House of Representatives

Explanatory Memorandum

Circulated By Authority of the Attorney-General, the Honourable Robert Mcclelland MP

Schedule 2 - Other amendments to the Proceeds of Crime Act 2002

This Schedule will amend the Proceeds of Crime Act 2002 to enhance and extend the Commonwealth asset confiscation regime by:

•

introducing freezing orders to ensure assets are not dispersed (Part 1)

•

removing the six year time limitation on orders for non-conviction-based restraint and forfeiture of proceeds of crime (Part 2)

•

providing for non-conviction-based restraint and forfeiture of instruments of serious crime (Part 3)

•

enhancing information sharing under the Act (Part 4), and

•

reimbursing legal aid commission legal costs from the Confiscated Assets Account (Part 5).

The Act provides a scheme to trace, restrain and confiscate proceeds of crime. With its passage in 2002, the Act introduced a civil based confiscation regime alongside the more traditional conviction based confiscation. The ability to deprive criminals of the proceeds of their criminal activity is an essential law enforcement tool. It deters criminal behaviour and prevents proceeds of crime from being used to fund further criminal activity.

In April 2006, Mr Tom Sherman AO undertook an independent review of the Act . Report on the Independent Review of the Operation of the Proceeds of Crime Act 2002 ( the Sherman Report) was tabled in Parliament on 18 October 2006. The Report contained 18 major recommendations and 39 technical recommendations to increase the effectiveness of the Act.

In June 2007, the Attorney-General's Department convened a senior level working group of Commonwealth agencies to review the Sherman Report. In addition to examining the recommendations, the working group identified additional proposals to improve the operation of the Act based on their experience and research since the time of the Sherman Report.

A number of the amendments in Schedule 2 respond to recommendations made in the Sherman Report, including the amendments removing the six year time limit on non-conviction-based asset recovery, providing for the restraint and forfeiture of instruments of serious offences without conviction and enhancing information sharing under the Act. Other amendments were identified by the senior level working group convened by the Attorney-General's Department.

Recommendations of the Sherman Report that are not dealt with in this Bill are being considered for possible amendments in future legislation.

Freezing orders

Part 1 of Schedule 2 will introduce freezing orders into the Act to limit the risk of criminal funds being dissipated. Freezing orders are an interim asset restraint measure and will be strictly limited in their application and duration.

Law enforcement agencies have identified that the time between identifying criminal funds in an account and obtaining a restraining order can result in criminal funds being moved. Even where restraining orders are obtained ex parte, significant documentation and a court hearing are required, which can provide more than enough time for funds in an account to be transferred. South Australia and Victoria have provisions for interim freezing of suspected criminal proceeds held in bank accounts.

Freezing orders will enable the temporary restraint of liquid assets held in accounts with financial institutions. The application process for freezing orders will be simpler than for restraining orders and an expedited application process will be available in circumstances where the time taken to obtain a formal restraining order increases the risk that suspected proceeds or instruments of crime will be transferred to frustrate confiscation proceedings.

The amendments contain a number of safeguards. Before making a freezing order, a magistrate must be satisfied there are reasonable grounds to suspect that the balance of an account is wholly or partly proceeds, or an instrument, of an offence and that there is a risk the balance of the account will be reduced. A freezing order will only continue in force for three working days. The person affected by the order can apply to a magistrate to have the order varied to meet the reasonable living expenses of the person or their dependants, the reasonable business expenses of the person or a specified debt incurred in good faith by the person. Offences will apply to support the integrity of the freezing order regime. Protection from liability is provided for institutions and individuals acting in good faith to comply with a freezing order.

Removal of time limitations for non-conviction based asset confiscation

Part 2 of Schedule 2 will amend the Act to remove the restriction on non-conviction-based orders that currently limits their application to offences occurring in the six years prior to the application for an order. The six year limitation on non-conviction-based asset confiscation was identified as an issue that needed to be addressed in the Sherman Report. Currently under the Act, non-conviction-based asset recovery (with the exception of literary proceeds orders) may only confiscate the proceeds or instruments of crimes committed in the six years prior to recovery action commencing.

This limitation precludes confiscation if relevant offences are not detected until more than six years after the offence was committed. It may also interfere with confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery.

The removal of the six year time limitation for non-conviction-based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred.

The Sherman Report recommended extending the time limitation to twelve years, however, the report also stated that any limit would pose difficulties. In view of these difficulties, it is considered appropriate to remove the time limit altogether.

Non-conviction-based confiscation of instruments of serious offences

Part 3 of Schedule 2 will amend the Act to enable the restraint and forfeiture of instruments of serious offences without conviction.

The non-conviction-based confiscation scheme is important to the overall success of the Act. Since its introduction in 2003, it has proven to be an effective mechanism to remove the proceeds of unlawful activity, preventing criminals profiting from their crimes and reinvesting in further criminal activity.

The amendments will enable the restraint and forfeiture of instruments of serious offences without conviction, similar to the way proceeds of crime can be confiscated without conviction. This amendment responds to a recommendation of the Sherman Report. It also brings Commonwealth legislation into line with legislation in South Australia, Western Australia and Victoria that permits non-conviction-based confiscation of property used (or intended to be used) in, or in connection with, an offence.

Currently, the Act permits the proceeds of a wide variety of offences to be confiscated on a civil standard of proof but instruments of indictable offences (other than terrorism offences) may only be confiscated where a person is convicted of the offence.

The Sherman Report recommended that instruments of indictable offences should be subject to non-conviction-based restraining orders and forfeiture orders under the Act. However, as a safeguard the amendments have been limited to the confiscation of serious offences only (defined in the Act to be offences carrying a penalty of 3 or more years imprisonment).

As a further safeguard the proposed amendments will permit a court discretion to make or amend a civil forfeiture order to take into account potential hardship to any person, the use ordinarily made of the property and the gravity of the offences concerned. This is consistent with the discretion afforded a court when considering an order to forfeit instruments of indictable offences following conviction.

Information sharing

Part 4 of Schedule 2 will amend the Act to clarify the use and sharing of information gathered under the Act.

The Act contains a range of information-gathering powers, including coercive examination, document production, and search and seizure mechanisms. The Act contains no specified limit on the use and sharing of information obtained under the Act. However, judicial decisions have created doubt regarding the extent to which information can be shared.

In DPP (Cth) v Hatfield [ 2006] NSWSC 195, the NSW Supreme Court ruled that information obtained in an examination under Part 3-1 of the Act could only be used for the purpose of proceedings under the Act, and could not be used or disclosed for any other purpose. Whether the decision in Hatfield would apply to material obtained using the other information-gathering powers contained in the Act is unclear.

The Sherman Report discussed this limit on the use of information and raised concerns it could prevent agencies sharing information vital to the prevention and investigation of serious criminal incidents. The Sherman Report highlighted that the decision in Hatfield would, for example, prevent sharing information of a planned murder or terrorist attack. The limit expressed in Hatfield may also require agencies to internally 'quarantine' information to avoid the argument that examination material had tainted other investigations.

The Sherman Report recommended a clear mandate in the Act that information relating to any serious offence can be passed to any agency having a lawful function to investigate that offence and to the Insolvency and Trustee Service Australia (ITSA) and Australian Tax Office to assist in their functions under the Act.

The amendments ensure that information obtained under the regime can be disclosed when that information will assist in the prevention, investigation or prosecution of criminal conduct.

Legal Aid payments

Part 5 of Schedule 2 will amend the Act to simplify arrangements for legal aid commissions to recover costs incurred by people who have assets restrained under the Act. The simplified process will see legal aid costs paid directly from the Confiscated Assets Account, instead of from restrained assets.

The existing scheme, which requires legal aid commissions to recover legal costs directly from a person's restrained assets, has proven complex and, at times, subject to delay. The New South Wales Legal Aid Commission has advised that it has encountered a range of problems with having its costs reimbursed under the existing scheme.

Under the new scheme, legal aid commissions will be able to invoice the Official Trustee for legal costs incurred by a person with restrained assets. The Official Trustee will then pay the costs from the Confiscated Assets Account and the Commonwealth will then recover the amount from the person who received the legal aid, up to the value of the restrained assets.

This amendment responds to the Sherman Report recommendation that all claims for legal expenses which have been certified as fair, reasonable and duly expended by legal aid commissions on proceedings relating to property that has been restrained under the Act, should be paid directly out of the Confiscated Assets Account.

The Commonwealth Legal Aid Priorities and Guidelines award a high priority to legal aid in cases where a person has assets restrained under the Act and direct legal aid commissions to disregard merits tests in certain circumstances and to disregard assets that are subject to a restraining order for the purposes of means tests.

When the Act was enacted, a commitment was made by the then Government to ensure legal aid commissions did not suffer detriment by taking on matters that may not usually pass the means and merits test. These amendments will address the problems with existing procedures and ensure that commitment by the then Government to legal aid commissions is met.

Part 1 - Freezing orders

Item 1 - Section 7

This item inserts a consequential amendment to section 7 of the Act, which provides a general outline of the confiscation scheme, to omit reference to '5' and substitute 'a number of'. Section 7 currently states that Chapter 2 sets out five processes relating to confiscation. The inclusion of unexplained wealth orders and freezing orders increases the number of processes relating to confiscation to more than five.

Item 2 - Before paragraph 7(a)

This item inserts a consequential amendment to section 7 of the Act to include a new subsection 7(aa) which includes freezing orders in the outline of the confiscation scheme, contained in Chapter 2 of the Act.

Item 2 - Before Part 2-1

This item inserts Part 2-1A in the Proceeds of Crime Act.

Part 2-1A - Freezing orders

Part 1 of Schedule 2 will insert new Part 2-1A into the Proceeds of Crime Act. Part 2-1A will introduce freezing orders into the Act to limit the risk of criminal funds being dissipated. Freezing orders are an interim asset restraint measure and will be strictly limited in their application and duration.

Law enforcement agencies have identified that the time between identifying criminal funds in an account and obtaining a restraining order can result in criminal funds being moved. Even where restraining orders are obtained ex parte, significant documentation and a court hearing are required, which can provide more than enough time for funds in an account to be transferred. South Australia and Victoria have provisions for interim freezing of suspected criminal proceeds held in bank accounts.

'Freezing orders' will enable the temporary restraint of liquid assets held in accounts with financial institutions. The application process for freezing orders will be simpler than for restraining orders and an expedited application process will be available in circumstances where the time taken to obtain a formal restraining order increases the risk that suspected proceeds or instruments of crime will be transferred to frustrate confiscation proceedings.

The amendments contain a number of safeguards. Before making a freezing order, a Magistrate must be satisfied there are reasonable grounds to suspect that the balance of an account is wholly or partly proceeds, or an instrument of an offence, and that there is a risk the balance of the account will be reduced. A freezing order will only continue in force for three working days. The person affected by the order can apply to a magistrate to have the order varied to meet the reasonable living expenses of the person or their dependants, the reasonable business expenses of the person or a specified debt incurred in good faith by the person. Offences will apply to support the integrity of the freezing order regime. Protection from liability is provided for institutions and individuals acting in good faith to comply with a freezing order.

Division 1 - Making freezing orders

15A Simplified outline of this Part

Section 15A provides a simplified outline of Part 2-1A and specifies when a freezing order can be made against a financial institution. A freezing order can be obtained where there are grounds to suspect the account balance reflects proceeds or an instrument of a serious offence and when a magistrate is satisfied that, unless a freezing order is made, there is a risk that the balance will be reduced.

15B Making freezing orders

Section 15B sets out the circumstances in which a freezing order can be made.

A freezing order can be made when an authorised officer applies for an order and a magistrate is satisfied there are reasonable grounds to suspect that the balance of an account is wholly or partly proceeds, or an instrument of an offence. The magistrate must also be satisfied there is a risk the balance of the account will be reduced and that this reduction would frustrate confiscation proceedings.

The requirement that a magistrate be satisfied there is a risk of the funds being reduced, ensures freezing orders will only be made in situations where it is necessary to ensure funds are not moved or dissipated.

Division 2 - How freezing orders are obtained

15C Affidavit supporting application made in person

Section 15C sets out the information that must be contained in an affidavit, supporting an application for a freezing order, where that application is made in person.

An affidavit must include sufficient information to identify the account(s) to be frozen and identify the financial institution with which the account is held. The affidavit must set out the grounds to suspect that the balance of the account is, wholly or partly, proceeds or an instrument of a serious offence.

The affidavit must also set out the grounds on which a person could be satisfied there is a risk that the balance of the account will be reduced, so that a person is not deprived of proceeds or an instrument of an offence, if a freezing order is not made.

15D Applying for freezing orders by telephone or other electronic means

Section 15D outlines the circumstances in which an authorised officer may apply for a freezing order by telephone, fax or other electronic means.

An authorised officer may apply for a freezing order by electronic means in an urgent case or, if the time involved in making an application in person would frustrate the effectiveness of the freezing order. For example, a freezing order may be granted where the authorising officer is concerned that the person who owns the assets targeted, is aware of an investigation. An electronic application must include all the information required in an application for an order made in person.

This item provides that where an application is made by telephone or other electronic means, a magistrate may require communication by voice to the extent practical and may require any other further information. This additional safeguard ensures that a magistrate can satisfy themselves of the need for the order to be made by telephone or electronic means, at the time the application is made.

15E Making order by telephone etc

Section 15E outlines the circumstances in which a magistrate may make a freezing order by telephone or other electronic means, and details the procedures that must be followed when a magistrate does so.

A magistrate will be permitted to make the same form of freezing order available under proposed section 15B by telephone or other electronic means if they are satisfied an order should be issued urgently and the time taken to apply in person would frustrate the order.

If a magistrate makes an order by telephone or other electronic means, the magistrate must inform the applicant of the terms of the order and the day and time when the order was made.

The applicant must complete a form of freezing order in terms corresponding to those given by the magistrate and include on the form the name of the magistrate who made the order and the day and time when the order was made. The applicant must then give the magistrate the completed form of freezing order, and lodge a written copy of any affidavit supporting the application not previously lodged, within the relevant timeframes.

A freezing order will be taken never to have had effect if the applicant does not provide an affidavit supporting the application (if one was not provided before the application was made) to the magistrate by the end of the second day after the order was made.

15F Unsigned freezing orders in court proceedings

Section 15F provides that, if it is material in any proceedings that a court be satisfied that a freezing order applied for under section 15D was duly made, and the signed freezing order is not produced, the court must assume the order was not duly made (unless the contrary is proved).

15G Offence for making false statements in applications

This item inserts an offence to support the integrity of the freezing order regime. A person will commit an offence if they make a statement that is false or misleading, or omit any information without which the statement is misleading, if the statement is made in, or in connection with, an application for a freezing order. Further offences relating to freezing orders are set out in section 15H.

This offence is necessary to deter people from making false statements, or providing inaccurate information in an application, or in connection with an application for a freezing order. An offence under this section is punishable by 2 years imprisonment and/or a fine of 120 penalty units.

15H Offences relating to orders made under section 15E

Section 15H inserts four offences relating to freezing orders made under section 15E by telephone, fax or other electronic means. These offences match existing offences in the Proceeds of Crime Act 2002 designed to support the operation of search warrants.

A person will commit an offence if they state the name of a magistrate in a form of freezing order and the name is not the name of the magistrate who made the order.

A person will commit an offence if they state a matter in a freezing order made under 15E and the matter departs in a material way from the order made by the magistrate.

A person will also commit an offence if they serve a freezing order that has not been approved by a magistrate or that departs materially from the terms authorised by the magistrate.

A person will commit an offence if, after serving a freezing order on a financial institution, they give the magistrate a form of freezing order that is not in the same form as the document provided to the financial institution.

These offences provide safeguards to ensure that penalties are attached to a breach of the conditions in relation to the application for, and service of, freezing orders. It is necessary to ensure that when an application for a freezing order is made by telephone, fax or other electronic means, all necessary processes are adhered to.

Offences under this section are punishable by 2 years imprisonment, and/or a fine of 120 penalty units.

Division 3- Giving effect to orders

15J Service of freezing order on financial institution and account-holder

Section 15J outlines the service requirements applicable to freezing orders. If a magistrate makes a freezing order, the applicant must give a copy of the order to the financial institution, and to each person whose account(s) will be affected by the order.

A copy of a freezing order must be given to a financial institution before the end of the first working day after the order was made. A freezing order will not come into force if this condition is not satisfied. This requirement ensures that financial institutions are made aware of the existence of a freezing order as soon as practicable after the order is made.

15K Freezing order does not prevent withdrawal to enable financial institution to meet its liabilities

Section 15K provides that the existence of a freezing order does not prevent a financial institution from processing withdrawals on the account to meet a liability imposed by or under a written law of the Commonwealth, a State or a Territory.

This will ensure that transactions mandated by law are not affected by freezing orders. These transactions could include, but are not limited to, payments mandated by family law or other court orders. The section is not intended to permit a financial institution to process withdrawals for the purpose of meeting the expenses of a person affected by the order.

15L Offence for contravening freezing orders

This item inserts an offence to support the enforcement of freezing orders. A financial institution will commit an offence if it allows a withdrawal from an account, which is subject to a freezing order, where the withdrawal contravenes the terms of the order.

This item is necessary to ensure that financial institutions comply with the terms of a freezing order.

This offence is punishable by 5 years imprisonment, or a fine of 300 penalty units.

15M Protection from suits etc for those complying with orders

This item provides protection from legal proceedings for a financial institution, or an agent or officer of a financial institution, for any action taken in complying with the order or in the mistaken belief that action was required under a freezing order.

This will ensure that institutions and individuals acting in good faith to comply with a freezing order are not exposed to liability for those actions.

Division 4 - Duration of freezing orders

15N When a freezing order is in force

Section 15N outlines the circumstances in which a freezing order is in force.

For a freezing order to have effect, a copy of the order must be given to the financial institution before the end of the first working day after the order was made. If a copy is not provided to a financial institution within this timeframe, the freezing order does not come into effect.

A freezing order will remain in force for the period specified in the order unless a court makes a decision on a restraining order covering the account before the end of that period. A freezing order is limited to a maximum duration of three working days. A freezing order can be extended if, before the end of the three day period, an application for a restraining order to cover the amount has been made and an order is made under section 15P extending the freezing order.

15P Order extending a freezing order

Section 15P outlines the circumstances in which a magistrate may make an order extending a freezing order beyond the time specified in the original order.

A magistrate may make an order extending a freezing order if an application for a restraining order, relating to the accounts specified in the freezing order, has been made but not yet determined by a court. The extension may be for a specified number of working days, or the period ending when the court decides the application for the restraining order.

The extension of a freezing order will not have effect unless a copy of the order for the extension is given to the financial institution before the time the original freezing order would have ceased.

Allowing for the extension of a freezing order in these limited circumstances recognises the intended operation of a freezing order as an interim measure, specifically designed to address risks that proceeds of crime will be dissipated before a restraining order can be obtained.

15Q Magistrate may vary freezing order to allow for withdrawal to meet reasonable expenses

Section 15Q allows a magistrate to vary a freezing order, on application by a person in whose name the account is held, if the magistrate is satisfied certain criteria have been met.

A freezing order may be varied to meet the reasonable living expenses of the person or their dependants, the reasonable business expenses of the person or a specified debt incurred in good faith by the person.

A freezing order may only be varied by a magistrate if: the person in whose name the account is held applies for a variation; the applicant has notified the DPP of the application and the grounds for making it; the magistrate is satisfied that the expense or debt is not related to legal costs and the magistrate is satisfied the person cannot meet the expense or debt out of property that is not covered by a freezing or restraining order.

A variation will not take effect until written notice of the variation is provided to the financial institution.

Allowing for a freezing order to be varied recognises that in certain situations it will be necessary to allow for withdrawals from a frozen account. For example, it would be inequitable that employees of a business which had its accounts frozen would not be paid if a regular pay day fell within the period the account was frozen. Similarly, it may be necessary to allow a withdrawal to ensure that a person can provide food and other necessities for his or her family.

Item 4 - Paragraph 337A(1)(a)

This item inserts a reference to a 'freezing order' into section 337A(1)(a) of the Act, which deals with the meaning of the term foreign indictable offence.

This is a consequential amendment which arises because new section 15C refers to a foreign indictable offence.

Item 5 - Paragraph 337A(2)(a)

This item insert a reference to a 'freezing order' into section 337A(2)(a) of the Act, which deals with the meaning of the term foreign indictable offence.

This is a consequential amendment which arises because new section 15C refers to a foreign indictable offence.

Item 6 - Section 338

This item inserts a definition of freezing order into section 338 of the Proceeds of Crime Act 2002.

This is a consequential amendment that arises out of the introduction of Part 2-1A into the Proceeds of Crime Act 2002.

Item 7 - Section 338

This item inserts a definition of 'working day' into section 338 of the Proceeds of Crime Act 2002.

This provides certainty as to the aspects of the operation of a freezing order that rely on working days. A working day does not include a Saturday or Sunday or a public or bank holiday in the place concerned.

Item 8 - Application

This item sets out the application of new Part 2-1A of the Proceeds of Crime Act 2002. Part 2-1A will apply to an account if there are reasonable grounds to suspect the balance of the account is proceeds of an offence or wholly or partly an instrument of an a serious offence, regardless of whether the conduct constituting the offence occurs before, on or after the commencement of Part 2-1A.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it will allow an authorised officer to obtain a freezing order in relation to an account that is suspected, on reasonable grounds, to contain the proceeds of a specified offence or is an instrument of a serious offence, and where the conduct constituting the offence occurred before the commencement of Part 2-lA (Freezing orders).

Retrospective application is necessary to ensure the effectiveness of the freezing order provisions. Without retrospective application, freezing orders would not be able to be obtained in respect of proceeds of an indictable offence, a foreign indictable offence or an indictable offence of Commonwealth concern, or an instrument of a serious offence, where the conduct constituting the offence occurred before the commencement of the freezing order provisions.

There is a real risk that funds in a bank account that are the proceeds of one of the offences mentioned above, or the instrument of a serious offence, might be dissipated and/or placed outside the reach of Australian law enforcement officials before a restraining order is obtained. A person who has already committed one of the offences mentioned above should not be able to avoid the application of the freezing order provisions.

Item 9 - Subsection 21E(4) (paragraph (a) of the definition of confiscation proceedings) in the Crimes Act 1914

This item is a consequential amendment to Subsection 21E(4) of the Crimes Act 1914 to include a reference to freezing orders in the definition of confiscation proceedings under this section.

Item 10 - Subsection 4(1) (before paragraph (a) of the definition of proceeds of crime order) in the Family Law Act 1975

This item is a consequential amendment to Subsection 4(1) of the Family Law Act 1975. Subsection 4(1) contains a definition of proceeds of crime order that currently includes restraining and forfeiture orders. It is necessary to include a reference to new freezing orders to ensure that the existence of a freezing order can be made known to a Court when necessary in family law proceedings.

Part 2 - Removal of six year time limit on non-conviction-based confiscation

Part 2 of Schedule 2 will amend the Proceeds of Crime Act to remove the restriction on non-conviction-based orders that currently limits their application to offences occurring in the six years prior to the application for an order. The six year limitation on non-conviction-based asset confiscation was identified as an issue that needed to be addressed in the Sherman Report. Currently under the Act, non-conviction-based asset recovery (with the exception of literary proceeds orders) may only confiscate the proceeds or instruments of crimes committed in the six years prior to recovery action commencing.

This limitation precludes confiscation if relevant offences are not detected until more than six years after the offence was committed. It may also interfere with confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery.

The removal of the six year time limitation for non-conviction based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred. It also ensures that those who are able to successfully hide their criminal conduct for a sufficient period of time are not rewarded by being able retain the proceeds.

The Sherman Report recommended extending the time limitation to twelve years, however, the report also stated that any limit would pose difficulties. In view of these difficulties, it is considered appropriate to remove the time limit altogether.

The Proceeds of Crime Act contains other references to six-year time limits that will be retained because they do not constrain the commencement of confiscation proceedings but are relevant, for example, to calculating penalty amounts or providing certainty to family law orders.

Item 11 - Paragraph 18(1)(d)

This item repeals paragraph 18(1)(d) which requires that the offence was committed within the six years preceding the application, and inserts a paragraph which removes this time limit for a restraining order made under section 18.

The effect of amended 18(1)(d) will be to ensure that restraining orders under section 18 are available to restrain property of a person reasonably suspected of committing a serious offence, or property of a person who is suspected of possessing proceeds or instruments of a serious offence, regardless of when that offence occurred.

Item 12 - Paragraph 18(3)(a)

This item repeals paragraph 18(3)(a) which requires that an affidavit of an authorised officer state the officer's suspicion that the offence was committed within six years preceding the application, and inserts a new paragraph which removes this time limit.

The effect of amended paragraph 18(3)(a) will be to permit an authorised officer to complete an affidavit supporting an application for a restraining order under section 18 with reference to all offences relevant to the restraining order, regardless of when the offence occurred.

Item 13 - At the end of subparagraph 19(1)(d)(ii)

The item inserts the word 'and' at the end of subparagraph 19(1)(d)(ii).

This is a consequential amendment that ensures proper interaction between subparagraph 19(1)(d)(ii) (as it is amended by item 212), and paragraph 19(1)(e).

Item 14 - Paragraph 19(1)(d)

This item omits the sentence at the end of paragraph 19(1)(d) that limits the operation of restraining orders under section 19 to offences suspected to have been committed within the six years preceding an application for an order under section 19.

The effect of amended paragraph 19(1)(d) will ensure that restraining orders under section 19 can be obtained where there are reasonable grounds to suspect property is the proceeds or an instrument of a relevant offence, regardless of when that offence occurred.

Item 15 - Application of amendments of sections 18 and 19

This item provides guidance on the application of the amendments to sections 18 and 19 that remove the six-year time limit.

The amendments to sections 18 and 19 of the Act will apply to any applications for a restraining order that are made on or after the commencement of the amendments, regardless of whether the conduct constituting an offence relevant to the order occurred before or after commencement of these sections.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables the DPP to apply for restraining orders where it is suspected, on reasonable grounds, that a person committed a serious offence (defined in section 338). The amendments remove the current limit that the serious offence must have been committed within 6 years preceding the application.

This 6 year limitation precludes confiscation if relevant offences are not detected until more than 6 years after the offence was committed. It may also hamper confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery. The removal of the 6 year time limitation for non-conviction-based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred.

Without retrospective application, restraining orders will not be able to be obtained in respect of conduct constituting a serious offence that was committed more than 6 years before the application where the conduct constituting the offence occurred before the commencement of Part 2 of Schedule 2 of the Bill.

Item 16 - Paragraph 47(1)(c)

This item repeals paragraph 47(1)(c) and replaces it with a paragraph that does not require a court to be satisfied the conduct, or suspected conduct that formed the basis of the order, occurred in the six years preceding an application for a forfeiture order under section 47.

The effect of the amended paragraph 47(1)(c) will be to ensure that forfeiture orders are available under section 47 regardless of when the suspected offence occurred, if a court is satisfied an order should be made.

Item 17 - Paragraph 49(1)(d)

This item repeals paragraph 49(1)(d) which limits forfeiture orders under section 49 to offences, that are not terrorism offences, which occurred in the six years preceding application for an order under section 49.

Repealing this paragraph ensures that forfeiture orders under section 49 are available regardless of when a relevant offence occurred, if a court considers an order should be made.

Item 18 - Application of amendments of sections 47 and 49

This item provides guidance on the application of the amendments to section 47 and 49 which remove the six-year time limit.

The amendments to sections 47 and 49 will apply to any applications for a forfeiture order that are made on or after the commencement of the amendments, regardless of whether the conduct constituting an offence relevant to the order occurred before or after commencement of these sections.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables the DPP to obtain a forfeiture order where it is suspected, on reasonable grounds, that a person committed a serious offence (defined in section 338). The amendments remove the current limit that the serious offence must have been committed within 6 years preceding the application.

This 6 year limitation precludes confiscation if relevant offences are not detected until more than 6 years after the offence was committed. It may also hamper confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery. The removal of the 6 year time limitation for non-conviction-based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred.

Without retrospective application, forfeiture orders will not be able to be obtained in respect of conduct constituting a serious offence that was committed more than 6 years before the application where the conduct constituting the offence occurred before the commencement of Part 2 of Schedule 2 of the Bill.

Item 19 - Subsection 84(1)

Item 19 will omit '(1)' from section 84 of the Proceeds of Crime Act 2002.

This is a consequential amendment that arises because Item 20 repeals subsection 84(2), leaving only one provision under section 84 and removing the need to divide section 84 into subsections.

Item 20 - Subsection 84(2)

This item repeals subsection 84(2) which directs a court to treat any conduct that is relevant to making an order under section 84, confirming a forfeiture order, as having occurred within the period of six years referred to in paragraph 47(1)(c).

This is a consequential amendment that arises because Item 16 removes the reference to the period of six years in paragraph 47(1)(c).

Item 21 - Subsection 85(1)

This item omits '84(1)(a)' from subsection 85(1) and substitutes '84(a)'.

This is a consequential amendment that arises because Item 19 removes '(1)' from section 84.

Item 22 - Subsection 85(2)

This item omits '84(1)(b)' from subsection 85(2) and substitutes '84(b)'.

This is a consequential amendment that arises because item Item 19 removes '(1)' from section 84

Item 23 - Subsection 110(1)

This item omits '(1)' in section 110.

This is a consequential amendment that arises because Item 24 repeals subsection 110(2), leaving only one provision in section 110 and removing the need to divide section 84 into subsections.

Item 24 - Subsection 110(2)

This item repeals subsection 110(2). Subsection 110(2) directs a court to treat any conduct that is relevant to making an order under section 110, confirming a forfeiture order, as having occurred within the period of six years referred to in paragraph 47(1)(c).

This is a consequential amendment that arises because Item 16 removes the reference to the period of six years in paragraph 47(1)(c).

Item 25 - Subsection 111(1)

This item omits '110(1)(a)' from subsection 111(1) and substitutes '110(a)'.

This is a consequential amendment that arises because Item 24 repeals subsection 110(2), leaving only one provision in section 110 and removing the need to divide section 84 into subsections.

Item 26 - Subsection 111(2)

This item omits '110(1)(b)' from subsection 111(2) and substitutes '110(b)'.

This a consequential amendment that arises because Item 24 repeals subsection 110(2), leaving only one provision in section 110 and removing the need to divide section 84 into subsections.

Item 27 - Subparagraph 116(1)(b)(ii)

This item omits the words 'subject to subsection (2)' from subparagraph 116(1)(b)(ii).

This is a consequential amendment that arises because Item 28 repeals subsection 116(2).

Item 28 - Subsection 116(2)

This item repeals subsection 116(2). The effect of subsection 116(2) is to limit a court's ability to consider offences, when making a pecuniary penalty order, to considering offences that occurred within the six years preceding application for a pecuniary penalty order.

This is a consequential amendment that ensures that pecuniary penalty orders are available in relation to offences regardless of when the offence occurred, if a court considers an order should be made.

Item 29 - Application of amendments of section 116

This item provides guidance on the application of the amendments of section 116.

These amendments will apply to applications for a pecuniary penalty order that are made on or after commencement, regardless of whether the conduct constituting an offence relevant to the order occurred before or after the commencement of these sections.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables the DPP to apply for a pecuniary penalty order where it is suspected, on reasonable grounds, that a person committed a serious offence (defined in section 338). The amendments remove the current limit that the serious offence must have been committed within 6 years preceding the application.

This 6 year limitation precludes confiscation if relevant offences are not detected until more than 6 years after the offence was committed. It may also hamper confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery. The removal of the 6 year time limitation for non-conviction-based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred.

Without retrospective application, pecuniary penalty orders will not be able to be obtained in respect of conduct constituting a serious offence that was committed more than 6 years before the application where the conduct constituting the offence occurred before the commencement of Part 2 of Schedule 2 of the Bill.

Item 30 - Section 149

This item repeals section 149, and replaces it with new section 149. This is a consequential amendment that arises because Item 28 repeals subsection 116(2). Existing section 149 limits a court's ability to confirm a pecuniary penalty order relating to non-terrorism offences, to offences occurring within the six-year time period referred to in subsection 116(2).

New section 149 will permit a court to make an order confirming a pecuniary penalty order without reference to offences within a six-year time period, if a court considers a confirmation order should be made.

Item 31 - Application of new section 149

This item provides guidance on the application of the amendments of section 149.

The amendments to section 149 will apply to pecuniary penalty orders applied for on or after the commencement of proposed section 149, whether the conduct constituting an offence relevant to the order occurred before, on or after the commencement of new section 149.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables a court to confirm a pecuniary penalty order if the court is satisfied that, when the DPP applied for the order, the court could have made the order without relying on the person's conviction that was quashed.

The amendments remove the current limit that the serious offence must have been committed within 6 years preceding the application. This 6 year limitation precludes confiscation if relevant offences are not detected until more than 6 years after the offence was committed. It may also hamper confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery. The removal of the 6 year time limitation for non-conviction-based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred.

Without retrospective application, confirmation of pecuniary penalty orders will not be able to be obtained in respect of conduct constituting a serious offence that was committed more than 6 years before the application where the conduct constituting the offence occurred before the commencement of Part 2 of Schedule 2 of the Bill.

Item 32 - Subparagraphs 202(5)(a)(ii) and (iii)

This item repeals subparagraph 202(5)(a)(ii) which refers to terrorism offences, and also repeals subparagraph 202(5)(s)(iii) which refers to a serious offence committed within 6 years. The item substitutes a new, single subparagraph 202(5)(a)(ii).

The distinction between terrorism offences, and serious offences that occurred within the last six years, is no longer relevant because of the application of Parts 2 and 3 which remove the six year limitation for serious offences other than terrorism offences and allow for the confiscation of instruments of serious offences.

Item 33 - Subparagraphs 202(5)(c)(ii) and (iii)

This item repeals subparagraph 202(5)(c)(ii) which contains reference to a terrorism offence and, also repeals 202(5)(c)(iii) which refers to a serious offence committed within 6 years. The item substitutes a new, single, subparagraph 202(5)(c)(ii).

The distinction between terrorism offences, and other serious offences limited to those that occurred within the last six years, is no longer relevant because of the application of Parts 2 and 3 which remove the six year limitation for serious offences other than terrorism offences and allow for the confiscation of instruments of serious offences.

The new subparagraph 202(5)(c)(ii) will define 'property tracking document' to include a document relevant to identifying, locating or quantifying proceeds of a serious offence, or an instrument of any other serious offence, that a person is reasonably suspected of having committed.

Item 34 - Subsection 202(6)

This item omits the words 'or (iii)' from subsection 202(6), which is a reference to subparagraph 202(5)(c)(iii).

This is a consequential amendment that arises because Item 33 repeals subparagraph 202(5)(c)(iii).

Item 35 - Application of amendments to section 202

This item provides guidance on the application of the amendments of section 202 of the Proceeds of Crime Act 2002.

These amendments will apply to production orders applied for on or after the commencement of the amendments, whether the conduct constituting an offence relevant to the production order occurred before, on or after commencement.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables a magistrate to make a production order in respect of certain documents that relate to serious offences that occurred more than 6 years before the application for the production order. The amendments remove the current limit that the serious offence must have been committed within 6 years preceding the application.

This 6 year limitation precludes confiscation if relevant offences are not detected until more than 6 years after the offence was committed. It may also hamper confiscation when extended criminal conduct is considered to be one offence stretching over more than six years. As criminals routinely attempt to conceal offences, and crimes such as fraud and money laundering may occur over extended periods, the time limit can pose significant obstacles for non-conviction-based recovery. The removal of the 6 year time limitation for non-conviction-based asset recovery will ensure that criminals are not able to benefit from their crimes, regardless of when they occurred.

Without retrospective application, production orders will not be able to be obtained in respect of conduct constituting a serious offence that was committed more than 6 years before the application where the conduct constituting the offence occurred before the commencement of Part 2 of Schedule 2 of the Bill.

Item 36 - Section 338 (paragraph (g) of the definition of serious offence)

Item 36 will insert the words 'or former section 5, 7, 7A or 86 of the Crimes Act 1914', after the words ' Criminal Code' in paragraph (g) of the definition of 'serious offence' in section 338.

This is a consequential amendment arising out of the removal of the six-year time limits that constrain the commencement of confiscation action. Former sections 5, 6, 7, 7A and 86 of the Crimes Act 1914 provided extensions of criminal responsibility equivalent to sections 11.1, 11.2, 11.4 and 11.5 of the Criminal Code, which are included in the definition of 'serious offence'. The removal of the 6 year time limit, makes it possible to commence confiscation action in relation to the former sections of the Crimes Act. It is therefore appropriate to include these sections in the definition of 'serious offence'.

Part 3 - Non-conviction-based confiscation of instruments of serious offences

Part 3 of Schedule 2 will amend the Proceeds of Crime Act to enable the restraint and forfeiture of instruments of serious offences without conviction.

The non-conviction-based confiscation scheme is important to the overall success of the Act. Since its introduction in 2003, it has proven to be an effective mechanism to remove the proceeds of unlawful activity, preventing criminals profiting from their crimes and reinvesting in further criminal activity.

The amendments will enable the restraint and forfeiture of instruments of serious offences without conviction, similar to the way proceeds of crime can be confiscated without conviction. This amendment responds to a recommendation of the Sherman Report. It also brings Commonwealth legislation into line with legislation in South Australia, Western Australia and Victoria that permits non-conviction-based confiscation of property used (or intended to be used) in, or in connection with, an offence.

Currently, the Act permits the proceeds of a wide variety of offences to be confiscated but instruments of indictable offences (other than terrorism offences) may only be confiscated where a person is convicted of the offence. Only the instruments of terrorism offences can be confiscated under non-conviction-based confiscation provisions.

Part 3 amends various provisions relevant to non-conviction-based confiscation action, to ensure instruments of serious offences can be confiscated. It replaces the references to instruments of terrorism offences in provisions that provide for non-conviction-based confiscation with references to instruments of serious offences.

A serious offence is defined under the Act as an indictable offence punishable by at least 3 years imprisonment and involving certain other elements such as unlawful conduct relating to narcotic substances or serious drug offences, money laundering and certain people smuggling offences.

The effect of these changes will mean that the DPP could apply to a court with proceeds jurisdiction to confiscate the premises of a person used as a laboratory to make narcotics, because the premises would be treated as an instrument of a serious offence.

These changes will ensure that the assets persons use in the commission of serious crimes can be confiscated.

The Sherman Report recommended that instruments of indictable offences should be subject to non-conviction-based restraining orders and forfeiture orders under the Act. However, as a safeguard the amendments have been limited to the confiscation of serious offences only (defined in the Act to be offences carrying a penalty of 3 or more years imprisonment).

As a further safeguard the proposed amendments will permit a court discretion to make or amend a civil forfeiture order to take into account potential hardship to any person, the use ordinarily made of the property and the gravity of the offences concerned. This is consistent with the discretion afforded a court when considering an order to forfeit instruments of indictable offences following conviction.

Items 37 - 41 - Subparagraphs 18(2)(d)(ii), 18(3)(b)(iii), 19(1)(d)(ii), 19(1)(e)(ii) and paragraph 19(2)(b)

Items 37 - 41 will omit the references to 'terrorism' offences from subparagraphs 18(2)(d)(ii), 18(3)(b)(iii), 19(1)(d)(ii), 19(1)(e)(ii) and paragraph 19(2)(b) and substitute references to 'serious' offences.

Item 42 - Application of amendments to sections 18 and 19

Item 42 provides guidance on the application of amendments to sections 18 and 19 of the Act to permit confiscation of instruments of serious offences.

The amendments will apply to applications for a restraining order that are made on or after the commencement of these amendments, regardless of whether the conduct constituting an offence relevant to the restraining order occurred before, on or after commencement.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables the restraint and forfeiture of instruments of serious offences without conviction, similar to the way proceeds of crime can be confiscated without conviction. Currently, the Proceeds of Crime Act 2002 only permits instruments of indictable offences (other than terrorism offences) to be confiscated where a person is convicted of the offence.

If the amendment to sections 18 were not given retrospective application, restraining orders would not be able to be obtained for proceeds of specified offences or instruments of serious offences in respect of conduct constituting a serious offence that occurred before the commencement of Part 3 of Schedule 2 of the Bill.

Items 43 - 47 - Subparagraphs 29(2)(c)(ii), 29(2)(d)(ii) and paragraph 45(6)(ca)

Items 43 - 47 will omit the references to 'terrorism' offences from subparagraphs 29(2)(c)(ii) and 29(2)(d)(ii) and paragraph 45(6)(ca) and substitute references to 'serious' offences.

Item 48 - Application of amendments of sections 29 and 45

Item 48 provides guidance on the application of amendments to sections 29 and 45 to permit confiscation of the instruments of serious offences.

These amendments apply to restraining orders made as a result of an application made on or after commencement of the amendments to sections 29 and 45, regardless of whether the conduct constituting an offence relevant to an order occurred before, on or after commencement.

This provision does not create any retrospective criminal liability through a new offence provision. If the amendment to section 29 were not given retrospective application, applications to exclude specified property from a restraining order would not be able to be obtained for proceeds of specified offences or instruments of serious offences in respect of conduct constituting a serious offence that occurred before the commencement of Part 3 of Schedule 2 of the Bill.

The need for the amendment to section 45 to have retrospective effect is consequential on other amendments. The amendment is necessary to ensure that persons cannot escape forfeiting their property to the Commonwealth in certain circumstances.

A person with proceeds or instruments of serious offences should not evade asset confiscation because their conduct, which constitutes a serious offence, occurred before the commencement of Part 3 of Schedule 2 of the Bill.

Item 49 - At the end of section 47

Item 49 inserts a subsection (4) to section 47.

Subsection 47(4) will permit a court to refuse to make a forfeiture order under section 47 in relation to property that is an instrument of a serious offence that is not a terrorism offence, if the court is satisfied it is not in the public interest to make the order.

This will retain the mandatory confiscation of instruments of terrorism offences while providing courts with discretion not to make orders relating to other serious offences, if the order is not in the public interest.

Item 50 - Application of new subsection 47(4)

Item 50 provides guidance on the application of subsection 47(4).

Subsection 47(4) applies to orders that are made on or after the commencement of subsection 47(4), regardless of whether the conduct constituting an offence relevant to an order under section 47 occurred before, on or after commencement of subsection 47(4).

This provision does not create any retrospective criminal liability through new offence provisions. Rather, it enables the forfeiture of instruments of serious offences without conviction, similar to the way proceeds of crime can be confiscated without conviction. Currently, the Proceeds of Crime Act 2002 only permits instruments of indictable offences (other than terrorism offences) to be confiscated where a person is convicted of the offence.

If the amendments to section 47 were not given retrospective application, forfeiture orders would not be able to be obtained for proceeds of specified offences or instruments of serious offences in respect of conduct constituting a serious offence that occurred before the commencement of Part 3 of Schedule 2 of the Bill.

Item 51 - Subparagraph 49(1)(c)(iv)

Item 51 omits the reference to 'terrorism' offences from subparagraph 49(1)(c)(iv) and substitutes a reference to 'serious' offences.

Item 52 - Application of amendment of subparagraph 49(1)(c)(iv)

Item 52 provides guidance on the application of the amendment to section 49 of the Act.

The amendment to section 49 applies to applications for a forfeiture order that are made on or after the commencement of the amendment to section 49, regardless of whether the conduct constituting an offence relevant to an order under section 49 occurred before, on or after commencement of that amendment.

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables the forfeiture of instruments of serious offences without conviction, similar to the way proceeds of crime can be confiscated without conviction. Currently, the Proceeds of Crime Act 2002 only permits instruments of indictable offences (other than terrorism offences) to be confiscated where a person is convicted of the offence.

If the amendments to section 49 were not given retrospective application, forfeiture orders would not be able to be obtained for proceeds of specified offences or instruments of serious offences in respect of conduct constituting a serious offence that occurred before the commencement of Part 3 of Schedule 2 of the Bill.

Item 53 - At the end of section 49

Item 53 inserts a subsection (4) to section 49.

Subsection 49(4) will permit a court to refuse to make a forfeiture order under section 49 in relation to property that is an instrument of a serious offence, that is not a terrorism offence, if the court is satisfied it is not in the public interest to make the order.

This will retain the mandatory confiscation of instruments of terrorism offences while providing courts with discretion not to make orders relating to other serious offences, if the order is not in the public interest.

Item 54 - Application of new subsection 49(4)

Item 54 provides guidance on the application of the amendment to section 49 of the Act.

Subsection 49(4) applies to orders that are made on or after the commencement of subsection 49(4), regardless of whether the conduct constituting an offence relevant to an order under section 49 occurred before, on or after commencement of subsection 49(4).

This provision does not create any retrospective criminal liability through a new offence provision. Rather, it enables a court to refuse to make an order under subsection 49(1), including where the conduct constituting the serious offence occurred before the commencement of Part 3 of Schedule 2.

If subsection 49(4) were not given retrospective application, the anomalous result would be that a court could refuse to make an order under subsection 49(1) where a person's conduct constituting a serious offence occurred within the 6 years before the forfeiture order application, but not where a person's conduct constituting a serious offence occurred outside of the 6 years preceding a forfeiture order application. This would disadvantage third parties affected by a forfeiture order where the conduct constituting a serious offence occurred more than 6 years before the forfeiture order is brought.

Items 55 - 59 - Subparagraphs 73(1)(c)(ii), 73(1)(d)(iii), 85(2)(a)(ii), 85(2)(b)(ii)

Items 55 - 59 omit the references to 'terrorism' offences from subparagraphs 73(1)(c)(ii), 73(1)(d)(iii), 85(2)(a)(ii) and 85(2)(b)(ii) and substitute references to 'serious' offences.

Item 60 - Application of amendments of sections 73 ad 85

Item 60 provides guidance on the application of amendments to sections 73 and 85.

The amendments will apply to forfeiture orders applied for on or after the commencement of the amendments, regardless of whether the conduct constituting an offence relevant to an order occurred before, on or after commencement.

This provision does not create any retrospective criminal liability through a new offence provision. If the amendment to section 73 were not given retrospective application, exclusion orders would not be able to be obtained for proceeds of specified offences or instruments of serious offences in respect of conduct constituting a serious offence that occurred before the commencement of Part 3 of Schedule 2 of the Bill.

The need for the amendment to section 85 to have retrospective effect is consequential on other amendments. The amendment is necessary to ensure that persons cannot escape forfeiting their property to the Commonwealth in certain circumstances.

A person with proceeds or instruments of serious offences should not evade asset confiscation because their conduct, which constitutes a serious offence, occurred before the commencement of Part 3 of Schedule 2 of the Bill.

Item 61 - 62 - Subparagraphs 111(2)(a)(ii) and 111(2)(b)(ii)

Items 61 - 62 omit the references to 'terrorism' offences from subparagraphs 111(2)(a)(ii) and 111(2)(b)(ii) and substitute references to 'serious' offences.

Item 63 - Application of amendments of section 111

Item 63 provides guidance on the application of the amendments to section 111 of the Act.

These amendments will apply in relation to the quashing, on or after the commencement of the amendments, of a conviction of an offence, whether the conviction occurred before, on or after commencement.

The need for the amendment to section 111 to have retrospective effect is consequential on other amendments. The amendment to section 111 is necessary to ensure that persons cannot escape forfeiting their property to the Commonwealth in certain circumstances.

A person with proceeds or instruments of serious offences should not evade asset confiscation because their conduct, which constitutes a serious offence, occurred before the commencement of Part 3 of Schedule 2 of the Bill.

Part 4 - Disclosure of information

Part 4 of Schedule 2 will amend the Proceeds of Crime Act to clarify the use and sharing of information gathered under the Act.

The Act contains a range of information-gathering powers, including coercive examination, document production, and search and seizure mechanisms. The Act contains no specified limit on the use and sharing of information obtained under the Act. However, judicial decisions have created doubt regarding the extent to which information can be shared.

In DPP (Cth) v Hatfield [ 2006] NSWSC 195, the NSW Supreme Court ruled that information obtained in an examination under Part 3-1 of the Act could only be used for the purpose of proceedings under the Act, and could not be used or disclosed for any other purpose. Whether the decision in Hatfield would apply to material obtained using the other information-gathering powers contained in the Act is unclear.

The Sherman Report discussed this limit on the use of information and raised concerns it could prevent agencies sharing information vital to the prevention and investigation of serious criminal incidents. The Sherman Report highlighted that the decision in Hatfield would, for example, prevent sharing information of a planned murder or terrorist attack. The limit expressed in Hatfield may also require agencies to internally 'quarantine' information to avoid the argument that examination material had tainted other investigations.

The Sherman Report recommended a clear mandate in the Act that information relating to any serious offence can be passed to any agency having a lawful function to investigate that offence and to the Insolvency and Trustee Service Australia (ITSA) and Australian Taxation Office (ATO) to assist in their functions under the Act.

The amendments ensure that information obtained under the regime can be disclosed when that information will assist in the prevention, investigation or prosecution of criminal conduct.

It was never the intention of the Act that information obtained in an examination could only be used for the purposes of confiscation proceedings under the Act and could not be shared for any other reason. It is desirable that, if during the course of an examination hearing, information about planned serious criminal activity is uncovered, such information is able to be passed on to relevant law enforcement agencies.

Item 64 - Section 8

Item 64 amends section 8 by including the existing information in section 8 in a new subsection 8(1). This is necessary because Item 65 will insert subsection 8(2).

Item 65 - At the end of section 8

Item 65 inserts subsection 8(2) after subsection 8(1). Subsection 8(2) indicates that Chapter 3, which sets out ways to obtain information, also authorises certain authorities to disclose information obtained under Chapter 3 for certain purposes.

Item 66 - At the end of subsection 223(4)

Item 66 inserts paragraph (e), (f) and (g) after subsection 223(4). Section 223 contains offences for disclosing the existence or operation of a monitoring order. Subsection 223(4) contains a list of persons to whom the existence or the operation of a monitoring order may be disclosed (for certain purposes).

Paragraphs 223(4)(e)-(f) add three further persons to who such information may be disclosed. They reflect the people with whom information may be shared under Item 67. These people are a person who is or forms part of an authority with functions under the Act, a person who is or forms part of an authority of the Commonwealth, or of a State, Territory or foreign country and a person in the Australian Taxation Office.

Item 67 - At the end of Chapter 3

Item 67 inserts Part 3-6 at the end of Chapter 3 of the Act.

Part 3-6 consists of section 266A, which allows authorities to disclose certain information obtained under certain circumstances to the authorities and for the purposes described in the table in section 266A.

Subsection 266A(1) sets out the types of information that can be disclosed under section 266A. Information obtained as a direct result of paragraph 39(1)(d), Parts 3-1, 3-2, 3-3, 3-4 or 3-5, or as a result of a disclosure, or a series of disclosures, under section 266A may be disclosed.

Part 3-2 of the Act relates to production orders. The AFP may obtain a person's bank statements under a production order that reveal significant amounts of income. If the AFP had reasonable grounds to suspect that the person had not declared all of their income in their Income Tax Returns, it is highly desirable that the AFP be able to pass the information obtained under the production order to the Australian Taxation Office for the purpose of protecting public revenue.

Similarly, if the AFP executed a search warrant under part 3-5 of the Act and discovered evidence of State offences, the AFP should be able to pass this information to their State Police counterparts for investigation.

The information outlined above may be disclosed to an authority with one or more functions under the Act, whether those functions involve investigation, conducting confiscation action, dealing with property or any other function under the Act. Information may only be disclosed to such an authority when the person disclosing the information believes, on reasonable grounds, that the disclosure would facilitate the authority's performance of its functions under the Act.

Information may also be disclosed to an authority of the Commonwealth, a State, Territory or foreign country that has a function investigating or prosecuting crimes against a law of the Commonwealth, State, Territory or foreign country. Information may only be disclosed when the person disclosing the information believes, on reasonable grounds, that the disclosure would assist in the prevention, investigation or prosecution of an offence against the law of the relevant jurisdiction that is punishable on conviction by at least 3 years imprisonment.

Information may also be disclosed to an authority of a foreign country that has a function of investigating or prosecuting offences against a law of the country. Information may only be disclosed when the person disclosing the information believes, on reasonable grounds, that the disclosure would assist in the prevention, investigation or prosecution of an offence against the law of the relevant jurisdiction and that, if it occurred in Australia, would constitute an offence against a law of the Commonwealth, or of a State or Territory, punishable by 3 or more years imprisonment.

To avoid doubt, this section does not alter existing procedures applicable to disclosure of information to foreign countries but provides a mandate to provide information obtained under the Act in accordance with those procedures.

Information may be disclosed to the Australian Taxation Office if the person disclosing the information believes, on reasonable grounds, that the disclosure would assist the Australian Taxation Office discharge its function of protecting public revenue.

The effect of section 266A generally is that no derivative use immunity will attach to the information to which it applies. Notwithstanding this, subsections 266A(3) - (7) ensure that a direct use immunity continues to apply to certain types of information disclosed under section 266A.

Subsections 266A(3) - (6) will ensure the immunities that apply to a particular answer or document when it is first obtained under the Act continue to apply when the answer or document is disclosed under section 266A. The subsections will provide direct use immunity in respect of a disclosure of an answer or document, and in respect of the fact that the person gave such an answer or document under the Act, even if the answer or document is produced in some other form (eg a summary of a document produced). This means that an answer given or a document produced in an examination under Part 3-1 of the Act, and the fact that the person gave such an answer or document, are not admissible in civil or criminal proceedings against the person who gave the information. This is consistent with the direct use immunity offered by section 198 for such answers and documents.

For example, subsection 266A(3) will prevent a person's answer or document, and any paraphrase, summary or other reproduction of the information contained in the person's answer or document, being admitted in proceedings against the person. However, the subsection will not prevent information disclosed under the section from being used to pursue further criminal investigations, or other investigations under the Act, nor will it prevent the admission in criminal proceedings of evidence that is obtained as a result of those investigations.

For example, a person may give an answer in an examination under Part 3-1 that discloses information about a bank account. Subsection 266A(3) will prevent information about the bank account that is obtained directly from the answer being admitted in proceedings against the person. However, the section will not operate to prevent the admission of the same information about the bank account if the information was obtained from separate investigations, such as the execution of a search warrant under the Crimes Act.

Subsection 266A(7) will provide that section 266A does not affect the admissibility of any information, document or thing obtained as an indirect consequence of a disclosure under the section. The purpose of this amendment is to make it clear that subsections 266A(3) - (6) create only a direct use immunity in respect of the types of information referred to in those provisions. This is consistent with the direct use immunity that would have applied when the information was originally obtained under Part 3-1 (Examinations) or Part 3-2 (Production orders).

Subsection 266A(8) expressly states that section 266A does not limit the operation of existing subsection 228(2) (which provides that a search warrant authorises the executing officer to make things seized under the warrant available to officers of other law enforcement agencies). The provision also makes it clear that section 228 does not limit the operation of section 266A. This removes any potential uncertainty about the interaction between the two information sharing provisions in section 228 and section 266A.

Part 5 - Legal aid costs

Part 5 of Schedule 2 will amend the Proceeds of Crime Act to simplify arrangements for legal aid commissions to recover costs incurred by people who have assets restrained under the Act. The simplified process will see legal aid costs paid directly from the Confiscated Assets Account, instead of from restrained assets.

The existing scheme, which requires legal aid commissions to recover legal costs directly from a person's restrained assets, has proven complex and at times, subject to delay. The New South Wales Legal Aid Commission has advised that it has encountered a range of problems with having its costs reimbursed under the existing scheme.

Under the new scheme, legal aid commissions will be able to invoice the Official Trustee for legal costs incurred by a person with restrained assets. The Official Trustee will then pay the costs from the Confiscated Assets Account and the Commonwealth will then recover the amount from the person who received the legal aid, up to the value of the restrained assets.

This amendment responds to the Sherman Report recommendation that all claims for legal expenses which have been certified as fair, reasonable and duly expended by legal aid commissions on proceedings relating to property that has been restrained under the Act, should be paid directly out of the Consolidated Assets Account.

The Commonwealth Legal Aid Priorities and Guidelines award a high priority to legal aid in cases where a person has assets restrained under the Act and direct legal aid commissions to disregard merits tests in certain circumstances and to disregard assets that are subject to a restraining order for the purposes of means tests.

When the Proceeds of Crime Act 2002 was enacted, a commitment was made by the then Government to ensure legal aid commissions did not suffer detriment by taking on matters that may not usually pass the means and merits test. These amendments will address the problems with existing procedures and ensure that commitment by the then Government to legal aid commissions is met.

Item 68 - Section 292

Item 68 repeals section 292. Section 292 obliged the Official Trustee to pay legal aid commissions' costs from assets covered by a restraining order. Under the new arrangements legal aid commissions' costs will be paid from the Confiscated Assets Account.

Item 69 - Subsections 293(1),(2) and (3)

Item 69 repeals subsections 293(1), 293(2) and 293(3) and substitutes new subsections 293(1), 293(2) and 293(3).

Existing subsections 293(1) and 293(2) provided guidance on the procedure for paying legal aid costs when those costs exceeded the value of assets subject to a restraining order or when it took a considerable time to dispose of the assets. This procedure will not be needed under the new arrangements.

The new arrangements for paying a legal aid commission's costs apply where a legal aid commission incurs costs representing someone whose assets are or were subject to a restraining order at the time of representation and where the person was also a suspect (defined under section 338 of the Act) at the time of representation.

The legal aid commission must give a bill for the costs to the Official Trustee and the Official Trustee must be satisfied the bill is true and correct for payment. Once these conditions are satisfied, the Official Trustee must pay the legal costs to the legal aid commission out of the Confiscated Assets Account, subject to subsection 293(2A).

Subsection 293(2A) provides that, if the Official Trustee is satisfied that the balance of the Confiscated Assets Account is insufficient to pay the legal costs, and there is a restraining order in place, the Official Trustee must, to the extent possible, pay the legal costs out of the property covered by the order.

If the Official Trustee does pay an amount to a legal aid commission under section 293 and property of the person is covered by a restraining order, the person must pay to the Commonwealth an amount equal to the lesser of the amount paid to the legal aid commission or the value of the person's property covered by the restraining order (subsection 293(3)).

This means that, if a legal aid commission incurs costs of $5,000.00 in representing a person whose property was covered by a restraining order and only $2,000.00 of the person's property is covered by the restraining order, the person need only pay $2,000.00 to the Commonwealth, not the full $5,000.00.

Item 70 - Division 1 of Part 4-4

Item 70 repeals Division 1 of Part 4-4 of the Act. This Division is no longer necessary because the system of charges to secure amounts payable to legal aid commissions is not needed under the new costs payment scheme.

Item 71 - Application of amendments of Chapter 4

Item 71 states that the changes in relation to costs made by Part 5 of the Bill apply to costs that were incurred by legal aid commissions before, on or after the commencement of the amendments and, if they were incurred before commencement, had not been paid to the commission before that commencement.

The retrospective application of items 69 and 71 of Schedule 2 enables legal aid commissions to benefit from the simplified legal aid payment system introduced by Part 5 of Schedule 2 of the Bill.

Were item 69 not made retrospective in application, it would create a considerable administrative burden for both legal aid commissions and the Official Trustee, who would have to administer two schemes for legal aid payments. Potentially, payments under both systems could continue for several years.

Further, if item 69 were not given retrospective application, there could be situations in which legal aid represented a person before and after the commencement of Part 5 of Schedule 2 of the Bill and would be required to recover the costs incurred before commencement in one way, and the costs incurred after commencement in a different way. The effect of items 69 and 71 is that costs incurred before the commencement of item 69 can be recovered under the simplified scheme.

Part 6 - Technical amendments

Items 72 - 102

Items 72 - 102 make technical amendments to various offence provisions in the Act to ensure these provisions reflect current drafting practice. Specifically, items 72 - 102 replace the references to 'Maximum penalty' in all offence provisions to 'Penalty'. These amendments do not make any substantive changes to the offence provisions concerned.

Item 103

Item 103 amends subsection 274(1) by omitting '(1) A person' and replacing it with 'A person.' This is a technical amendment. It is not necessary to number the section as '(1)' because there is only one subsection in section 274.

Items 104 - 105

Items 104 - 105 make technical amendments to subsections 274(1) and section 275 to ensure these provisions reflect current drafting practice. Specifically, these items replace the references to 'Maximum penalty' with 'Penalty'. These amendments do not make any substantive changes to the offence provisions.