House of Representatives

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Justice, the Hon Michael Keenan MP)

Statement of compatibility with human rights

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

An overview of measures in the Bill and their human rights implications is below.

Unexplained wealth

Overview

The Bill makes amendments to the POC Act to improve the Commonwealth's unexplained wealth laws.

Unexplained wealth laws were introduced in 2010 as part of a suite of reforms to more effectively prevent and investigate organised crime activity, and target the proceeds of organised crime groups. The laws are located in the POC Act, which provides a comprehensive scheme to trace, investigate, restrain and confiscate proceeds generated from Commonwealth indictable offences, foreign indictable offences and certain offences against State and Territory law.

Under Commonwealth unexplained wealth legislation, if a court is satisfied that there are reasonable grounds to suspect that a person's total wealth exceeds the value of the person's wealth that was lawfully acquired, the court can compel the person to attend court and prove, on the balance of probabilities, that their wealth was not derived from one or more relevant offences. If a person cannot demonstrate this, the court may order them to pay to the Commonwealth the difference between their total wealth and their legitimate wealth.

There are three types of order which can be sought in relation to unexplained wealth:

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unexplained wealth restraining orders

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preliminary unexplained wealth orders, and

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unexplained wealth orders.

Unexplained wealth restraining orders are interim orders that restrict a person's ability to dispose of or otherwise deal with property. These provisions ensure that property is preserved and cannot be dealt with to defeat an ultimate unexplained wealth order.

Preliminary unexplained wealth orders are orders requiring a person to attend court to demonstrate whether or not his or her wealth was derived from lawful sources. If the court is not satisfied that the person's wealth was not derived from an offence against a law of the Commonwealth, a foreign indictable offence or a State offence that has a federal aspect, it must then make an unexplained wealth order. The court has a discretion whether to make the order if there are not reasonable grounds to suspect that the unexplained wealth amount is more than $100,000, or where it is not in the public interest to make the order.

Unexplained wealth orders are final orders that make payable to the Commonwealth an amount which, in the court's opinion, constitutes the difference between a person's total wealth and the value of the person's property which the court is satisfied was not derived from the commission of a relevant offence. That is, the difference between their total wealth and their wealth that has been legitimately acquired.

In July 2011, the PJC-LE initiated an inquiry into Commonwealth unexplained wealth laws, the purpose of which was to examine the operation of the existing laws, identify relevant issues and determine ways in which the laws could be made more effective. The Committee handed down its final report in March 2012, which made 18 recommendations to improve the investigation and litigation of Commonwealth unexplained wealth matters.

The amendments in Schedule 1 of the Bill represent legislative measures introduced by the Government to implement recommendations of the Committee. These amendments will:

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include a statement in the objects clause about undermining the profitability of criminal enterprise

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ensure evidence relevant to unexplained wealth proceedings can be seized under a search warrant

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streamline affidavit requirements for preliminary unexplained wealth orders

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allow the time limit for serving notice of applications for certain unexplained wealth orders to be extended by a court in appropriate circumstances

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harmonise legal expense and legal aid provisions for unexplained wealth cases with those for other POC Act proceedings so as to prevent restrained assets being used to meet legal expenses

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allow charges to be created over restrained property to secure payment of an unexplained wealth order as can occur with other types of proceeds of crime order

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remove a court's discretion to make unexplained wealth restraining orders, preliminary unexplained wealth orders and unexplained wealth orders once relevant criteria are satisfied, including inserting an additional safeguard, and

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require the AFP Commissioner to provide a report to the PJC-LE annually on unexplained wealth matters and litigation, and to empower the Committee to seek further information from federal agencies in relation to such reports.

Schedule 1 of the Bill also contains amendments to the POC Act that do not relate to specific recommendations of the PJC-LE but have been identified as necessary to support the amendments outlined above and to address inefficiencies in the Act, namely to:

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clarify that unexplained wealth orders may be made where a person who is subject to the order fails to appear at an unexplained wealth proceeding. The purpose of this amendment is to ensure that persons cannot frustrate unexplained wealth proceedings by simply failing to appear when required to do so. The amendment will give effect to the original intent of the unexplained wealth scheme in the POC Act

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ensure that provisions in the POC Act that determine when restraining orders cease to have effect take account of: the new provisions allowing charges to be created and registered over restrained property to secure the payment of unexplained wealth amounts; and the fact that unexplained wealth restraining orders may sometimes be made after an unexplained wealth order (not only before). Consequential amendments are proposed to ensure that provisions allowing a court to order costs in certain situations where a restraining order has ceased take account of these amendments

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further streamline the making of preliminary unexplained wealth orders where an unexplained wealth restraining order is in place (or has been revoked under section 44 of the POC Act)

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remove redundant and unnecessary affidavit requirements in support of applications for preliminary unexplained wealth orders, and

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ensure that a copy of the affidavit relied upon when a preliminary unexplained wealth order was made must be provided to the person who is subject to the order in light of changes to the affidavit requirements for preliminary unexplained wealth orders outlined above.

In addition, Schedule 1 of the Bill will amend the POC Act to extend the purposes under section 266A for which information obtained under the coercive powers of the POC Act can be shared with a State, Territory or foreign authority to include a proceeds of crime purpose.

The purpose of these amendments is to enhance information sharing with appropriate State, Territory and foreign authorities. Proceeds of crime investigations and litigation increasingly involve transnational elements due to the international nature of serious and organised crime. To effectively pursue the proceeds of crime offshore and assist our foreign counterparts in doing so it is essential that the AFP has the ability to share information for such purposes.

Schedule 2 of the Bill corrects minor drafting errors in the POC Act that were identified during the drafting of the Bill.

Human rights implications

The Bill engages the following rights:

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right to a fair hearing in Article 14 of the International Covenant on Civil and Political Rights (ICCPR)

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minimum guarantees in criminal proceedings in Article 14(3) of the ICCPR

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protection against arbitrary or unlawful interference with privacy provided for in Article 17 of the ICCPR, and

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the prohibition on retrospective punishment in Article 15 of the ICCPR.

Right to a fair hearing

Article 14 of the ICCPR guarantees equality before courts and tribunals, and, in the determination of criminal charges, or any suit at law, the right to a fair and public hearing before a competent, independent and impartial court or tribunal established by law.

Proceedings under the POC Act are civil proceedings heard by Commonwealth, State and Territory courts in accordance with relevant procedures of those courts. This affords an affected person adequate opportunity to present his or her case, such that the right to a fair hearing is not limited. The Bill will not affect the civil court procedures applicable to POC Act proceedings. Accordingly, the Bill engages, but does not limit, the fair trial rights provided for in Article 14 of the ICCPR.

In some situations, applications for POC Act orders such as unexplained wealth restraining orders or preliminary unexplained wealth orders may be heard without notice being given to the person who is the subject of the application at the time the application is made. The Bill clarifies that a court is not prevented from making an unexplained wealth order simply because the person who has been ordered to appear by the court making the preliminary unexplained wealth order has failed to appear. The amendment reflects the original policy intent of the unexplained wealth provisions but puts beyond doubt this aspect. It will ensure that persons in relation to whom a preliminary unexplained wealth order has been made are not able to frustrate unexplained wealth proceedings by simply failing to appear when ordered to do so. These are important features of the laws, which serve the justified and reasonable purpose of preventing a person from dispersing his or her assets during the time between an order being sought and an order being made. The POC Act provides mechanisms which allow a person to quickly contest orders made without notice. The amendments in the Bill will not affect the ability of a person to challenge the making of an order.

Minimum guarantees in criminal proceedings

The United Nations Human Rights Committee has stated that criminal charges primarily encompass acts that are declared to be punishable under domestic criminal law, but may also extend to acts that are criminal in nature with sanctions that, regardless of their qualification in domestic law, must be regarded as penal. Relevant factors in considering whether charges are criminal include whether proceedings are brought by a public authority, whether there is a punitive element to the process and whether there are potentially serious consequences such as imprisonment (see the Human Rights Committee's General Comment 32).

Unexplained wealth proceedings and other proceedings under the POC Act are brought by a public authority and have the punishment and deterrence of breaches of Commonwealth law as one of their stated objects. However, these proceedings are civil proceedings only and are not criminal in nature - proceeds of crime orders imposed via proceeds of crime proceedings cannot create any criminal liability, do not result in any finding of criminal guilt and do not expose people to any criminal sanctions. As a result, the amendments in the Bill do not engage aspects of Article 14(3) relating to the determination of criminal charges. However, a brief discussion of aspects of the amendments and the protections in Article 14(3) is included below for information.

(i) Right to legal representation

Article 14(3) of the ICCPR provides that everyone shall be entitled to communicate with counsel of his or her own choosing in the preparation of his or her defence, and to have legal assistance assigned in any case where the interests of justice require, if he or she does not have sufficient means to pay for it.

The POC Act currently allows people who are subject to unexplained wealth proceedings to use certain restrained assets, or assets subject to their effective control, to meet their legal costs. This is different to other types of proceedings under the POC Act, which do not allow access to such assets for this purpose and instead provide that a person may be represented by legal aid, with relevant legal aid costs to be paid by the Commonwealth using confiscated assets held in the Confiscated Assets Account.

In the final report of its inquiry into Commonwealth unexplained wealth laws, the

PJC-LE recommended that provisions relating to legal expenses should be harmonised so that unexplained wealth provisions and other types of proceedings within the POC Act are treated similarly. The Bill will amend the POC Act to implement this recommendation.

The PJC-LE considered submissions and evidence from a range of community, law enforcement and other government bodies in reaching this conclusion, including information from the Attorney-General's Department about the rationale for harmonisation and procedures relating to the payment of legal aid costs in proceeds of crime matters.

The POC Act takes this approach to the use of restrained assets so as to prevent the practice of dissipating wealth on legal expenses to frustrate any potential proceeds of crime orders.

As noted, people who are subject to POC Act proceedings may seek legal representation through legal aid if their unrestrained assets are not sufficient to meet legal costs, to ensure that they are appropriately represented, are not disadvantaged. To the extent that the Bill may limit a person's right to legal representation, such limitations are necessary and reasonable in ensuring that wealth is not dissipated on legal expenses to frustrate potential unexplained wealth orders and that the Commonwealth's unexplained wealth laws operate effectively.

POC Act matters have been established as a priority civil law area for the allocation of Commonwealth funded legal services by State and Territory legal aid commissions under the National Partnership Agreement on Legal Assistance Services. As a matter of practice, many jurisdictions' legal assistance guidelines provide that, when determining whether legal assistance should be provided in relation to Commonwealth POC Act matters, any of a person's property that is covered by a restraining order, or is likely to be covered by a restraining order, should be disregarded for the purposes of means tests.

(ii) Determination of criminal charges - judicial discretions

Courts hearing unexplained wealth matters currently have a general discretion to decline to make a restraining order, preliminary unexplained wealth order or final unexplained wealth order, even if all relevant criteria for making the orders have been satisfied. The Bill will remove this discretion and will require courts to make unexplained wealth restraining orders, preliminary unexplained wealth orders and unexplained wealth orders once satisfied that the criteria for making these orders have been met. This will align unexplained wealth laws with other proceeds of crime orders, which do not allow for a general discretion once the court is satisfied of relevant criteria.

These amendments will not affect the independence of courts hearing unexplained wealth matters. Courts will retain discretion to refuse to make unexplained wealth restraining orders and unexplained wealth orders where the amount of suspected unexplained wealth is less than $100,000 or it is not in the public interest to make the order. Provisions that allow a person to seek to have unexplained wealth restraining orders or preliminary unexplained wealth orders revoked will not be affected by the Bill, with the result that the appropriate and necessary ability of courts to revoke orders on application will continue. The POC Act also provides other general appeal rights.

In the final report of its inquiry into Commonwealth unexplained wealth laws, the PJC-LE concluded that there does not seem to be a strong case for specific judicial discretion relating to unexplained wealth orders, stating that there are already other safeguards in place, such as:

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the requirement for a court to be satisfied that relevant criteria have been met

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the court's general discretion to refuse to make an order if it is in the public interest to do so

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the court's ability to revoke orders if it is in the interests of justice

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the court's ability to order costs, and

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oversight of unexplained wealth laws by the PJC-LE.

With regard to oversight of unexplained wealth laws by the PJC-LE, the Bill will improve transparency by introducing new requirements for the AFP and other Commonwealth law enforcement agencies to provide de-identified information to the PJC-LE each year outlining the number of matters investigated in which unexplained wealth action is the most likely outcome and the number of unexplained wealth proceedings that have been initiated. This is an important safeguard that supports the overall compatibility of the laws with human rights obligations.

Right to privacy and protection of families and children

Article 17 of the ICCPR accords everyone the right to protection against arbitrary or unlawful interference with their privacy, family, home or correspondence. This includes the right to protection from interferences with a person's personal information and property, particularly where it is a family home. Interferences are permissible so long as they are authorised by law and are not arbitrary.

In order for an interference with the right not to be arbitrary, the interference must be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. Reasonableness in this context incorporates notions of proportionality, appropriateness and necessity. In essence, this will require that:

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limitations serve a legitimate objective,

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limitations adopt a means that is rationally connected to that objective, and

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the means adopted are not more restrictive than they need to be to achieve that objective.

The POC Act enables proceeds of crime authorities to disclose information obtained using coercive powers under the POC Act with State, Territory and foreign authorities for the purpose of assisting in the prevention, investigation and prosecution of serious and indictable offences. As a result, provisions of the POC Act interact with the right to privacy. However, the information sharing provisions of the POC Act serve the legitimate and important objective of ensuring that law enforcement authorities are in a position to effectively investigate and litigate proceeds of crime matters. Under the POC Act the purposes for which disclosure can occur, and the authorities with who information is shared are strictly limited.

The Bill amends the existing disclosure rules to clarify that disclosures can be made to a State, Territory or foreign authority, that has a role in identifying, locating, tracing, investigating or confiscating proceeds of crime under the law of the State, Territory or foreign country, in order to assist in identification, location, tracing, investigation or confiscation of proceeds of crime. This amendment is necessary to clarify that information can be shared with such authorities to assist in proceeds of crime proceedings or in the decision to commence such proceedings. Proceeds of crime investigations and litigation increasingly involve interstate and transnational elements due to the cross-border nature of serious and organised crime. These amendments are necessary to ensure that proceeds of crime authorities are in a position to pursue proceeds of crime interstate and offshore and assist State, Territory and foreign counterparts in doing so.

To the extent that the amendments in the Bill may affect relevant privacy rights, such limitation is aimed at disrupting and combating serious and organised crime by improving the operation of the Commonwealth's unexplained wealth laws.

The POC Act enables courts to make a wide range of orders that result in the forfeiture of a person's wealth or property to the Commonwealth, or in a person being required to pay a specified amount of money to the Commonwealth. As a result, provisions of the POC Act interact broadly with the right to protection from interference with a person's property. However, the Act supports the important objective of ensuring that criminals are not able to profit from their crimes and are deterred from further criminal activity, and provides for a range of safeguards and procedures to ensure that it is not more onerous than necessary in achieving this end.

Unexplained wealth laws can require a person to pay an amount to the Commonwealth which represents the component of their wealth that a court is not satisfied was lawfully obtained. As with other proceeds of crime orders, this may result in a person's property, potentially including his or her house, being used to satisfy the order, which could affect his or her family or dependents in some circumstances.

Under the POC Act, courts have a general discretion to allow the following to be met out of property covered by a restraining order:

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reasonable living expenses of any of the dependants of a person whose property is the subject of a restraining order

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reasonable living expenses of the person whose property is restrained

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reasonable business expenses of that person, and

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specified debts incurred in good faith by that person.

Courts also have a general discretion to order that a specified amount be paid to a person's dependants, if satisfied that an unexplained wealth order would cause hardship to a person's dependants, that the specified amount would relieve that hardship and that, if the dependants are more than 18 years of age, they had no knowledge of the person's conduct that is the subject of the forfeiture order.

To the extent that the amendments in the Bill may affect relevant rights, such limitation is aimed at disrupting and combating serious and organised crime by improving the operation of the Commonwealth's unexplained wealth laws.

The Bill will amend existing search and seizure powers in the POC Act to allow authorised officers to seize material they find in the course of executing a search warrant that they believe on reasonable grounds will afford evidence for the purpose of initiating or conducting unexplained wealth proceedings. This amendment is necessary to ensure that officers are able to seize personal financial records, such as payslips and bank statements, that are found in the course of executing a search warrant and will assist in establishing the components of a person's wealth that have been legitimately acquired and those which may have been illegitimately acquired.

Officers do not currently have the ability to seize these materials in the course of executing a warrant under the POC Act. The amendments will not expand the grounds on which officers are able to obtain search warrants under the POC Act or empower officers to enter a wider range of premises than they are currently able to under the Act. Improving the ability of authorised officers to obtain material relevant to establishing components of a person's wealth may also have an exculpatory effect where further evidence shows that a person's wealth was lawfully acquired.

To the extent that any amendments made by the Bill may affect a person's right to protection against arbitrary and unlawful interference with their privacy, family, home or correspondence, these effects are reasonable, necessary and proportionate in achieving the intended outcomes of the Bill.

Prohibition against retrospective punishment

Article 15 of the ICCPR prohibits the retrospective operation of criminal laws, including the imposition of a heavier penalty than was applicable at the time when a criminal offence was committed.

The POC Act applies to offences and convictions regardless of whether they occurred before or after the commencement of the Act, with the result that proceeds of crime proceedings, including unexplained wealth proceedings, may involve consideration of offences that were committed, or are suspected to have been committed, at any time in the past. It is necessary for the POC Act to apply in this fashion due to the fact that criminal conduct from which a person may have profited or gained property may continue over several years or may not be discovered immediately.

Human rights jurisprudence views asset confiscation as a penalty capable of engaging the prohibition on retrospective criminal laws. However, unexplained wealth orders and other orders under the POC Act are civil asset confiscation orders that cannot create any criminal liability, do not result in any finding of criminal guilt and do not expose people to any criminal sanctions. Proceeds of crime proceedings are civil proceedings only.

Accordingly, the amendments in the Bill do not engage the prohibition against retrospective punishment.

Under section 179G of the POC Act, the amount of wealth a person has is calculated having regard to property owned, effectively controlled, disposed of or consumed by the person, including before the time the Commonwealth's unexplained wealth laws commenced. This is necessary to ensure that orders are not frustrated by requiring the precise point in time at which certain wealth or property was acquired to be established, as this can be extremely difficult for law enforcement agencies to obtain evidence of and prove.

To ensure that a person's wealth can continue to be calculated correctly under the existing laws, several amendments in the Bill relating to restraining orders, preliminary unexplained wealth orders and final unexplained wealth orders are expressed to apply to orders made after commencement only, but allow for the amendments made in the Bill to apply to those orders whether or not they relate to wealth that was acquired, or became subject to a person's effective control, before or after commencement.

Conclusion

The Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. To the extent that these measures may limit those rights and freedoms, such limitations are reasonable, necessary and proportionate in achieving the intended outcomes of the Bill.