House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Home Affairs and the Minister for Immigration and Border Protection, the Hon Peter Dutton MP)

Statement of Compatibility with Human Rights

30. 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 .

Overview of the Bill

31. Commonwealth 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 criminal profits 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.

32. There are three types of orders which can be sought in relation to unexplained wealth under the POC Act:

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unexplained wealth restraining orders (section 20A)

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preliminary unexplained wealth orders (section 179B), and

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unexplained wealth orders (section 179E).

33. 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 dissipated prior to the making of an unexplained wealth order. A court must make an unexplained wealth restraining order if satisfied that there are reasonable grounds to suspect that:

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a person's total wealth exceeds the value of the person's wealth that was lawfully acquired; and

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the person has committed an offence, or the whole or any part of the person's wealth was derived from an offence, against the law of the Commonwealth, a foreign indictable offence or a State offence with a federal aspect.

34. Preliminary unexplained wealth orders require a person to attend court to demonstrate whether or not his or her wealth was derived from lawful sources. The court has discretion whether to make an unexplained wealth restraining order or a preliminary unexplained wealth order if there are not reasonable grounds to suspect that the person's total wealth exceeded their lawfully acquired wealth by $100,000 or more (paragraph 20A(4)(a) and subsection 179B(4)) and may refuse to make an unexplained wealth restraining order or revoke a preliminary unexplained wealth order, if this is in the public interest (paragraph 20A(4)(b) and subsection 179C(5)).

35. 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, then it must make an unexplained wealth order (subsection 179E(1)).

36. 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 an offence against a law of the Commonwealth, a foreign indictable offence or a State offence with a federal aspect, that is, the difference between their total wealth and their wealth that has been lawfully acquired. This amount can be increased or decreased in certain circumstances (see section 179J).

37. On 19 March 2012, the Parliamentary Joint Committee on Law Enforcement's report on the Inquiry into Commonwealth Unexplained Wealth Legislation and Arrangements recommended that the Commonwealth Government seek a referral of powers from the States for the purpose of legislating for a national unexplained wealth scheme.

38. In February 2014, the Independent Report of the Panel on Unexplained Wealth ('the Report') by former police commissioners, Mr Mick Palmer AO APM and Mr Ken Moroney AO APM, found that existing arrangements for dealing with unexplained wealth were not working effectively, particularly where criminal assets and activities were spread across multiple jurisdictions. The Report found that constitutional limits on Commonwealth laws significantly reduced the capacity for federal agencies to assist States and Territories to pursue assets located offshore or to coordinate action across multiple States.

39. To address this issue, the Report recommended that all Australian Governments agree to a referral of powers from the States to the Commonwealth to enable the unexplained wealth provisions in the POC Act to be broadened to also apply where a link to a suspected State or Territory offence could be established. LCCSC considered these recommendations and agreed to establish an officials-level Working Group on Unexplained Wealth ('the Working Group') to develop a national cooperative scheme on unexplained wealth premised on a referral of powers.

40. The amendments in the Bill give effect to the national scheme as negotiated by the Working Group.

41. Schedule 1 of the Bill outlines the key aspects of the national scheme, and includes amendments which:

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allow for the concurrent operation of State and Territory unexplained wealth provisions

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introduce 'roll-back' provisions that allow States and Territories to disapply amendments to Commonwealth laws as they apply to State or Territory offences

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clarify the constitutional basis for provisions relating to referral or adoption, and

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define key terms such as 'unexplained wealth' , 'adoption Act' , 'referral Act' and 'participating State' .

42. Schedule 1 of the Bill also allows the national scheme to continue to apply to proceedings that have already been initiated in the event of termination or cessation of the scheme. It also provides that the amendments made under Schedule 2 of the Bill (which extends the Commonwealth unexplained wealth regime to certain offences against the laws of 'participating States' ) apply regardless of when the offence was committed, when the wealth was acquired or when the property came into a person's effective control.

43. Schedule 2 of the Bill extends the 'main unexplained wealth provisions' (as defined by subsection 14B(3) of Schedule 1) to certain 'relevant offences' against the laws of referring or adopting States. 'Relevant offences' will be specified in legislation to be enacted by the referring or adopting States (see item 8 of Schedule 2).

44. Schedule 3 of the Bill extends the 'main unexplained wealth provisions' to offences against the laws of 'self-governing Territories' . The amendments made under Schedule 3 apply regardless of when the offence was committed, when the wealth was acquired or when the property came into the person's effective control.

45. Schedule 4 of the Bill contains amendments to the POC Act that do not relate to specific recommendations of the Report but have been identified by the Working Group as necessary to improve information gathering by 'participating States' and 'self-governing Territories' .

46. These amendments:

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allow a magistrate to make a production order requiring a person to produce documents to an 'authorised officer' of a 'participating State' or Territory that are relevant to determining whether to take action against a person under the unexplained wealth legislation of the 'participating State' or ' self-governing Territory ' or in relation to proceedings against a person under that legislation

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allow a specified official of a 'participating State' or 'self-governing Territory' to give notice to financial institutions to provide an 'authorised officer' with certain information or documents relevant to determining whether to take action against a person under the unexplained wealth legislation of the 'participating State' or Territory or in relation to proceedings against the person under that legislation

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permit the disclosure of information obtained under a production order or notice to a financial institution to particular authorities for particular purposes, and

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require authorities to report to the Parliamentary Joint Committee on Law Enforcement on information obtained under production orders or notices to financial institutions if requested and to provide a written report to the Minister on the use of the powers each financial year.

47. Schedule 5 of the Bill contains amendments that give effect to the new sharing arrangements for proceeds of crime realised under the national scheme. These amendments:

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allow amounts that have been paid (or are to be paid) under the 'national cooperative scheme' or an 'equitable sharing program' to be credited to or debited from the Confiscated Assets Account (CAA), and

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outline the arrangements for sharing 'proceeds of confiscated assets' with States, Territories or foreign countries under the 'national cooperative scheme' .

48. Schedule 6 of the Bill amends the Telecommunications (Interception and Access) Act 1979 (Cth) (TIA Act) to facilitate information-sharing on unexplained wealth between Commonwealth, 'participating State' and Territory agencies.

49. Schedule 7 of the Bill provides that an independent review of unexplained wealth provisions and any other matter under the 'NCSUW agreement' must be undertaken as soon as practicable after the fourth anniversary of the Unexplained Wealth Legislation Amendment Act 2018 .

50. Schedule 8 of the Bill makes amendments to the Proceeds of Crime Regulations 2002 to clarify that the definition of 'unexplained wealth legislation' in section 338 of the POC Act extends to particular provisions of the Criminal Assets Recovery Act 1990 (NSW) and the Criminal Property Forfeiture Act (NT).

51. The purpose of the Bill is to provide a stronger basis for the Commonwealth to work with States and Territories through coordinated operations to comprehensively target criminal assets-utilising unexplained wealth laws to undermine criminal gangs and prevent them reinvesting their profits to support further criminal activity.

Human rights implications

52. The human rights that may be of relevance to the Bill are those set out in Articles 2(3), 14(1) and 17 of the International Covenant on Civil and Political Rights (ICCPR),

Article 2(3) - Right to an effective remedy

53. Article 2(3) of the ICCPR protects the right to an effective remedy for any violation of rights or freedoms recognised by the ICCPR, including the right to have such a remedy determined by a competent judicial, administrative or legislative authority or by any other competent authority provided for by the legal system of the state. The right to an effective remedy applies notwithstanding that a violation has been committed by persons acting in an official capacity.

54. The Bill does not contain measures that prevent a person from bringing a private action for compensation. Therefore the right to an effective remedy is not engaged.

Article 14(1) - Right to a fair hearing in civil proceedings

55. Article 14(1) of the ICCPR guarantees equality before courts and tribunals, and the right to a fair and public hearing before a competent, independent and impartial court or tribunal established by law.

56. 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.

57. In some situations, applications for interim 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 (subsections 26(4) and 179B(3)). These are important features of the laws that serve the justifiable 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.

58. The POC Act also specifies 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 (paragraph 179E(4)(b)). This provision fulfils the justifiable and reasonable purpose of preventing persons from frustrating unexplained wealth proceedings by simply failing to appear when ordered to do so.

59. Should an unexplained wealth restraining order or preliminary unexplained wealth order be made without notice, the POC Act provides mechanisms which allow a person to quickly contest these orders (sections 29, 31 and 179C). The amendments in the Bill will not affect the ability of a person to challenge the making of an order.

60. Accordingly, the Bill engages, but does not limit, the fair trial rights provided for in Article 14(1) of the ICCPR.

Articles 14(2)-(7) and 15 - Minimum guarantees in criminal proceedings

61. Articles 14(2) to (7) and Article 15 of the ICCPR provide minimum guarantees which apply to criminal proceedings only. 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 Human Rights Committee General Comment 32).

62. Unexplained wealth proceedings and other proceedings under the POC Act are brought by a public authority for the purpose of determining and punishing breaches of Commonwealth law. However, these proceedings are civil proceedings only and are not criminal in nature - unexplained wealth orders imposed via unexplained wealth proceedings cannot create any criminal liability, do not result in any finding of criminal guilt and do not expose people to any criminal sanctions. Proceedings on an application for a restraining order or an unexplained wealth order are also explicitly characterised as civil in section 315 of the POC Act and the rules of statutory construction and evidence applicable only in relation to criminal law do not apply in proceedings under the Act.

63. As a result, the amendments in the Bill do not engage aspects of Article 14(2)-(7) and (15) relating to the determination of criminal charges.

Article 17 - Right to privacy

64. 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.

65. The term 'unlawful' in Article 17 means no interference can take place except in cases authorised by law. What is 'arbitrary' will be determined by circumstances of each case. In order for an interference with the right to privacy not to be arbitrary, the interference must be for a reason consistent with the provisions, aims and objectives of the ICCPR and be reasonable in particular circumstances. The United Nations Human Rights Committee has interpreted reasonableness in this context to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

66. The measures in this Bill are designed to achieve the legitimate objectives of combating criminal activity and ensuring that property acquired unlawfully is not retained by criminals.

(a)(i) Interference with privacy - production orders and notices to financial institutions

67. Schedule 4 of the Bill allows relevant authorities in Territories and 'participating States' to compel others to provide documents or information using production orders or notices to financial institutions.

68. To the extent that the amendments in Schedule 4 may limit the right to privacy, any limitation of those rights is aimed at disrupting and combating serious and organised crime by facilitating information-sharing programs between Commonwealth, State and Territory agencies whose functions relate to unexplained wealth. Any limitations of rights are reasonable, necessary and proportionate to achieving this purpose.

69. Information obtained from these orders and notices can only be disclosed to specific authorities where a person believes on reasonable grounds that the disclosure will serve a purpose provided in Part 3 of Schedule 4 of the Bill. Disclosure can be made, for example, to the Australian Tax Office only for the purpose of protecting public revenue.

70. While information can be disclosed to an investigative or prosecutorial body for the purpose of investigating or prosecuting a crime punishable by at least three years imprisonment, evidence obtained from a production order against a person will not be admissible in criminal proceedings against this person under proposed subsection 18(3), except where these criminal proceedings relate to the provision of false or misleading information under sections 137.1 or 137.2 of the Criminal Code in relation to producing a document or making it available.

71. The use of these powers will also be supervised by the Parliamentary Joint Committee on Law Enforcement, which may require an authority to provide further particulars on any information disclosed under a production order or notice to financial institutions, and the use of these powers will be outlined in a yearly report to the Minister.

(a)(ii) Interference with privacy - TIA Act amendments

72. Schedule 6 of the Bill engages the right to privacy by allowing officers in Commonwealth, Territory and 'participating State' agencies to use, record, or communicate lawfully intercepted information or interception warrant information for a purpose connected with an unexplained wealth proceeding in relation to the agency. These amendments also allow the chief officer of an agency to communicate lawfully intercepted information to the relevant Commissioner of Police if that information relates to the unexplained wealth provisions of that jurisdiction.

73. To the extent that the amendments in Schedule 6 may limit the right to privacy, these limitations are reasonable, necessary and proportionate to achieving the legitimate objective of ensuring that law enforcement authorities are in a position to effectively combat serious and organised crime by improving the information-sharing arrangements between law enforcement agencies that deal with unexplained wealth.

74. The TIA Act prohibits law enforcement from intercepting communications or accessing stored communications except for proper purposes under a warrant or authorisation. Under the Act, law enforcement agencies may only share lawfully intercepted or stored information with other agencies in particular circumstances and for particular purposes.

75. The tools available under the interception regime in the TIA Act are often useful in obtaining information about organised criminal activities when 'traditional' investigative techniques prove inadequate. The Bill allows information obtained under the TIA Act to be shared between law enforcement agencies, thereby facilitating the effective investigation of unexplained wealth matters, which often involve the covert movement of funds across State and Territory borders.

76. Under the TIA Act, the purposes for which disclosure can occur, and the authorities with which information is shared, are strictly limited. Information obtained under the TIA Act is also subject to a range of protections under the Act, including:

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restrictions that prevent Australian law enforcement, anti-corruption, and national security agencies from accessing communications and telecommunications data except for proper purposes under a warrant or authorisation

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prohibitions on a range of people associated with the telecommunications industry, such as employees of carriers and emergency call service people, from disclosing any information or document relating to a communication, which includes telecommunications data, and

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requirements that an authorised officer must consider the privacy of a person before authorising the disclosure of particular information, or that persons who issue warrants must consider the privacy of the persons affected by those warrants.

77. It is also important to note that the TIA Act already allows for the communication of lawfully intercepted information or interception warrant information relevant to certain forfeiture matters, including the confiscation or forfeiture of property and pecuniary penalty orders which relate to the commission of a prescribed offence. The amendments in the Bill merely extend the existing disclosure laws to ensure that they also cover information relevant to unexplained wealth provisions.

78. The amendments at Schedule 6 therefore impact upon the right to privacy, but impose limitations on this right that are authorised by law and are not arbitrary.

(b) Interference with personal property

79. Schedule 5 of the Bill provides equitable sharing arrangements for property that has already been confiscated under the POC Act. A person who has property confiscated under the POC Act no longer has any interest in this property and the proprietary rights of this person therefore remain unaffected by these sharing arrangements. These sharing arrangements therefore do not engage the right to privacy.

80. Schedules 2 and 3 of the Bill, however, extend the scope of unexplained wealth orders under the POC Act which, like other confiscation orders under the POC Act, interact broadly with the right to protection from interference with a person's property. However, the Bill 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.

81. These safeguards and procedures include, but are not limited to, the following:

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courts may refuse to make an unexplained wealth restraining order, a preliminary unexplained wealth order or an unexplained wealth order if there are not reasonable grounds to suspect that the person's total wealth exceeds by $100,000 or more the value of their wealth that was 'lawfully acquired' (subsections 20A(4), 179B(4) and 179E(6))

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a court may refuse to make an unexplained wealth restraining order or unexplained wealth order if the court is satisfied that it is not in the public interest to make the order (subsections 20A(4) and 179E(6))

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courts may also exclude property from the scope of some of these orders or revoke these orders in a range of situations, including (for some orders) where it is in the public interest or the interests of justice to do so (sections 24A, 29A, 42 and 179C), and

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courts may also make orders relieving dependents from hardship caused by unexplained wealth orders (section 179L) and allow for reasonable expenses to be paid out of funds restrained under unexplained wealth restraining orders (section 24).

82. Proceeds of crime authorities are also Commonwealth agencies that are bound by an obligation to act as model litigants (see paragraph 4.2 and Appendix B of the Legal Services Directions 2017). This obligation requires these authorities to act honestly and fairly in handling litigation brought under the Act, and includes (but is not limited to) obligations not to take advantage of a claimant who lacks resources to litigate a legitimate claim and not to rely on technical defences except in limited circumstances.

83. The amendments are reasonable, necessary and proportionate measures to achieve the legitimate objectives of combating criminal activity and ensuring that property or wealth acquired unlawfully is not retained by criminals.

(c) Conclusion

84. 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 to achieving the purpose of combating criminal activity and ensuring that property or wealth acquired unlawfully is not retained by criminals.

Conclusion

85. 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.