House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, The Hon Josh Frydenberg MP)

Chapter 2 Harmonising and enhancing ASIC's search warrant powers

Outline of chapter

2.1 This Bill strengthens ASIC's ability to carry out its enforcement functions by modernising and harmonising its search warrant powers, while ensuring appropriate safeguards are in place to balance the imposition on an individual's property and personal rights.

2.2 Schedule 1 to the Bill draws ASIC's search warrant powers from across ASIC administered legislation into the ASIC Act and Credit Act. ASIC's search warrant powers are enhanced by applying by reference the search warrant powers in the Crimes Act 1914 , modified as necessary.

Summary of new law

2.3 Schedule 1 to this Bill harmonises and enhances ASIC's search warrant powers across various ASIC administered legislation. To do this, Schedule 1 to the Bill amends the ASIC Act and the Credit Act to apply by reference the search warrant powers from the Crimes Act 1914 , modified as necessary.

2.4 Amendments to the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993 refer to the enhanced provisions in the ASIC Act.

2.5 Under the harmonised and enhanced search warrant powers, established under this Bill, ASIC can:

•

apply for a search warrant in circumstances where the contravention would be an indictable offence under the ASIC Act, the Corporations Act 2001 , the Credit Act, the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993 ;

•

apply for a search warrant where a law of the Commonwealth, a State or Territory has been contravened and concerns the management of a body corporate or managed investment scheme or involves fraud or dishonesty and relates to a body corporate, managed investment scheme or financial product and the contravention would be an indictable offence;

•

search and seize evidential material; and

•

use the evidential material to perform its functions and duties and exercise its powers including preventing and investigating breaches of ASIC administered legislation, prosecuting such breaches and taking administrative action.

2.6 By applying the search warrant provisions from the Crimes Act 1914 , ASIC has available to it the ancillary powers included in the Crimes Act 1914 .

2.7 In making its recommendations, the ASIC Enforcement Review Taskforce noted that the Regulatory Powers (Standard Provisions) Act 2014 creates a standard framework for monitoring and investigation powers. However, in making its recommendations, the ASIC Enforcement Review Taskforce clarified that this standard framework should only be relied upon if its provisions were equivalent to those in the Crimes Act 1914 .

2.8 The ancillary provisions in the Crimes Act 1914 recognise and provide flexibility to access equipment and devices that may store evidential material. For example, the Crimes Act 1914 gives constables the power to remove a device to determine if the device contains evidential material, operate equipment to access data held at another place and seek a 'person' warrant which is useful where evidence may be contained on a portable device. Equivalent provisions are not in the Regulatory Powers (Standard Provisions) Act 2014 .

Comparison of key features of new law and current law

Detailed explanation of new law

2.9 Schedule 1 to the Bill harmonises ASIC's search warrant powers across various ASIC administered legislation to ensure that ASIC has consistent search warrant powers across legislation for which it has specific enforcement responsibility.

2.10 Schedule 1 to the Bill also makes amendments to ASIC's search warrant powers to modernise and make the powers more useful, recognising the integral part technology plays in the storage and communication of information.

2.11 To do this, Schedule 1 to the Bill incorporates by reference search warrant provisions from the Crimes Act 1914 into the ASIC Act and Credit Act. The relevant search warrant provisions from the Crimes Act 1914 are:

•

Divisions 1, 2, 4C and 5 of Part IAA; and

•

any other provisions of the Crimes Act 1914, to the extent that those other provisions relate to the operation of Divisions 1, 2, 4C and 5 of Part IAA.

[Schedule 1, Part 1, item 1, section 39D of the ASIC Act; and Schedule 1, Part 2, item 2, section 272B of the Credit Act]

2.12 Incorporating by reference the search warrant provisions from the Crimes Act 1914 has the practical effect of keeping ASIC's search warrant powers up-to-date as changes are made to the Crimes Act 1914 .

2.13 However, certain modifications are required to the Crimes Act 1914 provisions to make the provisions 'fit for purpose' in the context of ASIC's regulatory and investigative remit. These modifications are contained in the ASIC Act and Credit Act.

2.14 The terms included in the modified provisions are defined as per their definitions in the Crimes Act 1914 unless specified otherwise. [Schedule 1, Part 1, item 1, section 39A of the ASIC Act; and Schedule 1, Part 2, item 2, section 272BA of the Credit Act]

2.15 To this end, the applied provisions of the Crimes Act 1914 are modified to include definitions of ASIC, ASIC senior staff member and ASIC staff member. [Schedule 1, Part 1, item 1, section 39H of the ASIC Act; and Schedule 1, Part 2, item 2, section 272F of the Credit Act]

How can ASIC apply for a search warrant?

2.16 To carry out its investigative and enforcement functions, ASIC can apply for a warrant.

2.17 Schedule 1 to the Bill adopts by reference a modified version of section 3E of the Crimes Act 1914 to provide that a magistrate may issue a warrant, or authorise an ordinary search or frisk search, if the magistrate is satisfied by information given on oath or affirmation by a constable, an ASIC member or ASIC staff member. [Schedule 1, Part 1, item 1, subsections 39F(1) and 39F(2) of the ASIC Act and Schedule 1, Part 2, item 2, subsections 272D(1) and 272D(2) of the Credit Act]

2.18 Currently, when seeking a warrant under the Credit Act, the Retirement Savings Accounts Act 1997 or the Superannuation Industry (Supervision) Act 1993 , ASIC must demonstrate to the court that it issued a notice to produce which has not been complied with.

2.19 Consistent with the process under the Crimes Act 1914 , ASIC is no longer required to demonstrate when seeking a search warrant that it has previously issued a notice to a person requiring the production of books which the person has failed to produce.

2.20 This means ASIC is no longer required to forewarn a person under investigation that it may apply for a search warrant. These changes will decrease the risk of destruction, concealment and alteration of evidence by such persons, and enhance ASIC's ability to progress an investigation.

2.21 ASIC's existing search warrant provisions require ASIC to specify particular books thought to exist. ASIC's subsequent search and seizure is limited to those particular books.

2.22 This means that if, in the course of executing a search warrant under any of these Acts, an ASIC officer identifies documents that are highly relevant to the offences to which the warrant relates, but those documents do not form part of the particular books specified in the warrant, there is no authority to seize those documents.

2.23 The amendments in Schedule 1 to this Bill mean ASIC is no longer required to specify the exact books or evidential material that can be searched and seized. Instead, the magistrate, in issuing the warrant must state the offence to which the warrant relates and the kinds of evidential material that can be searched for under the warrant.

2.24 The magistrate must also state that the warrant authorises the seizure of evidential material about the offence to which the warrant relates or another offence that is an indictable offence.

2.25 This means that under its amended search warrant powers ASIC is able to seize other material relevant to the particular offence if ASIC uncovers the material in the process of executing the warrant or material relevant to another indictable offence.

2.26 This approach gives the Australian Federal Police and/or state police, and ASIC more flexibility in executing a search warrant, particularly if evidential material that was previously unknown to ASIC is discovered at the premises. As a consequence, ASIC will be able to search and seize a wider range of material relevant to its investigation.

2.27 The explanation in paragraphs 2.19 and 2.23 to 2.26 is the result of applying by reference Division 2 of Part IAA of the Crimes Act 1914 . Modifications are not required.

2.28 As search warrants are often sought and issued in circumstances where there is a reasonable concern that relevant evidence will be destroyed, tampered with or not produced under a notice, there may be situations where swift action is required to ensure that the effective execution of the warrant is not frustrated.

2.29 Schedule 1 to the Bill adopts a modified version of subsection 3R(1) of the Crimes Act 1914 to enable a constable, ASIC member or ASIC staff member to apply for a search warrant by telephone, telex, fax or other electronic means in urgent cases. [Schedule 1, Part 1, item 1, subsection 39F(4) of the ASIC Act and Schedule 1, Part 2, item 2, subsection 272D(4) of the Credit Act]

When can a search warrant be issued?

2.30 Using a search warrant is a substantial imposition on an individual's property and personal rights. It is also a significant logistical undertaking that involves substantial costs, planning and coordination with the Australian Federal Police and/or state police.

2.31 In light of these concerns, Schedule 1 to the Bill adopts a modified version of the definition of evidential material which is limited to material relevant to an indictable offence. The definition of evidential material in the Crimes Act 1914 would normally also include a thing relevant to a summary offence. [Schedule 1, Part 1, item 1, section 39E of the ASIC Act and Schedule 1, Part 2, item 2, section 272C of the Credit Act]

2.32 This means that when a magistrate is considering issuing a search warrant under the amended ASIC search warrant provisions, the magistrate must suspect that material relevant to an indicatable offence is, or will be in the next 72 hours, present on those premises.

2.33 The definition of indictable offence applied by reference, is an offence against a law of the Commonwealth punishable by imprisonment for a period exceeding 12 months, unless the contrary intention appears.

2.34 The relevant guide in the Credit Act is updated to refer to search warrants being granted for indictable offences. [Schedule 1, Part 2, item 2, section 272A of the Credit Act]

2.35 This threshold ensures that ASIC's amended search warrant powers are only used by ASIC to investigate serious offences. It also seeks to achieve an appropriate balance between the need for ASIC to have access to effective investigative tools, the relevant harm or risk resulting from the purported contravention, and the rights of individuals.

How can seized evidential material be used and disclosed?

2.36 Under the existing search warrant provisions in the ASIC Act, the Credit Act, the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993 , ASIC may use books seized by ASIC under those provisions for the purposes of a proceeding under a law of the Commonwealth or of a State or Territory.

2.37 In contrast, material seized under the existing search warrant provisions in the Crimes Act 1914 which is subsequently shared with ASIC can only be used by ASIC for the purpose of investigating or prosecuting criminal offences. Seized material cannot be used to investigate contraventions that may give rise to civil proceedings or administrative action, and the material is not admissible in any such proceedings or action undertaken by ASIC.

2.38 The ASIC Enforcement Review Taskforce found that the restrictions on the permissible use of evidence obtained under the existing Crimes Act 1914 search warrant provisions create various practical difficulties for ASIC.

2.39 Schedule 1 to the Bill substitutes section 3ZQU of the Crimes Act 1914 to set out the purposes for which material seized under ASIC's new search warrant powers can be used by ASIC. [Schedule 1, Part 1, item 1, section 39G of the ASIC Act and Schedule 1, Part 2, item 2, section 272E of the Credit Act]

2.40 Under the substituted provision, a constable or Commonwealth officer may use or make available to an ASIC staff member to use, seized evidential material for the purpose of the performance of ASIC's functions or duties or the exercise of ASIC's powers.

2.41 This would include ASIC preventing or investigating a breach of an offence provision, a breach of a civil penalty provision, or a breach that could result in other civil or administrative action.

2.42 It would also include ASIC using material seized through a search warrant to:

•

disqualify a person from managing a corporation or ban a person from providing financial services or engaging in credit activities;

•

seek a declaration of a contravention from a court;

•

revoke, suspend or vary conditions of a licence;

•

issue an infringement notice;

•

seek an injunction to stop future misconduct; or

•

seek an order from a court to wind up a company.

2.43 These are examples of the type of administrative, civil or criminal actions that ASIC may take. This is not an exhaustive list.

2.44 ASIC is also able to share information with a person engaged by ASIC to, for example, assist in the preparation of a legal case or undertake forensic accounting. It is important that ASIC can share the information broadly with people that it engages.

2.45 A constable or Commonwealth officer may also make available to a constable or a Commonwealth officer the seized evidential material for:

•

preventing or investigating a breach of an offence provision, a breach of a civil penalty provision, or a breach of an obligation (other than an obligation of a private nature);

•

prosecuting a breach of an offence provision;

•

prosecuting a breach of a civil penalty provision; or

•

taking administrative action, or seeking an order of a court of tribunal, in response to a breach of an obligation.

2.46 A constable or Commonwealth officer is able to use the material in preventing, investigating or prosecuting a breach of any offence provision. This is not limited to indictable offences.

2.47 Consistent with the explanation at paragraph 2.14, constable and Commonwealth officer are defined in section 3 of the Crimes Act 1914 and apply for the purposes of the substituted provision.

2.48 The information collected under the search warrant may also be shared and used by an agency that has responsibility for law enforcement in a foreign country, intelligence gathering in a foreign country or the security of a foreign country for the purpose of enforcement action in that foreign jurisdiction.

2.49 The substituted provisions inserted by Schedule 1 to this Bill also replicate parts of section 3ZQU in the Crimes Act 1914 .

2.50 This includes using or making available for others to use the seized material for proceedings under the Proceeds of Crimes Act 1987 , investigating or resolving a complaint under the Ombudsman Act 1976 or the performance or functions of the Australian Federal Police.

How are ASIC's search warrant powers enhanced?

2.51 The existing search warrant powers in the ASIC Act, the Credit Act, the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993 do not adequately address the issues that arise from the operation of modern businesses. The ASIC Enforcement Review Taskforce found that as a result, these search warrant powers are not as practical or effective as they could be.

2.52 The search warrant provisions in the Crimes Act 1914 were amended by the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018 to address these concerns to allow the Australian Federal Police to carry out its functions more effectively.

2.53 Schedule 1 to this Bill incorporates by reference many of the 'ancillary powers' for search warrants from the Crimes Act 1914 into the ASIC Act for the purposes of ASIC's new search warrant powers, with minor modifications as necessary.

2.54 For example, the amended search warrant powers give ASIC the ability to:

•

take photographs and make video recordings of the search (section 3J of the Crimes Act 1914 );

•

operate electronic equipment on the premises to access data (section 3L of the Crimes Act 1914 );

•

move devices to another place for processing to determine if the devices contain evidential material (section 3K of the Crimes Act 1914 ); and

•

operate seized devices to access data (section 3ZQV of the Crimes Act 1914) .

2.55 Schedule 1 to the Bill also adopts a modified version of subsection 3LA(1) of the Crimes Act 1914 to enable a constable, ASIC member or ASIC staff member to apply to a magistrate for an order requiring a person to provide reasonable assistance or information to assist with a computer or other electronic device. [Schedule 1, Part 1, item 1, subsection 39F(3) of the ASIC Act and Schedule 1, Part 2, item 2, subsection 272D(3) of the Credit Act]

How long can ASIC retain seized material?

2.56 Schedule 1 to the Bill applies by reference subsections 3L(1B) and 3LAA(3) and sections 3ZQX and 3ZQZB of the Crimes Act 1914 . These provisions set out when material seized under a search warrant power must be returned, destroyed or removed from a device where the material may be stored.

2.57 These provisions also allow an application to a magistrate to make an order setting out how long a thing, which has been seized under a search warrant, may be retained.

2.58 To give effect to this outcome, the applied provisions from the Crimes Act 1914 are modified to provide that references in those provisions to 'the Commissioner' are references to the 'responsible Commissioner' which includes the Chairperson of ASIC (as well as the Commissioner of the Australian Federal Police). [Schedule 1, Part 1, item 1, section 39H of the ASIC Act and Schedule 1, Part 2, item 2, section 272F of the Credit Act ]

2.59 Similarly, references to 'the Australian Federal Police' should be read as references to 'the responsible agency' which includes ASIC (as well as the Australian Federal Police). [Schedule 1, Part 1, item 1, section 39H of the ASIC Act and Schedule 1, Part 2, item 2, section 272F of the Credit Act].

How can a person access seized material?

2.60 The ASIC Enforcement Review Taskforce specifically considered the circumstances in which a private litigant should be able to access information seized by ASIC under its harmonised search warrant provisions. The ASIC Enforcement Review Taskforce concluded that it was appropriate to provide additional protections to material seized under a search warrant to limit the ability of private litigants to access that material.

2.61 Schedule 1 to the Bill amends the ASIC Act and Credit Act to provide that another law of the Commonwealth is not able to permit access to material seized under ASIC's amended search warrant powers to a private person. [Schedule 1, Part 1, item 1, section 39G of the ASIC Act and Schedule 1, Part 2, item 2, section 272E of the Credit Act]

2.62 This rule is intended to prevail, for example, over the Bill's provision for the purposes for which seized material can be used by ASIC and shared, explained above at paragraph 2.40. It is also intended to prevail over those parts of section 3ZQU that seek to preserve uses that are required or authorised by other Commonwealth, State or Territory laws. The rule does not prevail over the Freedom of Information Act 1982 .

2.63 A private person can only obtain the seized material through an order of a court or of a tribunal (as defined in the ASIC Act). [Schedule 1, Part 1, item 1, section 39G of the ASIC Act and Schedule 1, Part 2, item 2, section 272E of the Credit Act]

2.64 Consequential amendments are also required to section 37 of the ASIC Act and section 271 of the Credit Act. Section 37 of the ASIC Act and section 271 of the Credit Act allow for the sharing and use of seized books. However, section 37 of the ASIC Act and section 271 of the Credit Act are amended to exclude material obtained under ASIC's amended search warrant powers. [Schedule 1, Part 3, items 5, 6, 7 and 8, paragraph 37(1)(b), subsections 37(1A), 37(8) and 37(9) of the ASIC Act; and items 16, 17, 18 and 19, paragraph 271(1)(b) and subsections 271(1A), 271(8) and 271(9) of the Credit Act]

Consequential amendments

2.65 Schedule 1 to the Bill also makes consequential amendments to the ASIC Act and Credit Act to support the updated approach to search warrants.

2.66 The existing search warrant provisions in the ASIC Act and Credit Act are repealed as are redundant references. [Schedule 1 Part 3, items 3, 4 and 11, sections 28 and 35 to 36A, and subsection 65(1) of the ASIC Act; and items 13, 14 and 15, sections 262, 263, and 269 and 270 of the Credit Act]

2.67 References to the existing search warrant provisions in the ASIC Act are updated to refer to the adopted and modified provisions from the Crimes Act 1914 . [Schedule 1, Part 3, items 9 and 10 paragraphs 39B(1)(b) and 39B(1)(d) of the ASIC Act]

2.68 Existing subsection 65(2) of the ASIC Act and section 292 of the Credit Act provide that a person must not intentionally or recklessly fail to provide reasonable assistance to a person who is exercising his or her powers under a search warrant are repealed. The provisions applied by reference from the Crimes Act 1914 provide avenues for ASIC to seek assistance when executing a warrant. [Schedule 1, Part 3, items 12 and 20, subsection 65(2) of the ASIC Act and subsection 292 of the Credit Act]

Superannuation Industry (Supervision) Act 1993

2.69 Schedule 1 to the Bill amends the Superannuation Industry (Supervision) Act 1993 to remove the search warrant provisions contained in the Superannuation Industry (Supervision) Act 1993 and refer to the new provisions included in the ASIC Act. [Schedule 1, Part 3, items 24, 25 and 26, section 271, paragraph 273(1)(b) and subsection 273(1A) of the Superannuation Industry (Supervision) Act 1993]

Retirement Savings Accounts Act 1997

2.70 Schedule 1 to the Bill amends the Retirement Savings Accounts Act 1997 to remove the search warrant provisions contained in the Retirement Savings Accounts Act 1997 and refer to the new provisions included in the ASIC Act. [Schedule 1, Part 3, items 21, 22 and 23, section 102, paragraph 104(1)(b) and subsections 104(1) of the Retirement Savings Accounts Act 1997]

Application and transitional provisions

2.71 The amendments contained in Schedule 1 to the Bill commence the day after Royal Assent.

2.72 The amendments made by Schedule 1 to the Bill apply to search warrants applied for on or after the Schedule commences. However, the matter to which the warrant relates may have occurred before commencement. [Schedule 1, Part 4, items 27, 28 and 29]

2.73 The Bill provides that search warrants issued under the repealed provisions in the ASIC Act, Credit Act, Retirement Savings Accounts Act 1997 and Superannuation Industry (Supervision) Act 1993 can still be served and result in the seizure of material relating to crimes committed after commencement of the new provisions.