House of Representatives

Explanatory Memorandum

(Circulated by authority of the Prime Minister, the Honourable John Howard, MP)

Notes on Clauses

Clause 1: Short Title

The clause sets out the Bill's short title.

Clause 2: Commencement

The clause provides that the Bill will commence on the day on which it receives Royal Assent.

Clause 3: Schedule(s)

The clause provides that each Act specified in the Schedule to the Bill is amended or repealed as set out in the Schedule.

Schedule 1 - Amendment of Acts

Australian Securities and Investments Commission Act 2001

Item 1

This clause amends section 127 of the Australian Securities and Investments Commission Act to allow ASIC to disclose information to Commonwealth Royal Commissions voluntarily.

Subsection 127(1) requires ASIC to take all reasonable measures to protect confidential and protected information (including information given to ASIC in connection with the performance of its functions or the exercise of its powers under the Corporations Act 2001) from unauthorised use or disclosure.

Subsequent subsections authorise ASIC to disclose confidential and protected information to certain agencies in certain circumstances. These agencies include the Australian Prudential Regulation Authority, State and Territory governments and agencies (which would include State and Territory Royal Commissions) and prescribed professional disciplinary bodies. Commonwealth Royal Commissions are not included amongst those agencies at present. As a result, Commonwealth Royal Commissions can only obtain information from ASIC officers if they exercise their coercive powers.

The item will add two new subsections to section 127 to ensure that ASIC can provide confidential and protected information to Royal Commissions voluntarily. Proposed subsection 127(2B) will provide that disclosing information to Commonwealth Royal Commissions, such as the Royal Commission into the failure of the HIH Insurance Group, is authorised use and disclosure of information for the purposes of section 127. Proposed subsection 127(2C) will, consistent with other subsections in section 127, allow the Chairperson of ASIC to impose conditions that a Royal Commission must comply with in relation to the information.

Item 2

This item amends subsection 127(6) of the Australian Securities and Investments Commission Act consequential to the amendments made by item 1.

Financial Transaction Reports Act 1988

Item 3

This item amends section 27(16) of the Financial Transaction Reports Act to allow certain Commonwealth Royal Commissions to access financial transaction reports information (FTR information).

FTR information is the transactions reported to AUSTRAC by financial institutions such as banks and other 'cash dealers'. It includes cash transactions of $10,000 or more, transactions which an institution considers suspicious, all international funds transfer instructions (wire transfers), and the carrying and sending (eg. by post) of cash of $10,000 or more into or out of Australia.

Paragraph 27(1)(b) of the Act allows a 'law enforcement agency' which is authorised in writing by the Director of AUSTRAC to access FTR information for the purposes of performing its functions. Subsection 27(16) already allows the State Royal Commission into the New South Wales Police Service, together with other bodies with Royal Commission-like powers such as the Independent Commission Against Corruption and the Police Integrity Commission, to access FTR information by including those bodies in the reference to 'law enforcement agency'.

This item adds paragraph 27(16)(ea) to the Act, which will provide for certain Commonwealth Royal Commissions to be included in the reference to 'law enforcement agency' as well. The Commonwealth Royal Commissions referred to in the paragraph are those whose terms of reference include inquiring into whether unlawful conduct may have occurred. Royal Commissions whose terms of reference involve inquiring into possible unlawful conduct, such as whether a person may have committed an offence, would be covered by this paragraph. Royal Commissions whose terms of reference solely concern organisational deficiencies or the development of law reform proposals would not be covered by the paragraph.

Item 4

This item amends subsection 27(17) of the Financial Transaction Reports Act to allow certain persons associated with a Commonwealth Royal Commission of the kind referred to in proposed paragraph 27(16)(ea) to access FTR information.

Subsection 27(3) of the Act allows a 'law enforcement officer' to access FTR information in accordance with an authorisation given by the Director of AUSTRAC under paragraph 27(1)(b). Other subsections in section 27 set out the ways in which law enforcement officers can and cannot deal with that information.

The item adds paragraphs 27(17)(t), (u) and (v) to the Act, which will include:

•

the sole Commissioner, or a member of a Commonwealth Royal Commission of the kind referred to in paragraph 27(16)(ea);

•

a member of staff of such a Commission; and

•

counsel appointed to assist such a Commission

in the references to 'law enforcement officer' in section 27.

Royal Commissions Act 1902

Items 5 and 7

These items will amend section 6P of the Royal Commissions Act to allow Royal Commissions to communicate information or furnish evidence that relates to, or may relate to, a contravention of the law to the persons and authorities listed in subsection 6P(1), regardless of whether the contravention may give rise to a criminal, civil or administrative penalty.

Subsection 6P(1) of the Act currently allows a Royal Commission to provide information that relates to or may relate to the commission of an offence, or evidence of the commission of an offence, against the law.

It is possible that the word 'offence' could be construed narrowly to mean a contravention of the law which gives rise to a criminal penalty only. There are many contraventions of the law, including taxation and corporations laws, which can give rise to civil or administrative penalties instead. Royal Commissions should also be able to provide information and evidence regarding those contraventions to the persons and authorities listed in subsection 6P(1).

Accordingly, item 5 replaces the references to 'offences against the law ' in subsection 6P(1) with references to 'contraventions of the law'. Item 7 adds a new subsection 6P(1A), which defines contravention of a law as a contravention for which a person may be liable to a criminal, civil or administrative penalty. Administrative penalty is intended to include the range of sanctions that an administrative, enforcement or regulatory agency might impose, including enforceable undertakings, orders disqualifying a person from managing a company, canceling a license and penalty notices.

These amendments will apply to all Royal Commissions established under the Royal Commissions Act. However, they are particularly intended to ensure that the Royal Commission into the failure of the HIH Insurance Group can provide information to ASIC to assist its ongoing investigation into whether any criminal or civil proceedings should be brought against any person as a result of the failure.

Item 6

This item will amend paragraph 6P(1)(a) of the Royal Commissions Act to allow Royal Commissions to provide information about contraventions of the law to the Attorney-General of the Australian Capital Territory (ACT).

Subsection 6P(1) currently allows a Royal Commission to provide specified information to the Attorneys-General of the Commonwealth, any of the States and the Northern Territory, but not the Attorney-General of the ACT.

The subsection was added before self-government in the ACT and has not been amended to reflect the ACT's change of status. The item will ensure that the Royal Commissions can provide the information referred to in subsection 6P(1) to the Attorney-General of the ACT as well.