Senate

Revised Explanatory Memorandum

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

General Outline

1. This Bill amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, Australian Postal Corporation Act 1989, Crimes Act 1914, Criminal Code Act 1995, Privacy Act 1988, Proceeds of Crime Act 2002, Radiocommunications Act 1992, Surveillance Devices Act 2004, Taxation Administration Act 1953 and the Telecommunications (Interception and Access) Act 1979.

2. The Bill contains a range of measures to:

•

support the establishment of the New South Wales (NSW) Law Enforcement Conduct Commission (LECC) and its Inspector

•

align the investigative powers of the Independent Broad-based Anti-corruption Commission of Victoria (IBAC) with those available to other state anti-corruption bodies, and

•

amend the Proceeds of Crime Act 2002 (POC Act) to clarify the definition of 'lawfully acquired' to address the issues raised in Commissioner of the Australian Federal Police v Huang [2016] WASC 5 (Huang).

3. The Bill comprises three schedules.

4. Schedule 1 will amend the Telecommunications (Interception and Access) Act 1979 (TIA Act) to replace references to the NSW Police Integrity Commission (PIC) with the LECC within the definition of eligible authority and criminal law-enforcement agency, and references to the Inspector of the PIC with the Inspector of the LECC within the definition of eligible authority.

5. The LECC will be responsible for the detection, investigation and prevention of law enforcement corruption and misconduct. The Inspector of the LECC will oversee the LECC's operations and the use of covert powers by NSW law enforcement. The LECC will replace the existing PIC and have comparable investigative powers to other anti-corruption bodies in Australia.

6. The inclusion of the LECC within the definition of eligible authority will allow the Attorney-General to declare it to be an 'interception agency' if the respective State legislation meets the requirements in section 35 of the TIA Act. Under that section, the Attorney-General may only make such a declaration if satisfied that State legislation sets out minimum recordkeeping requirements and establishes an independent oversight regime. The State must also have entered into an agreement to pay all expenses connected with the issue of warrants to the agency. A declaration that an agency is an 'interception agency' enables defined officers of that agency to apply to an independent issuing authority for a warrant to intercept communications to assist in the investigation of serious offences. Serious offences are generally offences punishable by at least seven years' imprisonment.

7. In response to the 2015 Tink Review of Police Oversight, the NSW Government announced the establishment of a single law enforcement oversight body, the LECC. The LECC will consolidate the functions of the PIC, the police oversight functions of the NSW Ombudsman and the oversight functions of the Inspector of the [NSW] Crime Commission. The LECC will be responsible for identifying and investigating instances of misconduct and maladministration in the NSW Police Force and NSW Crime Commission.

8. During investigations involving police officers, administrative employees of the NSW Police Force and officers of the NSW Crime Commission, the LECC's investigative jurisdiction will be limited to instances of 'serious misconduct' or 'officer maladministration' that is 'serious maladministration'. The term 'serious misconduct' relates to matters involving a serious indictable offence or serious disciplinary action against an officer or employee, corruption or systemic misconduct and maladministration. The term 'serious maladministration' includes conduct of a serious nature that is unreasonable, unjust, oppressive, improperly discriminatory or arises wholly or in part from improper motives. The PIC's current jurisdiction involves all police misconduct and not just conduct of a serious nature.

9. The Inspector of the LECC will monitor the LECC's compliance with NSW legislation, investigate complaints against the LECC and its officers and undertake audit functions relating to the use of covert powers by NSW law enforcement, including the inspection of records required to be maintained under Commonwealth legislation. The Bill will enable the Inspector of the LECC to receive lawfully intercepted information from interception agencies in order to carry out its oversight function.

10. The Bill will also amend a number of Commonwealth Acts to replace references to the PIC with the LECC in order to align the LECC's investigative powers with other anti-corruption bodies across Australia.

11. Schedule 2 will amend a number of Commonwealth Acts to allow the IBAC to access information from Commonwealth agencies that relates to its investigations. Schedule 2 will also extend defences for certain Commonwealth telecommunications offences to the IBAC. The powers provided under this Bill to the IBAC are pursuant to the IBAC's role in identifying and investigating corruption in public administration in Victoria and are the same as those available to the Independent Commission Against Corruption (NSW), the Crime and Corruption Commission (Queensland), and the Independent Commissioner Against Corruption (South Australia).

12. Schedule 3 will amend section 336A of the POC Act to clarify that property or wealth is not to be considered 'lawfully acquired' where it has been subject to a security or liability that has been wholly or partly discharged using property that is not 'lawfully acquired'.

13. The Supreme Court of Western Australia in Huang held that it could not consider the source of funds used to satisfy a mortgage over a residential property in determining whether this property was 'lawfully acquired', despite the possibility that unlawfully acquired funds had been used to make mortgage repayments. The Court was therefore bound to exclude the residential property from forfeiture.

14. The interpretation of the meaning of 'lawfully acquired' in the Huang decision is contrary to the intended meaning and to the objects of the POC Act - which is to deprive people of the proceeds of offences, of unexplained wealth amounts, and to undermine the profitability of criminal enterprises.

15. Criminals regularly use asset-protection structures to hide or disguise proceeds of crime, including using a range of mortgages, loans, and other agreements to achieve this purpose. The amendments will clarify that, where illegitimate funds are used to discharge a legitimately-obtained security (such as a mortgage), property or wealth obtained using this security is not considered 'lawfully acquired' under section 336A of the POC Act.

Financial Impact

16. The Bill will have no financial impact.

ACRONYMS

Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) - AML-CTF Act

Australian Transaction Reports and Analysis Centre - AUSTRAC

Crimes Act 1914 (Cth) - Crimes Act

Independent Broad-based Anti-corruption Commission of Victoria - IBAC

International Covenant on Civil and Political Rights - ICCPR

Law Enforcement Conduct Commission Act 2016 (NSW) - LECC Act

Law Enforcement Conduct Commission of New South Wales - LECC

New South Wales - NSW

Police Integrity Commission of New South Wales - PIC

Privacy Act 1988 (Cth) - Privacy Act

Proceeds of Crime Act 2002 (Cth) - POC Act

Surveillance Devices Act 2004 (Cth) - SD Act

Telecommunications (Interception and Access) Act 1979 (Cth) - TIA Act

The [Commonwealth] Criminal Code - Criminal Code