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Thursday, 30 April 1987
Page: 2314


Mr LIONEL BOWEN (Attorney-General)(4.40) —I move:

That the Bill be now read a second time.

The Proceeds of Crime Bill provides some of the most effective weaponry against major crime ever introduced into this Parliament. Its purpose is to strike at the heart of major organised crime by depriving persons involved of the profits and instruments of their crimes. By so doing, it will suppress criminal activity by attacking the primary motive-profit-and prevent the re-investment of that profit in further criminal activity.

All the evidence available to government from royal commissions and other inquiries in recent years suggests that major crime, particularly drug trafficking and serious fraud on the revenue, is growing and is becoming increasingly international in scope. Traditional methods of punishment by imprisonment and fine are not enough. Stronger measures are called for. Further, measures are required to target not only the pushers and others physically involved in criminal activity but also those who direct, finance and reap the most reward from crime.

The Bill provides a mechanism for the tracing, freezing and confiscation of the proceeds of indictable offences committed against the laws of the Commonwealth and of the Territories. The Bill confers on police new powers to assist in following the money trail, requires financial institutions to retain documents necessary to preserve the money trail and creates new offences such as money laundering and organised fraud. In addition, the Bill also provides the mechanism to enforce orders made under corresponding State laws which affect the freezing and confiscation of property located in a Territory. The Bill, when taken together with the Mutual Assistance in Criminal Matters Bill, enables Australian freezing and confiscation orders to be enforced overseas and orders made in foreign countries in relation to foreign offences to be enforced against assets located in Australia. These international measures of co-operation are vital in the fight against the growing internationalism of major crime.

The Bill is the end product of a resolution passed by the Special Premiers Conference on Drugs, as a result of which the Standing Committee of Attorneys-General agreed upon the terms of the draft model Bill after extensive consultation. South Australia, Victoria and New South Wales have enacted legislation broadly along the lines of the model scheme agreed to by the Standing Committee. The general regime of this Bill, insofar as it relates to the freezing and confiscation of assets, is also consistent with that model. However, this Bill goes far beyond the regime approved by the Standing Committee in providing new effective powers to permit law enforcement agencies to follow the money trail, creating new offences of money laundering and organised fraud, providing for the statutory forfeiture of property following conviction of certain serious offences and requiring financial institutions to preserve the money trail for subsequent taxation and law enforcement purposes.

This Bill forms part of a package of Bills, each of which contains measures which significantly advance the fight against organised crime, but when taken together constitute a comprehensive package which is designed to effectively suppress organised crime in Australia. The package will include the Proceeds of Crime Bill now before the House, the Telecommunications (Interception) Amendment Bill, the Mutual Assistance in Criminal Matters Bill, a revision and codification of the laws relating to extradition, and new legislation requiring certain cash transactions to be reported to a central government agency.

The Proceeds of Crime Bill represents a careful balancing of effective new powers for law enforcement agencies in the freezing and confiscation of assets against the need for adequate mechanisms for the protection of interests of third parties, who have an interest in property which is the subject of forfeiture but who have no involvement in the commission of the offence and no knowledge of the origin of the property.

The scheme has been carefully designed to provide the greatest possible flexibility to law enforcement agencies to ensure that the legislation effectively meets as many different factual situations as possible. For example, search warrants and restraining orders may be sought immediately before charges are laid, or at any subsequent time. Confiscation orders likewise may be sought at the time of conviction and, in fact, form part of the sentencing process where sufficient evidence is available to bring confiscation proceedings at the time, and the matter can be expeditiously dealt with by the court as part of the sentencing process. In other cases, the application for confiscation can be made at any time up to six months after the date of the relevant conviction. Innocent third parties may seek to have their property excluded from freezing and confiscation proceedings as early as the hearing of the application of the restraining order, at any time during the currency of the restraining order, at the determination of the application for confiscation proceedings, and at any time within six months after confiscation. The regime of this Bill will be in addition to other Commonwealth and Territory legislative provisions which provide for the forfeiture of property or the imposition of pecuniary penalties such as the provisions in Division 3 of Part XIII of the Customs Act 1901.

The detailed explanation of the contents of the Bill is contained in the explanatory memorandum. I wish only to refer at this stage to the more important features of the Bill. It applies both within and outside Australia to enable courts to make restraining and confiscation orders in relation to property located outside Australia and profits derived and realised outside Australia. Confiscation orders under the proposed legislation may take the form of either forfeiture orders, or orders for pecuniary penalties, or a combination of both where this is appropriate. Once a forfeiture order is made, the property vests in equity in the Commonwealth. Registrable property does not vest in law until registration procedures have been complied with. Third parties who can establish that they were not in any way involved in the commission of the offence are able to seek exemption of their property from the operation of the forfeiture order, or to have the forfeiture order discharged in respect of that property. As a general rule, third parties must challenge the forfeiture order within six months unless granted special leave by the court.

Pecuniary penalty orders, on the other hand, may only be made against the defendant. These orders require the court to assess the benefit which the offender derived directly or indirectly from the commission of the offence, assigning a monetary value to that benefit and making a pecuniary penalty order equal to that amount. Once such an order has been made it can be enforced as a civil debt and is provable in bankruptcy.

The legislation contains provisions to enable courts to look behind the legal ownership of property to determine whether that property is subject to the effective control of the defendant, having regard to such things as shareholdings or directorships of companies, any trust that has a relationship to the property, family and business relationships, and the like.

The Bill also provides for statutory forfeiture in limited circumstances. Where a person is convicted of a serious offence, defined to be a narcotics offence involving a traffickable quantity of drugs which constitutes a breach of Commonwealth or Territory law, an organised fraud of- fence, or an offence of money-laundering the proceeds of such drug trafficking or organised fraud, that person is liable to have all property which is the subject of a restraining order six months after the date of his or her conviction forfeited by force of statute, unless the person can establish that the property was lawfully acquired.

The Bill also deals with the problem of persons, or their associates, moving property beyond the jurisdiction once they become aware that charges are about to be laid. Part III of the Bill confers new and far-reaching powers on police officers to seize property which is tainted and to hold such property for 14 days pending the making of a restraining order over the property. Such seizures can arise in three circumstances, namely, by consent, under judicial warrant, or without judicial warrant in emergencies. Restraining orders may be made immediately before charges are laid. Under a restraining order, the court may direct that property specified in the order not be disposed of, or otherwise dealt with, by any person other than in accordance with the terms of the order or may require the Official Trustee to take custody and control of the property specified in the order. A court may make a restraining order where it is satisfied that there are reasonable grounds for believing that the defendant committed the offence alleged and that the property the subject of the application is either tainted property or may be required to satisfy a pecuniary penalty order.

Restraining orders may be varied by a court on the application of any person holding an interest in property the subject of the order. Restraining orders may be registered on registers of title and, when combined with pecuniary penalty orders, give rise to a statutory charge over the property. Contravention of a restraining order constitutes an offence punishable by a fine of $10,000 or five years imprisonment or both in the case of a natural person and a fine of $50,000 in the case of a body corporate.

Part IV of the Bill confers wide-ranging and effective powers on law enforcement officers to gain access to documents relevant to following the money trail and transferring tainted property. The first of these new measures is a production order, made by a person who is a judge of a Supreme Court, directing a person who has property tracking documents in his or her possession or control to produce such documents to a law enforcement officer or, alternatively, to make them available for inspection by such an officer. A breach of a production order constitutes an offence. Where it is inappropriate to seek a production order, either because property cannot be identified with sufficient particularity or because there are grounds to believe that a production order is unlikely to be complied with or may prejudice effective law enforcement, a search warrant may be granted to search for and seize property tracking documents.

A major new initiative is the introduction of monitoring orders, made by a person who is a judge of a Supreme Court, directing a financial institution to give information over specified periods of time to law enforcement authorities about transactions conducted through accounts held by a particular person. Monitoring orders are available only in relation to serious offences-those involving narcotic drugs, organised fraud or money laundering, the proceeds of drug trafficking or organised fraud.

As part of the process of enabling law enforcement agencies to follow the money trail and to assist in the investigation of tax evasion offences, the legislation places a statutory obligation on financial institutions to retain certain records. Records which relate to the opening of accounts must be retained in original form for seven years after closure of the relevant account and all other documents necessary to reconstruct transactions in excess of $200 must be retained for a period of seven years after the transaction in original or some other form, including micro- fiche. Consultation has taken place with financial institutions in relation to these measures.

Part V of the Bill creates two new offences relating to money laundering. The first of these is a serious offence of engaging in money laundering where the person knows or ought reasonably to have known that property is, in fact, the proceeds of crime. Such a crime must be either an indictable offence against a law of the Commonwealth, or of a Territory, or a drug trafficking offence which was committed overseas which would have constituted an offence against Australian law had the offence been committed in Australia. The legislation also creates a less serious indictable offence of laundering property which is reasonably suspected of being proceeds of crime. This offence is very similar to the offence of possession of goods reasonably suspected of having been stolen, which exists in most jurisdictions and has proved to be an effective law enforcement tool against theft.

The legislation also creates a new offence of organised fraud which is constituted by acts and omissions which constitute three or more public fraud offences from which the person has derived substantial benefit. Public fraud offences are breaches of sections 29d and 86a of the Crimes Act 1914 and sections 5, 6, 7 and 8 of the Crimes (Taxation Offences) Act 1980. This offence is specifically designed for persons who have been engaged in a pattern of conduct, over a period of time, from which they have benefited to the detriment of society. The Government has not followed the American precedents which centre around concepts of sophisticated methods, organisation or planning and specific monetary limits. Some of the most effective fraudulent activity has resulted from schemes of utmost simplicity.

The Bill also provides for the problem of dealing with absconders. In certain circumstances, a person who has absconded can be taken to have been convicted of an offence and can be liable to confiscation proceedings. Before a confiscation order can be made against an absconder the court must be satisfied that the person has, in fact, absconded and either that the person has been committed for trial in respect of the offence or that a reasonable jury properly instructed could find the person guilty of the offence on the basis of the evidence put before it.

These are the major features of the Proceeds of Crime Bill. The Bill will give to law enforcement authorities effective and comprehensive means to carry on the fight against major crime. The Bill will also require our law enforcement authorities to develop more sophisticated skills in tracking, analysing and building up data on financial transactions of criminals. The development of these skills is essential to the success of the measures in this Bill.

Financial Impact Statement

I believe that this Bill will result in significant financial benefit to the Commonwealth, the States and foreign countries with which Australia has mutual assistance arrangements. I also believe that this Bill will return benefits which will greatly outweigh its administrative costs. The Bill provides mechanisms which not only deny to the perpetrators the proceeds of crime but also return those proceeds to society. The Bill will also provide mechanisms to return significant revenue to the Commonwealth.

It is proposed that a special trust fund be established to receive the funds generated under this legislation and apply those funds specifically to finance further measures by law enforcement authorities in their fight against crime. This would mean not only that criminals would be denied their profits but also that those very profits would be reinvested in the fight against major crime.

As honourable members will be aware, I have recently returned from a visit to the United States and Europe which involved discussions on measures to attack the proceeds of crime, international mutual assistance and extradition. I was impressed with the way in which the United States is using legislation on proceeds of crime to deprive criminals of many millions of dollars and reapply that money in its fight against crime. I was also impressed, in my discussions with those countries, by the increasing recognition of the need to adopt measures of the kind contemplated in this Bill and to greatly increase international co-operation in this area. I commend the Bill to the House and I present the explanatory memorandum to the Bill.

Debate (on motion by Mr Spender) adjourned.