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Suppression of the Financing of Terrorism Bill 2002

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2002

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

THE HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

SUPPRESSION OF THE FINANCING OF TERRORISM BILL 2002

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Attorney-General,

the Honourable Daryl Williams AM QC MP)

 

 



 

SUPPRESSION OF THE FINANCING OF TERRORISM BILL 2002

 

OUTLINE

 

This Bill amends the Criminal Code Act 1995 (Criminal Code), the Financial Transactions Reports Act 1988 , the Mutual Assistance in Criminal Matters Act 1987 and the Charter of the United Nations Act 1945 to enhance the Commonwealth’s counter terrorism legislative framework by:

·          creating an offence directed at those who provide or collect funds with the intention that they be used to facilitate terrorist activities;

·          requiring cash dealers to report transactions that are suspected to relate to terrorist activities;

·          enabling the Director of the Australian Transaction Reports and Analysis Centre, the Australian Federal Police Commissioner and the Director-General of Security to disclose financial transaction reports information directly to foreign countries, foreign law enforcement agencies and foreign intelligence agencies; and

·          introducing higher penalty offences for providing assets to, or dealing in assets of, persons and entities engaged in terrorist activities.

 

The measures in the Bill implement obligations under United Nations Security Council Resolution 1373 and the International Convention for the Suppression of the Financing of Terrorism.  Australia has signed the Convention and the Government intends to ratify the Convention in the near future, subject to the usual consultation processes. 

 

[The Proceeds of Crime Bill 2002 will give effect to the Article 8 of the Convention, which requires State parties to take appropriate measures to provide for the forfeiture of property that is the proceeds of terrorist activity or that it has been used, or is intended to be used, in terrorist activity.]

 

 

 

FINANCIAL IMPACT STATEMENT

 

There are no direct financial impacts from this Bill.

 



NOTES ON CLAUSES

 

Clause 1: Short title

This clause sets out the short title by which this Act may be cited. 

 

Clause 2: Commencement

This clause provides that the sections 1, 2 and 3, Item 3 of Schedule 1 and Schedule 2 commence on the day on which this Act receives the Royal Assent. 

Item 1 of Schedule 1 commences on the day this Act receives the Royal Assent unless the Criminal Code Amendment (Espionage and Related Offences) Act 2002 or the Security Legislation Amendment (Terrorism) Act 2002 receive the Royal Assent the day before this Act, in which case it does not commence at all. 

Item 2 of Schedule 1 commences on the day after this Act receives the Royal Assent unless the Security Legislation Amendment (Terrorism) Act 2002 receives the Royal Assent the day before this Act, in which case it does not commence at all.

The contingent commencement clauses for Items 1 and 2 of Schedule 1 are necessary to ensure that the same Chapter and Part headings and preliminary provisions are not inserted by more than one Act.  For example, this Act, the Criminal Code Amendment (Espionage and Related Offences) Act 2002 and the Security Legislation Amendment (Terrorism) Act 2002 each contain an item inserting the heading “Chapter 5” into the Criminal Code.  However, only the first of the three Acts to receive the Royal Assent would actually insert the heading “Chapter 5”.  The other two Acts would simply insert provisions into the newly created Chapter. 

The clause also provides that Schedule 3 commences on a day to be fixed by Proclamation.  However, if the provisions of Schedule 3 do not commence within the period of 6 months beginning on the day which it receives the Royal Assent, the provisions commence on the first day after the end of that period.  This will allow time to make the regulations necessary to give effect to the provisions in the Schedule.

Clause 3: Schedule(s)

This clause provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

 



 

Schedule 1 - Amendment of the Criminal Code Act 1995

 

This Schedule inserts proposed new Chapter 5 (The integrity and security of the Commonwealth) and proposed new Part 5.3 (Terrorism) into the Criminal Code.  Proposed Division 103 of Part 5.3 contains a new offence directed at the financing of terrorism.

 

Item 1

 

This Item inserts proposed Chapter 5 of the Criminal Code ‘The integrity and security of the Commonwealth’. 

 

Item 2

 

This Item inserts proposed new Part 5.3 (Terrorism) into the Criminal Code.  Proposed Division 103 of Part 5.3 introduces a new financing of terrorism offence.  Proposed Division 100 contains definitions and application provisions relevant to the new financing of terrorism offence and to proposed terrorism offences in the Security Legislation Amendment (Terrorism) Bill 2002, which will also be inserted into Part 5.3.

 

Proposed section 100.1 - Definitions

 

Proposed section 100.1 contains definitions of terms used in proposed Part 5.3 of the Criminal Code.

 

Commonwealth place is given the same meaning as in the Commonwealth Places (Application of Laws) Act 1970 where it means a place (not being the seat of government) with respect to which the Parliament, by virtue of section 52 of the Constitution, has, subject to the Constitution, exclusive power to make laws for the peace, order, and good government of the Commonwealth.  The new financing of terrorism offence in proposed section 103.1 will extend to actions that take place in a Commonwealth place.  This definition is one of the mechanisms that aligns the ambit of the offence with the scope of Commonwealth legislative power under the Constitution.

 

constitutional corporation is defined to mean a corporation within the terms of paragraph 51(xx) of the Constitution.  Paragraph 51(xx) of the Constitution covers foreign, trading and financial corporations.  The new financing of terrorism offence in proposed section 103.1 will extend to actions that affect constitutional corporations or that are carried out by constitutional corporations.  This definition is one of the mechanisms that aligns the ambit of the offence with the scope of Commonwealth legislative power under the Constitution.

 

funds is defined as property and assets of every kind and legal documents or instruments in any form.  The definition is broad in scope and is derived from Article 1 of the International Convention for the Suppression of the Financing of Terrorism.  The breadth of the definition will ensure that the financing of terrorism offence applies regardless of whether a person facilitates a terrorist act through the provision of money, equipment or weapons.

 

organisation is defined as a body corporate or an unincorporated body, whether or not it is based in Australia, consists of persons who are not Australian citizens, or is part of a larger organisation.  The definition of organisation is relevant to the proscribed organisations offence in Schedule 2 to Security Legislation Amendment (Terrorism) Bill 2002.  The definition is included to defeat any argument that a group of persons is not an organisation because it does not have a particular formal attribute or structure.

 

terrorist act is defined to mean a specified action or threat of action that is made with the intention of advancing a political, religious or ideological cause. The types of actions covered by the definition of “terrorist act” are set out in proposed subsection 100.1(2) and include actions involving serious harm to persons, serious damage to property and interference with essential electronic systems.  The new offence in proposed section 103.1 will apply to the financing of actions which fall within this definition.

 

Lawful advocacy, protest and dissent, and industrial action are expressly excluded from the ambit of the definition.  

 

Proposed subsection 100.1(2) sets out the types of action referred to in the proposed subsection 100.1(1) that can constitute a “terrorist act”.  The types of actions listed involve serious harm, damage or disruption. A terrorist act includes action that involves serious harm to a person or serious damage to property, endangers life, creates a serious risk to the health or safety of the public or a section of the public, or is designed to seriously interfere with, seriously disrupt, or destroy, an electronic system.  Electronic systems include information systems; telecommunications systems; financial systems; and systems used for essential government services, essential public utilities and transport providers.

 

Proposed subsection 100.1(3) provides that a reference in proposed Division 100 to any person or property is a reference to any person or property within or outside Australia.  It also provides that a reference to the public includes a reference to the public of a foreign country.

 

Proposed section 100.2 - Constitutional basis for offences

 

Proposed section 100.2 provides a broad constitutional basis for the new financing of terrorism offence in proposed section 103.1 and the proposed terrorism offences in the Security Legislation Amendment (Terrorism) Bill 2002, which will also be inserted into Part 5.3.  An action or threat of action will give rise to an offence under Part 5.3 where it is within the scope of the Commonwealth’s legislative power under the Constitution. 

 

Proposed subsection 100.2(2) draws on the various bases of Commonwealth legislative power in section 51 of the Constitution to specify particular circumstances in which an action or threat of action will give rise to an offence. 

 

These include circumstances where the action:

·          affects the interests of the Commonwealth, a Commonwealth authority, or a foreign, trading or financial corporation;

·          disrupts foreign or interstate trade or commerce, banking or insurance;

·          takes place outside Australia; or

·          is an action in relation to which the Commonwealth is obliged to create an offence under international law (for example, United Nations Security Council Resolution 1373 obliges Australia to criminalise the collection and provision of funds for terrorist acts).

 

Item 3

 

This Item inserts proposed Division 103 of the Criminal Code ‘Financing terrorism’.  This contains the financing terrorism offence in proposed section 103.1

 

Proposed section 103.1 - Financing terrorism

Proposed section 103.1 makes it an offence for a person to provide or collect funds where the person is reckless as to whether those funds will be used to facilitate or carry out a terrorist act (as defined in proposed section 100.1).  The maximum penalty for the offence is imprisonment for life.  The maximum fine is $220,000 for a natural person and $1,100,000 for a body corporate under the existing $110 value for a penalty unit in section 4AA of the Crimes Act, and the provisions for calculating maximum fines in section 4B of that Act. 

The maximum penalty of life imprisonment is consistent with the penalties applicable to the proposed terrorism offences in the Security Legislation Amendment (Terrorism) Bill 2002.  Financing terrorism warrants a penalty comparable to engaging in a terrorist act because financing is central to organised terrorist activity and influences both the extent and the seriousness of those activities.

 

The offence implements Article 2 of the Convention for the Suppression of the Financing of Terrorism and paragraph 1(b) of United Nations Security Council Resolution 1373, and draws on the language used in those international instruments.

 

Proposed subsection 103.1(3) applies Category D geographical jurisdiction, as set out in section 15.4 of the Criminal Code, to an offence against subsection 103.1(1).  Category D jurisdiction is unrestricted.  Its application to the financing of terrorism offence means that the offence will be committed whether or not the conduct or the result of the conduct constituting the offence occurs in Australia.  In view of the very serious nature of this offence and the depth of international concern regarding the financing of terrorism it is appropriate for Australia to criminalise this conduct regardless of where it occurs.

 

However, where the conduct constituting the offence occurs wholly in a foreign country and the person charged or to be charged is not of Australian nationality, section 16.1 of the Criminal Code will require that the Attorney-General's consent be obtained for a prosecution for an offence against proposed section 103.1. 

 

The consent requirement enables the Attorney-General to decide in his or her discretion whether it is appropriate that a prosecution should proceed having regard to considerations of international law, practice and comity, international relations, prosecution action that is being or might be taken in another country, and other public interest considerations.  However, an arrest may be made and charges laid before consent is given. 



 

Schedule 2 - Amendments relating to the reporting of financial transactions

 

Part 1 of this Schedule introduces amendments to the Financial Transaction Reports Act 1988 (FTR Act) and Mutual Assistance in Criminal Matters Act 1987 (Mutual Assistance Act) to require cash dealers to report suspected terrorist-related transactions and streamline the procedures for the disclosure of financial transaction reports information (FTR information) to foreign countries.  Part 2 of the Schedule provides for a review of the proposed amendments to be conducted two years after their commencement.

 

Part 1 - Amendments relating to the reporting of financial transactions

 

Financial Transaction Reports Act 1988

 

Item 1

 

This Item inserts proposed subsection 16(1A) into the FTR Act.  Subsection 16 (1A) requires a “cash dealer” to report a transaction to the Director of the Australian Transaction Reports and Analysis Centre (AUSTRAC) if he or she has reasonable grounds to suspect that the transaction is preparatory to the commission of a financing of terrorism offence or that information he or she has concerning the transaction may be relevant to the investigation or prosecution of such an offence.  “Cash dealer” is defined in section 3 of the FTR Act to include financial institutions, financial corporations, insurers, securities dealers, futures brokers, trustees and persons who collect, hold, exchange, remit or transfer cash and non-cash funds on behalf of others.

 

Cash dealers are currently required to report other types of suspicious transaction, including transactions relevant to the investigation or prosecution of Commonwealth offences.  This amendment makes it clear that cash dealers also have an obligation to report transactions that they suspect are related to terrorist activity.  The amendment is consistent with Article 18 of the International Convention for the Suppression of the Financing of Terrorism.

 

Items 2 to 7

 

These Items insert references to proposed subsection (1A) into section 16 of the FTR Act consequent upon the insertion of proposed subsection (1A) into that section by Item 1.  This ensures that the provisions in section 16that specify the details to be included in reports, prevent cash dealers from disclosing information contained in reports and prohibit the use of reports in legal proceedings, apply to reports made under proposed subsection (1A).

 

Item 8

 

This item inserts a definition of financing of terrorism offence into subsection 16(6) of the FTR Act.  A “financing of terrorism offence” means an offence under section 103.1 of the Criminal Code or section 20 or 21 of the Charter of the United Nations Act 1945 (UN Charter Act).  A cash dealer’s reporting obligations under proposed subsection 16(1A) relate specifically to these offences (see Item 1). 

 

The offence in section 103.1 of the Criminal Code applies to persons who collect or provide funds to facilitate terrorist activities (see Item 3 of Schedule 1).  The offences in sections 20 and 21 of UN Charter Act prohibit dealings in the assets of proscribed persons or entities engaged in terrorist activities (see Item 1 of Schedule 3).

 

Item 9

 

This Item repeals existing paragraph 27(1)(d) of the FTR Act, which entitles the Attorney-General to access FTR information for the purpose of dealing with a request from a foreign country for assistance with a criminal matter.  The existing paragraph 27(1)(d) is replaced by a new paragraph, which gives the Commissioner of the Australian Federal Police power to access FTR information for the purpose of communicating that information to a foreign law enforcement agency.

The repeal of the existing paragraph 27(1)(d), in conjunction with other proposed amendments to the FTR Act and the Mutual Assistance Act made by this Schedule, removes the current requirement for foreign country requests for FTR information to be dealt with by the Attorney-General in accordance with the provisions of the Mutual Assistance Act.  The proposed amendments instead give the Director of AUSTRAC general responsibility for disclosure of information outside of Australia.  The Australian Federal Police Commissioner and the Director-General of Security will also be able to communicate FTR information directly to foreign law enforcement and intelligence agencies (see Items 14 and 17).

The Director of AUSTRAC currently has the responsibility for disclosure of FTR information within Australia.  By enabling the Director to also disclose information to foreign countries both spontaneously and upon request, the proposed amendments will make the procedures for sharing information with other countries significantly faster and more efficient.  The current mutual assistance procedures for communicating FTR information are unnecessarily cumbersome and hamper the rapid exchange of information.  In the context of international investigations and intelligence gathering, delays in the transmission of information can have significant consequences.  Australia’s current requirements were adopted because of the strict secrecy attaching to FTR information but they are not geared to enabling urgent sharing of financial intelligence.

The proposed amendment will give effect to Recommendation 32 of ‘The Forty Recommendations’ of the Financial Action Task Force on Money Laundering (FATF), which is an inter-governmental body whose purpose is the development and promotion of policies to combat money laundering.  FATF Recommendation 32 states that 'each country should make efforts to improve a spontaneous or upon request international information exchange relating to suspicious transactions, persons and corporations involved in those transactions between competent authorities.  Strict safeguards should be established to ensure that this exchange of information is consistent with national and international provisions on privacy and data protection.”    Most FATF members do not require foreign country requests for FTR information to be processed via the mutual assistance channel as Australia currently does. 

The amendment is also consistent with paragraph 3(a) of United Nations Security Council Resolution 1373, which calls upon States to “find ways of intensifying and accelerating the exchange of operational information, especially regarding actions or movements of terrorist persons or networks…”.

The confidentiality of the information disclosed to a foreign country will be protected by the requirement that the Director be satisfied that the foreign country has given appropriate undertakings for protecting the confidentiality, and controlling the use, of that information (see Item 14).  There would also be a review of the proposed amendments to be conducted two years after their commencement, which would consider whether the privacy of persons identified in FTR information is adequately protected (see Part 2 of this Schedule).

 

The proposed new paragraph 27(1)(d) will enable the Australian Federal Police (AFP) Commissioner to access FTR information for the purpose of communicating it to a foreign law enforcement agency, where access has been authorised in writing by the Director of AUSTRAC.  In practice, the written authority will take the form of a Memorandum of Understanding between AUSTRAC and the AFP, which address issues relating to notification protocols and procedures to protect privacy.

 

The AFP currently has access to FTR information for the purpose of performing its functions.  However, in order to provide foreign law enforcement agencies with FTR information relevant to their investigations (see Item 14), the AFP Commissioner also needs to be able to access information for that purpose.  Permitting the AFP Commissioner to communicate FTR information directly to foreign law enforcement agencies will enable relevant information to be exchanged, without delay, at an agency level.  The spontaneous exchange of information between the AFP and foreign law enforcement agencies will enhance the ability of those agencies to act rapidly in response to international terrorism and transnational crime.

 

The notes in Item 9 insert headings in section 27 for clarity.

 

Item 10

 

This Item repeals subsection 27(3A).  Subsection 27(3A) enables the Attorney-General to communicate FTR information to a foreign country under the Mutual Assistance Act where the Attorney-General is satisfied that the country has given appropriate undertakings as to confidentiality and use. 

 

The repeal of subsection 27(3A), in conjunction with other proposed amendments to the FTR Act and the Mutual Assistance Act made by this Schedule, will remove the current requirement for foreign country requests for FTR information to be dealt with by the Attorney-General in accordance with the provisions of the Mutual Assistance Act.  The proposed amendments will instead give the Director of AUSTRAC the general responsibility for disclosure of information outside of Australia.  (See the discussion at Item 9).

 

Item 11

 

This Item includes a reference to proposed subsection (11D) in subsection 27(6) consequent upon the insertion of proposed subsection (11D) into section 27 by Item 14.

 

Item 12

 

This Item omits “and” and substitutes “or” at the end of subparagraph 27(6)(a)(ii) consequent upon the addition of proposed new subparagraph 27(6)(a)(iii) at the end of paragraph 27(6)(a) by Item 13.

 

Item 13

 

This Item adds proposed new subparagraph 27(6)(a)(iii) at the end of paragraph 27(6)(a).  The new subparagraph will permit the AFP Commissioner, or an AFP member authorised by the Commissioner, to communicate FTR information to a foreign law enforcement agency in accordance with proposed subsections 27(11B) to (11D). 

 

Permitting the AFP Commissioner to communicate FTR information directly to foreign law enforcement agencies will enable relevant information to be exchanged, without delay, at an agency level.  The spontaneous exchange of information between the AFP and foreign law enforcement agencies will enhance the ability of those agencies to act rapidly in response to international terrorism and transnational crime.

 

Item 14

 

This Item inserts proposed subsections (11A), (11B), (11C) and (11D) into section 27.  These subsections stipulate the conditions upon which the Director of AUSTRAC and the AFP Commissioner may communicate FTR information to a foreign country or a foreign law enforcement agency.  The conditions are intended to safeguard privacy and confidentiality and ensure that information is used only for proper purposes.  There would also be a review of the proposed amendments to be conducted two years after their commencement, which would consider whether the privacy of persons identified in FTR information is adequately protected (see Part 2 of this Schedule).

Proposed subsection (11A) provides that the Director may communicate FTR information to a foreign country if it is appropriate in all the circumstances to do so and if the Director is satisfied that the foreign country has given appropriate undertakings for protecting the confidentiality of the information and ensuring it is properly used. 

 

Proposed subsection (11B) provides that the AFP Commissioner may communicate FTR information to a foreign law enforcement agency if it is appropriate in all the circumstances to do so and the Commissioner is satisfied the foreign law enforcement agency has given appropriate undertakings for protecting the confidentiality of the information, and for ensuring that it is used in the performance of the foreign law enforcement agency’s functions.  The Commissioner may authorise a member of the AFP to communicate FTR information to a foreign law enforcement agency on his or her behalf (proposed subsection (11C)).

 

When considering whether it is appropriate to grant a request by a foreign country or foreign law enforcement agency for FTR information, the Director and Commissioner may need to take into account a range of issues, including whether the request was made for the purpose of persecuting or punishing a person on the ground of sex, race, nationality or religion and whether the granting of the request would prejudice the sovereignty, security or national interest of Australia.

 

Proposed subsection (11D) provides that if the Commissioner of the AFP accesses FTR information for the purpose of communicating it to a foreign law enforcement agency and that information is not relevant to the performance of the AFP’s functions, neither the Commissioner, nor a person authorised by the Commissioner to communicate the information, may record, communicate or divulge the information except for the purpose of communicating the information to a foreign law enforcement agency.  This provision is designed to ensure that where the AFP obtains FTR information for the purpose of communicating it to an overseas agency, it cannot make use of that information for its own purposes where it would not currently be able to do so.

 

The reasons for enabling the Director and the Commissioner to exchange information directly with foreign agencies are discussed at Item 9 and Item 13.

 

Item 15

 

This Item inserts proposed subsection 27(20), which provides that a reference in this section to a foreign law enforcement agency is a reference to an agency that has responsibility for law enforcement in a foreign county.  The amendment is consequent upon the insertion of paragraph 27(1)(d), subparagraph 27(6)(a)(iii) and subsections 27(11B), 27(11C) and 27(11D) by Items 9, 13 and 14, which enable the AFP Commissioner to disclose FTR information to foreign law enforcement agencies.

 

Item 16

 

This Item omits “and” and substitutes “or” at the end of subparagraph 27AA(4)(a)(iii) consequent upon the addition of proposed new subparagraph 27AA(4)(a)(iv) at the end of paragraph 27AA(4)(a) by Item 17.

 

Item 17

 

This Item inserts proposed new subparagraph 27AA(4)(a)(iv) at the end of paragraph 27AA(4)(a).  The new subparagraph will permit the Director-General of Security, or an Australian Security Intelligence Organisation (ASIO) employee authorised by the Director-General, to communicate FTR information to a foreign intelligence agency in accordance with proposed subsections 27AA(5A) and (5B). 

 

Permitting the Director-General of Security to communicate FTR information directly to foreign intelligence agencies will enable relevant information to be exchanged, without delay, at an agency level.  The spontaneous exchange of information between ASIO and foreign intelligence agencies will enhance the ability of those agencies to act rapidly in response to international terrorism and other national security issues.

 

In contrast to the AFP, ASIO does not require a provision expressly enabling the Director-General to access information for the purpose of communicating it to a foreign intelligence agency.  ASIO is currently able to access information for the purpose of performing its functions (subsection 27AA(1)). As ASIO’s functions include the provision of information to foreign countries in relation to security matters, it is able to access information under subsection 27AA(1) for the purpose of communicating it to a foreign intelligence agency.  However, the Memorandum of Understanding between AUSTRAC and ASIO, under which ASIO currently accesses FTR information, will be revised to take account of the amendments permitting the Director-General to communicate FTR information to foreign intelligence agencies.

 

The notes in Item 17 insert headings in section 27AA for clarity.

 

Item 18

 

This Item inserts new subsections (5A) and (5B) into section 27AA.  These subsections stipulate the conditions upon which the Director-General of Security may communicate FTR information to a foreign intelligence agency.  The conditions are intended to safeguard privacy and confidentiality and ensure that information is used only for proper purposes.  There would also be a review of the proposed amendments to be conducted two years after their commencement, which would consider whether the privacy of persons identified in FTR information is adequately protected (see Part 2 of this Schedule).

 

Proposed subsection (5A) provides that the Director-General of Security may communicate FTR information if it is appropriate in all the circumstances to do so and the Director-General is satisfied the foreign intelligence agency has given appropriate undertakings for protecting the confidentiality of the information and ensuring that it is used in the performance of the foreign intelligence agency’s functions.  The Director-General may authorise an ASIO employee to communicate FTR information to a foreign intelligence agency on his or her behalf (proposed subsection (5B)).

 

When considering whether it is appropriate to grant a request by a foreign intelligence agency for FTR information, the Director-General may need to take into account a range of issues, including whether the request was made for the purpose of persecuting or punishing a person on the ground of sex, race, nationality or religion and whether the granting of the request would prejudice the sovereignty, security or national interest of Australia.

 

Item 19

 

This Item replaces the existing Note 2 in subsection 27AA(7) with a new note, consequent upon the insertion of subsections (11A) to (11D) into section 27 by Item 14.

 

Item 20

 

This Item inserts a definition of foreign intelligence agency in subsection 27AA(8).  Foreign intelligence agency means an agency that has responsibility for intelligence gathering for a foreign country or the security of a foreign country.  The amendment is consequent upon the insertion of subparagraph 27AA(4)(a)(iv) and subsections 27AA(5A) and 27AA(5B) by Items 16 and 17, which enable the Director-General of Security to disclose FTR information to foreign intelligence agencies.

 

Item 21

 

This Item provides that the amendments made by Items 1-8 above apply to transactions completed on or after the day on which this Schedule commences.  This means that the amendments requiring cash dealers to report suspected terrorist-related transactions will not apply to transactions that are finalised before the amendments commence.

 

Mutual Assistance in Criminal Matters Act 1987

 

Item 22

 

This Item repeals Part VIA of the Mutual Assistance Act.  Part VIA provides that where a foreign country asks the Attorney-General for information, the Attorney-General may direct the Director of the AUSTRAC to give the Attorney-General access to FTR information for the purpose of enabling the Attorney-General to deal with the request.

 

The repeal of Part VIA, in conjunction with the proposed amendments to the FTR Act made by this Schedule, will remove the current requirement for foreign country requests for FTR information to be dealt with by the Attorney-General in accordance with the provisions of the Mutual Assistance Act.  The proposed amendments will instead give the Director of AUSTRAC the general responsibility for disclosure of information outside of Australia.  (See the discussion at Item 9).

 

Part 2 - Review of effectiveness of amendments

 

Item 23

 

Independent Review

 

This Item requires the Attorney-General to cause a review of the amendments made by Part 1 of this Schedule to be undertaken as soon as possible after the second anniversary of the commencement of the amendments.  The review will consider the extent to which the amendments made by Part 1 of the Schedule have contributed to the enforcement of financing of terrorism offences, whether the amendments sufficiently regulate the sharing and use of FTR information and whether the privacy of persons identified in that information is adequately protected. 

 

The review will be conducted by a committee consisting of members nominated by the Attorney-General, the AFP Commissioner, the Director-General of Security, the Inspector-General of Intelligence and Security, the Director of AUSTRAC and the Federal Privacy Commissioner.  However, the Attorney-General may reject a nomination on the grounds that a the person nominated does not possess the requisite qualifications or an appropriate security clearance.

 

A written report of the review must be given to the Attorney-General, who is required to table the report in each House of Parliament within 15 sitting days of its receipt by the Minister.  However, the Attorney-General must remove information from the report if, on advice given by the AFP Commissioner or Director-General of Security, the Attorney-General is of the view that it may endanger a person’s safety, prejudice an investigation or compromise the operational activities or methodologies of ASIO or the AFP.

 

If the review identifies any inadequacies, a further review would have to be undertaken within two years to ascertain whether those inadequacies had been dealt with.

 

The provision for review of the proposed amendments was included to address the privacy considerations that they raise.  They will provide an opportunity to ensure that the regulation of the use of FTR information under legislation, memoranda of understanding and guidelines is adequate and appropriate.  The involvement of the Privacy Commissioner in the review will ensure that privacy interests are represented. 

There is a precedent for such a review in section 23YV of the Crimes Act 1914 , which requires an independent review of the operation of the provisions in the Act dealing with forensic procedures. 

 

 



 

Schedule 3 - Amendment of the Charter of the United Nations Act 1945

 

This Schedule introduces amendments to the UN Charter Act to prohibit dealings in the assets of persons and entities involved in terrorist activities and to prevent others from making assets available to those persons or entities.

 

The provisions in proposed Part 4 implement paragraph 1(c) of the United Nations Security Council Resolution 1373.  Paragraph 1(c) requires States to:

“freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled directly or indirectly by such persons; and of persons acting on behalf of, or at the direction of such persons and entities, including funds derived or generated from property owned or controlled directly or indirectly by such persons and associated persons or entities”.

 

The amendments to the UN Charter Act will supersede the existing provisions in the Charter of the United Nations (Anti-terrorism Measures) Regulations 2000 .  New simplified regulations giving effect to these amendments will be made to commence at the same time as the amendments.  Moving the provisions relating to the freezing of assets from the regulations to the Act will enable the penalty for the offences to be increased.

 

Item 1

 

This Item inserts proposed new Part 4 (Offences to give effect to Security Council decisions) into the UN Charter Act.  Part 4 creates new offences directed at those who provide assets to, or deal in the assets of, persons and entities involved in terrorist activities.  The Part also contains associated provisions that, amongst other things, provide for the Minister for Foreign Affairs to list persons and entities for the purpose of the offences, to revoke a listing and to permit a specified dealing in a freezable asset.

 

Proposed section 14 - Definitions

 

Proposed section 14 contains definitions of terms used in proposed Part 4 of the Charter.

 

asset is defined as property and assets of every kind and legal documents or instruments in any form.  The definition is broad in scope and is derived from Article 1 of the International Convention for the Suppression of the Financing of Terrorism.  The breadth of the definition will ensure that the requirement to freeze an asset applies regardless of whether that asset is money, equipment or a weapon.

 

freezable asset means an asset that is listed by the Minister for Foreign Affairs or owned or controlled by a person or entity listed by the Minister or proscribed by regulations, or is derived or generated from such an asset. 

 

listed asset means an asset listed by the Minister under proposed section 15.  Proposed section 15 provides for the Minister to list assets if satisfied of the matters prescribed by the Governor-General in regulations.  The prescribed matters must give effect to a United Nations Security Council decision related to terrorism and dealing in assets (eg, Resolution 1373).

 

proscribed person or entity means a person or entity listed under proposed section 15 or proscribed by regulation under proposed section 18.  Proposed sections 20 and 21 make it an offence to provide assets to, or deal in the assets of, proscribed persons and entities.

 

superior court means the Federal Court of Australia or the Supreme Court of a State or Territory.  These courts are able to grant an injunction under proposed section 26 to restrain a person from engaging in conduct which would constitute an offence against proposed section 20 or 21.

 

Proposed section 15 - Listing persons, entities and assets

 

Proposed section 15 provides that the Minister must list a person or entity, and may list an asset or class of assets, if satisfied of certain prescribed matters.  The Governor-General may make regulations prescribing the matters of which the Minister must be satisfied.  A matter may only be prescribed if it would give effect to a United Nations Security Council decision that Article 25 of the Charter of the United Nations requires Australia to carry out and that relates to terrorism and dealings with assets.  A person, entity or asset is listed by notice in the Gazette .

 

The listing of a person, entity or asset by the Minister will attract the application of the offences in proposed section 20 and 21.  The offences will apply to a person who makes an asset available to a listed person or entity or who deals in a listed asset or an asset owned by a listed person entity.

 

Proposed section 16 - Minister may revoke the listing

 

Proposed section 16 provides for the Minister for Foreign Affairs to revoke a listing of a person, entity or asset by notice in the Gazette if he or she is satisfied that the listing is no longer necessary to give effect to a United Nations Security Council decision that Article 25 of the Charter of the United Nations requires Australia to carry out and that relates to terrorism and dealings with assets.  The revocation may be made at the Minister’s own instigation or on application by a listed person or entity (see proposed section 17).

 

The proposed section will ensure that the legislation provides an express mechanism for listed persons and entities to have their listing reviewed and, if appropriate, revoked. 

 

Proposed section 17 - Listed person or entity may apply to have the listing revoked

 

Proposed section 17 enables listed persons and entities to apply in writing to the Minister for Foreign Affairs to have the listing revoked.  However, the Minister is not required to consider an application if the person or entity has already made an application within the previous 12 months.

 

The application must set out the circumstances justifying a revocation of the listing, For example, evidence that the person is not associated with a terrorist organisation or involved in terrorist activities.

 

Proposed section 18 - Proscription by regulation

 

Proposed section 18 provides a means of proscribing persons and entities by reference to a decision of the United Nations Security Council that identifies persons and entities to which the decision relates.  Security Council decisions often list the persons or entities against whom sanctions should be applied.  Enabling those lists to be directly incorporated by the regulations as they exist from time to time is more expedient than requiring the Minister to list each person and entity by notice in the Gazette .  However, the ability for the Minister to list persons and entities by notice in the Gazette is necessary to cover Security Council decisions, like Resolution 1373, which do not specifically identify persons or entities to which sanctions should be applied.

 

Proposed section 19 - Effect of resolution ceasing to bind Australia

 

Proposed section 19 provides for the listing of a person or entity under proposed section 15 to be automatically revoked when the Security Council decision to which the listing gives effect no longer binds Australia.  The section also provides that regulations proscribing a person or entity under proposed section 18 cease to have effect when the Security Council decision to which the regulations give effect no longer binds Australia. 

 

The section makes it clear that the offences cease to apply in relation to persons, entities or assets listed by the Minister or proscribed by regulation from the time the Security Council decision to which the listing or proscription gives effect ceases to bind Australia, without the need for the Minister to revoke the listing or for the regulations to be repealed.

 

Proposed section 20 - Offence-dealing with freezable assets

 

Proposed section 20 provides that a person who holds a freezable asset is guilty of an offence if the person uses or deals with the asset, or allows or facilitates a use or dealing, and is reckless as to whether the asset is a freezable asset, and the use or dealing is not in accordance with a notice under section 22.  The maximum penalty for dealing with a freezable asset is 5 years imprisonment.  The maximum fine will be $33,000 for a natural person and $165,000 for a body corporate under the existing $110 value for a penalty unit in section 4AA of the Crimes Act, and the provisions for calculating maximum fines in section 4B of that Act. 

 

The penalty for the existing offence against the regulations is only $5,500, which is clearly inadequate.  Under section 12 of the UN Charter Act, this is the maximum penalty that may be applied to offences against the regulations.  Moving the offence to the Act will enable the penalty to be significantly increased.

 

Strict liability applies to the fact that the use or dealing with the asset is not in accordance with a notice under section 22.  The application of strict liability means that the prosecution does not have to prove any fault element, such as knowledge or recklessness, in respect of this element of the offence.  However, the defence of mistake of fact is still available. 

 

The application of strict liability is necessary to ensure that a defendant who uses or deals with an asset which he or she knows to be a freezable asset cannot escape liability by demonstrating that they were not aware that the use or dealing was not in accordance with a notice under section 22.  A person wishing to deal in a freezable asset will have to ensure that the dealing has been permitted by a notice given under section 22.  However, it is a defence to a prosecution for an offence against section 20, if a person shows that he or she dealt with a freezable asset in the mistaken but reasonable belief that the dealing was in accordance with a notice.  It is also a defence if the person can show that the use or dealing was solely for the purpose of preserving the value of the asset.

 

Category A geographical jurisdiction, as set out in section 15.1 of the Criminal Code, will apply to an offence against subsection 20(1).  Category A geographical jurisdiction is satisfied if (i) the conduct constituting the offence occurs wholly or partly in Australia, or wholly or partly on board an Australian aircraft or an Australian ship; (ii) a result of the conduct occurs wholly or partly in Australia or wholly or partly on board an Australian aircraft or an Australian ship; or (iii) at time of the alleged offence the person charged with the offence was an Australian citizen or body corporate.  Where the conduct constituting an offence occurs wholly in a foreign country and only a result occurs in Australia, there is a defence available if there is no corresponding offence in that foreign country.  However, that defence is not available if jurisdiction is to be exercised on the basis of the person's nationality.

 

The application of Category A jurisdiction to the offence will mean that a person (including a body corporate) who uses or deals with a freezable asset in Australia or an Australian citizen or corporation who uses or deals with a freezable asset in a foreign country will commit an offence against section 20.  The offence would not apply to foreign citizens or corporations that engage in a use or dealing with a freezable asset in a foreign country as those persons and corporations could not be expected to act with regard to a listing made under Australian law.

 

Proposed section 21 - Offence-giving an asset to a proscribed person or entity

 

Proposed section 21 makes it an offence for a person to directly or indirectly make an asset available to a proscribed person or entity, if the person is reckless as to whether the person or entity is a proscribed person or entity and the making available of the asset is not in accordance with a notice under section 22.  The offence carries a maximum penalty of 5 years imprisonment.  The maximum fine will be $33,000 for a natural person and $165,000 for a body corporate under the existing $110 value for a penalty unit in section 4AA of the Crimes Act, and the provisions for calculating maximum fines in section 4B of that Act.

 

The penalty for the existing offence against the regulations is only $5,500, which is clearly inadequate.  Under section 12 of the UN Charter Act, this is the maximum penalty that may be applied to offences against the regulations.  Moving the offence to the Act will enable the penalty to be significantly increased.

 

Strict liability applies to the fact that the making available of the asset is not in accordance with a notice under section 22.  The application of strict liability means that the prosecution does not have to prove any fault element, such as knowledge or recklessness, in respect of this element of the offence.  However, the defence of mistake of fact is still available. 

 

The application of strict liability is necessary to ensure that a defendant who makes an asset available to a person whom he or she knows to be a proscribed person cannot escape liability by demonstrating that they were not aware that the making available of the asset was not in accordance with a notice under section 22.  A person wishing to make an asset available to a proscribed person or entity will have to ensure that the making available has been permitted by a notice given under section 22.  However, it is a defence to a prosecution for an offence against section 20, if a person shows that he or she made an asset available to a proscribed person or entity in the mistaken but reasonable belief that the making available was in accordance with a notice.

 

Category A geographical jurisdiction, as set out in section 15.1 of the Criminal Code, will apply to an offence against subsection 21(1).  Category A geographical jurisdiction is satisfied if (i) the conduct constituting the offence occurs wholly or partly in Australia, or wholly or partly on board an Australian aircraft or an Australian ship; (ii) a result of the conduct occurs wholly or partly in Australia or wholly or partly on board an Australian aircraft or an Australian ship; or (iii) at time of the alleged offence the person charged with the offence was an Australian citizen or body corporate.  Where the conduct constituting an offence occurs wholly in a foreign country and only a result occurs in Australia, there is a defence available if there is no corresponding offence in that foreign country.  However, that defence is not available if jurisdiction is to be exercised on the basis of the person's nationality.

 

The application of Category A jurisdiction to the offence will mean that a person (including a body corporate) who makes an asset available to a proscribed person or entity in Australia or an Australian citizen or corporation who makes an asset available to a proscribed person or entity in a foreign country will commit an offence against section 21.  The offence would not apply to foreign citizens or corporations that make an asset available to a proscribed person or entity in a foreign country as those persons and corporations could not be expected to act with regard to a listing made under Australian law.

 

Proposed section 22 - Authorised dealings

 

Proposed section 22 provides that the owner of an asset may apply in writing to the Minister for Foreign Affairs for permission to make the asset available to a proscribed person or entity or, if the asset is a freezable asset, to use or deal with the asset in a specified way.  The Minister, or a delegate, may grant permission by written notice.  The notice may be subject to conditions and must be given to the owner of the asset as soon as practicable after it is made. 

 

The provision will allow the Minister to exempt a particular dealing in an asset from the application of the offences in proposed section 20 and 21.  This power would only be exercised in exceptional circumstances, for example, to protect the rights of third parties.

 

Proposed section 23 - Part prevails over conflicting legal obligations

 

Proposed section 23 provides that the provisions of Part 4 prevail over Commonwealth, State or Territory laws that would otherwise require a person to act in contravention of this part.  The section makes it clear that Commonwealth, State and Territory employees are covered by the offences in Part 4 and should not comply with any statutory obligation or exercise any statutory power to make a payment to a person or entity (eg, a social security payment) where the making of the payment is prohibited by Part 4.  This underscores the general point that Commonwealth officers, servants and agents of the Crown have no immunity from the ordinary criminal law: see, eg, Jacobsen v Rogers (1995) 182 CLR 572 at 587.

 

Proposed section 24 - Indemnity for holder of assets

 

Proposed section 24 provides that a person is not liable to an action, suit or proceeding for anything done or omitted to be done in good faith and without negligence in compliance or purported compliance with this Part.

 

Proposed section 25 - Compensation for persons wrongly affected

 

Proposed section 25 provides for the Commonwealth to compensate the owner of an asset where the holder of the asset refuses, in good faith and without negligence, to deal with the asset in accordance with the owner’s instructions, on the basis that the asset is a freezable asset, when it is not in fact a freezable asset.  For example, if a bank freezes the funds in a person’s account in the mistaken but honest belief that the person is a listed person or entity, that person will be entitled to compensation from the Commonwealth for any loss he or she suffers as a result.

 

Proposed section 26 - Injunctions

 

Proposed section 26 provides for a superior court to grant an injunction restraining a person from engaging in conduct where the person has engaged, is engaging, or proposes to engage conduct involving a contravention of Part 4 (ie, dealing in a freezable asset or making an asset available to a proscribed person or entity).  An injunction may only be granted on application by the Attorney-General.

 

A superior court may grant an injunction by consent of all parties to the proceedings even if it is not satisfied that the person has engaged, is engaging, or proposes to engage in conduct involving a contravention of Part 4.  A court may grant an interim injunction pending its determination of an application and may discharge or vary an injunction it has granted.  Injunctions are currently available under section 13 of the UN Charter Act for conduct involving a contravention of the regulations.  Proposed section 26 will enable an injunction to be granted in relation to conduct that would constitute an offence against section 20 or 21.