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Currency (Restrictions on the Use of Cash) Bill 2019



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BILLS DIGEST NO. 89, 2019-20 11 MARCH 2020

Currency (Restrictions on the Use of Cash) Bill 2019 Joseph Ayoub Law and Bills Digest Section

Contents

The Bills Digest at a glance .............................................. 4

Purpose of the Bill ........................................................... 5

Structure of the Bill ......................................................... 5

Background ..................................................................... 5

About the black economy ........................................... 5

Black Economy Taskforce ............................................ 5

Size of the black economy ........................................... 6

Australian Bureau of Statistics .................................. 6

Taskforce ................................................................... 6

Reserve Bank of Australia ......................................... 6

Use of cash as a payment method .............................. 7

Table 1: use and value of cash as a payment method ...................................................................... 7

Use of cash in the black economy ............................... 8

Taskforce recommendations ...................................... 9

Consultation on the proposed cash ban ..................... 9 Effectiveness of Cash limits ....................................... 10

Role of AUSTRAC ....................................................... 11

Financial Transaction Reports Act 1988 .................. 12 Committee consideration .............................................. 12

Senate Economics Legislation Committee ................ 12 Australian Greens’ dissenting report ...................... 13 Senate Standing Committee for the Scrutiny of Bills ............................................................................ 13

Using delegated legislation ..................................... 14

Appropriateness of penalties .................................. 14

Policy position of non-government parties/independents.................................................... 15

Australian Labor Party ............................................... 15

Katter’s Australian Party ........................................... 15

Date introduced: 19 September 2019

House: House of Representatives

Portfolio: Treasury

Commencement: 1 January 2020

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at March 2020.

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Currency (Restrictions on the Use of Cash) Bill 2019 2

Andrew Wilkie ........................................................... 15

Centre Alliance .......................................................... 16

The Australian Greens ............................................... 16

Pauline Hanson’s One Nation ................................... 16

Position of major interest groups................................... 16

Community concerns .............................................. 16

Groups in favour of the Bill ..................................... 17

Industry groups that oppose the Bill ....................... 17

Additional issues ..................................................... 18

Financial implications .................................................... 18

Statement of Compatibility with Human Rights.............. 19

Parliamentary Joint Committee on Human Rights ... 19 Key issues and provisions .............................................. 19

Purpose of the Bill ..................................................... 20

Creation of offences .................................................. 20

Offence: single payment that is $10,000 or more .. 20 Offence: series of payments that total $10,000 or more .................................................................... 21

Key issue—series of payments made for a supply or as a gift .................................................... 21

Stakeholder comments ........................................... 21

Key issue—cash and the cash limit ......................... 22

Application of offences to an entity .......................... 23

Key issue—determining criminal liability of an entity ....................................................................... 23

Key issue—imposing criminal liability on an entity ....................................................................... 23

Table 2: imposition of vicarious criminal liability .... 24 Difference between the offences ............................. 24

Clause 12: application of strict liability ................... 24 Key issue—limit on strict liability ............................ 25

Stakeholder comments ........................................... 25

Clause 13: intention, knowledge or recklessness ... 25 Conduct engaged in outside of Australia .................. 26 Stakeholder comments ........................................... 26

Penalties for contravention....................................... 26

Exceptions to the offences ........................................ 26

Key issue: payments relating to personal or private transactions and gifts .................................. 27

Key issue: payments where the AML/CTF Act or FTR apply ................................................................. 28

Key issue: payments made in digital currency ........ 28 Stakeholder comments ........................................... 29

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Currency (Restrictions on the Use of Cash) Bill 2019 3

Commencement ........................................................ 30

Responsible agency ................................................... 30

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The Bills Digest at a glance Purpose of the Bill

The purpose of the Currency (Restrictions on the Use of Cash) Bill 2019 (the Bill) is to create offences where an entity makes or accepts cash payments of $10,000 or more in certain circumstances. Cash includes both physical and digital currency.

About the offences

Clause 12 creates criminal offences for entities that:

• make or accept a payment in cash where the cash is $10,000 or more or

• make or accept a series of payments for a supply or gift where the total amount of cash is $10,000 or more.

Strict liability applies to some of the physical elements of the offence under clause 12 and the maximum penalty that may be imposed is 60 penalty units—currently equivalent to $12,600.

Clause 13 creates a criminal offence based on the same physical elements as in clause 12 but requires that a fault element is also proven. The maximum penalty that may be imposed under clause 13 is two years’ imprisonment and/or 120 penalty units—currently equivalent to $25,200. A court may impose a maximum penalty on a corporation that is up to five times the amount that can be imposed on a natural person.

Defences

The Rules made under the Bill allow the Minister, by way of legislative instrument, to provide that the proposed offences do not apply to:

• the making or acceptance of a payment of a kind specified by the Rules or

• the making or acceptance of a payment in circumstances specified by the Rules.

The Bill applies special rules for determining the criminal liability of entities that are not legal persons and also allows for the controllers of such entities to be held criminally liable.

Commencement

The Bill is set to commence on 1 January 2020. However, Treasury has stated that it is the Government’s intention that the Bill will not apply retrospectively. Accordingly, the commencement date will have to be amended.

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Currency (Restrictions on the Use of Cash) Bill 2019 5

Purpose of the Bill The purpose of the Currency (Restrictions on the Use of Cash) Bill 2019 (the Bill) is to create offences where an entity makes or accepts cash payments of $10,000 or more in certain circumstances.

Structure of the Bill The Bill consists of three Parts:

• Part 1 sets out preliminary matters including the commencement, objects of and definitions applicable to the Bill

• Part 2 sets out the proposed offences for making or accepting cash payments and allows the Minister to create exceptions to the offences by way of legislative instrument and

• Part 3 sets out how the proposed offences apply when the entity is not a legal person, the recovery of fines from the assets of certain entities and enables the Minster to make ‘rules’ by way of legislative instrument.

Background

About the black economy There is no internationally agreed definition of the black economy and definitions vary within Australia. Generally speaking it covers activities which take place outside the tax and regulatory systems involving both legal and illegal activities.1

Cash is used in the black economy because, unlike some electronic transactions, it does not leave an obvious audit trail.2 Non-compliance with taxation obligations enabled by the use of cash also provides businesses with an unfair competitive advantage by being able to offer goods and services at a discount.3

Black Economy Taskforce The measures contained in the Bill were announced by the Government in the 2018-19 Federal Budget and form part of the Government’s response to the Black Economy Taskforce’s (the Taskforce) final report: Black Economy Taskforce: Final Report—October 2017 (Final Report).4

The Taskforce was chaired by Michael Andrew AO (the former Chair of the Board of Taxation) and was established in December 2016 to develop a multi-pronged policy response to combat the black economy in Australia.5

The Taskforce’s Final Report was provided to the Government in October 2017 and publicly released with the 2018-19 Budget.6 The release was also accompanied by the Government’s

1. Black Economy Taskforce (Taskforce), Black Economy Taskforce: final report—October 2017, report prepared for Treasury, Canberra, October 2017, p. 12. 2. Taskforce, Black Economy Taskforce: final report, op. cit., p. 49; R Finlay , A Staib and M Wakefield, Where's the money‽ An investigation into the whereabouts and uses of Australian banknotes, Research discussion paper, 12, 2018, Reserve Bank of

Australia (RBA), 2018, p. 1. 3. Taskforce, Black Economy Taskforce: final report, op. cit., p. 53. 4. Australian Government, Budget measures: budget paper no. 2: 2018-19, p. 23; Taskforce, Black Economy Taskforce: final

report, op. cit. 5. Treasury, ‘Black Economy Taskforce’, Treasury website. 6. Treasury, ‘Black Economy Taskforce final report’, Treasury website, 8 May 2017; Treasury, ‘Australian Government response

to the Black Economy Taskforce final report’, Treasury website, 8 May 2018.

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Currency (Restrictions on the Use of Cash) Bill 2019 6

response Tackling the Black Economy: Government Response to the Black Economy Taskforce Final Report (Government Response).7

The Bill is part of a range of legislative measures enacted by the 45th Parliament and under consideration by the current Parliament to implement various recommendations contained in the Final Report as well as those recommendations contained in the Taskforce’s Black Economy Taskforce: Interim Report—March 2017.8

Further information on the black economy, including the drivers, consequences and measures announced in the 2018-19 Budget aimed at addressing the black economy can be found in the Parliamentary Library’s Budget Review 2018-19 under the heading ‘Targeting the black economy’.9

Size of the black economy

Australian Bureau of Statistics In 2012, the Australian Bureau of Statistics (ABS) estimated that ‘underground production’ or the ‘cash economy’ accounted for 1.5 per cent of Australia’s Gross Domestic Product (GDP).10 According to the Taskforce, this amounted to approximately $25 billion in 2017 money.11

Taskforce In its Final Report the Taskforce stated that the black economy is larger than estimated by the ABS in 2012 and could be as large as three per cent of GDP; in 2015-16 this equated to $50 billion.12 However, the Taskforce’s definition of the black economy takes in a broader range of conduct than that considered in the ABS study.13 The Taskforce also considered that it is likely that certain elements of the black economy are continuing to grow as a result of a combination of ‘strong incentives, poor transparency and limited enforcement’.14

Reserve Bank of Australia Relying on the ABS’s and Taskforce’s methodology, the Reserve Bank of Australia (RBA) estimates that there was underground production of around $41.5 billion and illegal production of roughly $12.5 billion in 2017-18.15 The RBA uses the term ‘underground production’ to refer to the deliberate concealment of legal activities to avoid tax payments and ‘illegal production’ to refer to activities forbidden by law where there is mutual consent, such as illegal drug production and sale.16

7. Australian Government, Tackling the black economy: government response to the Black Economy Taskforce final report, The Treasury (Treasury), Canberra, May 2018. 8. See for example: Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Act 2018, Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Act 2018, Customs Amendment (Immediate Destruction of Illicit Tobacco) Act 2019

and the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020. 9. J Ayoub, ‘Targeting the black economy’, Budget review 2018-19, Research paper series, 2017-18, Parliamentary Library, Canberra, 2018, pp. 38-46. 10. Australian Bureau of Statistics (ABS), The non-observed economy and Australia’s GDP, 2012: information paper,

cat. no. 5204.0.55.008, ABS, Canberra, 12 September 2013. 11. Taskforce, Black Economy Taskforce: final report, op. cit., p. 25. 12. Ibid., p. 35. 13. Ibid., p. 26. 14. Ibid., p. 35. 15. Finlay et al, Where's the money‽, op. cit., p. 25. 16. Ibid., p. 24.

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Currency (Restrictions on the Use of Cash) Bill 2019 7

Use of cash as a payment method While there are various reports on the use of cash in the economy, there is no comprehensive reporting on the use of cash for transactions of $10,000 or more.

The RBA’s 2016 triennial Consumer Payments Survey (CPS) ‘provides a nationally representative dataset on how Australian consumers make their payments and how this has changed over time’. The CPS shows a consistent decline in both the use of cash as a payment method and the value of cash payments as a proportion of total payments.17 Table 1: use and value of cash as a payment method, shows the use of cash for lower value transactions but does not include transactions of $9,999 or more.

Table 1: use and value of cash as a payment method

2007 2010 2013 2016

Percentage of payments made in cash as a proportion of other payment methods

69% 62% 47% 37%

Value of cash payments as a proportion of total payments

38% 29% 18% 18%

Source: MA Doyle, C Fisher, E Tellez and A Yadav, How Australians pay: evidence from the 2016 Consumer Payments Survey, Research discussion paper, 4, 2017, RBA, 2017, p. 2.

While the use of cash payments for consumer transactions remains the most common payment method for lower-value transactions (in 2016 this was for transactions under $10), this too has been in decline since 2007 when cash was the most common payment method for payments under $41.18

Certain entities that receive or facilitate payments are required to report transactions of $10,000 or more to the Australian Transaction Reports and Analysis Centre (AUSTRAC)—these are known as threshold transaction reports (TTRs); 2.6 million TTRs (that is, transactions of $10,000 or more) were submitted to AUSTRAC in 2018-19 and 3.9 million submitted in 2017-18.19 AUSTRAC reporting requirements are discussed in greater detail under the heading ‘Role of AUSTRAC’.20

17. MA Doyle, C Fisher, E Tellez and A Yadav, How Australians pay: evidence from the 2016 Consumer Payments Survey, Research discussion paper, 4, 2017, RBA, 2017, p. 2. The 2016 CPS recorded information on around 17,000 day to day payments made by over 1,500 participants during a week.

18. Ibid., p. 17. 19. Australian Transaction Reports and Analysis Centre (AUSTRAC), Annual report 2018-2019, AUSTRAC, West Chatswood, NSW, 2019, p. v; AUSTRAC, Annual report 2017-2018, AUSTRAC, West Chatswood, NSW, 2018, p. 34. 20. AUSTRAC, ‘Reporting transactions of $10,000 and over: threshold transaction reports (TTRs)’, AUSTRAC website, last updated

25 February 2020. Motor vehicle dealers who act as insurers or insurance intermediaries and solicitors must submit significant cash transaction reports (SCTRs) instead of TTRs.

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Currency (Restrictions on the Use of Cash) Bill 2019 8

Use of cash in the black economy The Reserve Bank of Australia is the sole issuer and redeemer of Australian banknotes. This means that we know exactly how many banknotes have ever been printed and issued to the public, and how many banknotes, at the end of their life, have been returned to the Reserve Bank and destroyed.

21

The RBA recently estimated that there were approximately $76 billion (as at June 2018) worth of outstanding Australian banknotes.22 The RBA estimates that the outstanding banknotes fall into the following categories:

• banknotes used to facilitate legitimate day-to-day transactions in Australia

• banknotes that are held, either domestically or overseas, as a store of value, for emergency liquidity or other such purposes (referred to as hoarding)

• banknotes used in the shadow economy (either to conceal legal transactions to avoid tax, to pay for illegal goods or to store wealth generated by the sale of illegal goods) or

• banknotes that have been lost or destroyed.23

The RBA emphasised that any attempt to estimate where outstanding banknotes are, and for what purpose they are being used, is ‘an approximation at best’.24 This uncertainty is understandable— previous research conducted by EUROPOL stated ‘the nature of cash means that there is little, if any, concrete data available beyond figures around the volume and value of bank notes issued and in circulation’.25 Nevertheless the RBA’s research indicates:

1. around 15 to 35 per cent of outstanding banknotes are used to facilitate legitimate transactions within Australia;

2. roughly half to three-quarters of outstanding banknotes are hoarded; of this, we can allocate 10-20 percentage points to domestic hoarding [by Australian residents], and up to 15 percentage points to international hoarding [by foreigners];

3. around 4 to 8 per cent of outstanding banknotes are used in the shadow economy, of which, 3-5 per cent are used to conceal legal transactions, 1-2 per cent are used to purchase illegal drugs, and up to 1 per cent are used to store profits from illegal activity; and

4. around 5 to 10 per cent of outstanding banknotes are actually lost. 26 [emphasis added].

While the RBA makes no attempt to estimate the value of transactions over $10,000, it does rely on the Taskforce’s estimation of the size of the black economy and estimates ‘around $5 billion of cash, or around seven per cent of the value of banknotes on issue, is used to facilitate shadow economy activities’.27 Three-quarters are used in ‘underground production’ ($3.75 billion) and one quarter in illegal production ($1.25 billion). However, this assumes that all of these transactions are made in cash, an assumption which the RBA considers is ‘likely incorrect’.28

21. Finlay et al, Where's the money‽, op. cit., p. [i]. 22. Ibid., p. 1. 23. Ibid. 24. Ibid. 25. European Police Office (EUROPOL), Why is cash still king? A strategic report on the use of cash by criminal groups as a

facilitator for money laundering, EUROPOL Financial Intelligence Group, The Netherlands, 2015, pp. 11 and 46. 26. Finlay et al, Where's the money‽, op. cit., pp. 1-2. 27. Ibid., pp. 25-26. 28. Ibid., pp. 25-27.

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Currency (Restrictions on the Use of Cash) Bill 2019 9

The research conducted by the RBA also found that ‘the total cash hoarding by the illicit drug supply chain is in the range of $40 million to $1 billion’. However, by relying on the difference between drug suppliers cash holdings (on average two per cent of the value of their stock of drugs) and the value of all assets gained through crime (approximately 11 per cent of the value of the stock of drugs held), the RBA found that a large share of cash profits is converted into other assets.29

Taskforce recommendations During its consultation, the Taskforce ‘heard examples of large undocumented cash payments being made for houses, cars, yachts, agricultural crops and commodities’.30 According to the Taskforce, a cash transaction ‘makes it easier for businesses to underreport income, and to offer consumers discounts for transactions that reflect avoided obligations’, for example, the avoidance of income tax and GST obligations, while also potentially accessing social security benefits.

Accordingly, the Taskforce recommended an economy-wide cash limit of $10,000, the objective of which is to ‘reduce the ease with which black economy transactions may be made’.31 While the Taskforce considered that the measure would have a positive effect on Commonwealth revenue owing to increased collection of income tax and GST, it noted that implementation may involve an increase in government expenditure, for example, as a result of the enforcement and penalty systems.32

Consultation on the proposed cash ban Treasury embarked on a public consultation about the policy design of the cash payment limit from 24 May 2018 to 1 July 2018. Submissions are available on the Treasury website.33 On 26 July 2019, Treasury released exposure drafts of the Currency (Restrictions on the Use of Cash) Bill 2019 and other related instruments.34

The consultation resulted in a number of submissions from industry stakeholders such as the Australian Banking Association, National Retail Association, NSW Farmers Association, the Law Society of New South Wales and Star Entertainment Group. Submissions were also received from a large number of individuals. In total, 3,620 submissions were received including 198 confidential/non-publishable submissions.35 According to Treasury, the majority of submissions that did not come from industry or regulators ‘discussed common themes, such as the cash payment limit reducing civic freedoms, concerns with negative interest rates and bank-bail-ins and unduly restricting the way cash can be used and stored outside of banks’.36

29. Ibid., p. 29. 30. Taskforce, Black Economy Taskforce: final report, op. cit., p. 53. Information on the Taskforce’s consultation can be found in Treasury’s submission to the Senate Economics Legislation Committee, Inquiry into the provisions of the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions] [Submission no. 70], 14 November 2019.

31. Taskforce, Black Economy Taskforce: final report, op. cit., p. 53. 32. Ibid., p. 54. 33. Treasury, ‘Introducing an economy-wide cash payment limit’, Treasury website. 34. Treasury, ‘Currency (Restrictions on the Use of Cash) Bill 2019’, Treasury website. 35. Ibid. 36. Treasury, Submission to Senate Economics Legislation Committee, Inquiry into the Currency (Restrictions on the Use of Cash)

Bill 2019 [Provisions], [Submission no. 70], 14 November 2019, p. 1.

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Currency (Restrictions on the Use of Cash) Bill 2019 10

Treasury has subsequently released the Currency (Restrictions on the Use of Cash) Rules 2019 as an exposure draft (Exposure Draft Rules) which, among other things, contains proposed carve-outs from the criminal offences contained in the Bill.37

Effectiveness of Cash limits The proposed cash payment limit is not unique to Australia, a number of other countries, including several countries in Europe, have cash transaction limits. The European Consumer Centre France cash payment limitations details those European Union countries which have a cash limit in place. For example, in France, French residents may make cash purchases of up to the value of €1,000 for goods from traders; for non-residents, the limit is €15,000. Both parties are liable for a penalty of up to five per cent of the amount paid where it exceeds the limit.38 Multiple other European States have implemented cash transaction limits, including, for example, Belgium, Greece, Italy and Poland—cash payment thresholds appear to vary between €1,000 and €15,000.39

There is limited analysis available on the effectiveness of cash payment limits in reducing the black economy; Friedrich Schneider undertook some analysis of cash restrictions and reporting in the 2017 paper Restricting or Abolishing Cash: An Effective Instrument for Fighting the Shadow Economy, Crime and Terrorism? Schneider concludes: ‘[t]he available evidence suggests that restrictions on cash use will probably reduce profits from crime, but will certainly not eliminate them’.40 The reduction in shadow economy activity as a result of restrictions on the use of cash could be between two and 20 per cent depending on the measure.41 However, Schneider also considers ‘the abolishment or strict limitation of cash carries the risk of seriously weakening trust in state authorities’ and ‘a limitation or abolition could only be justified by sound reasons and large benefits’.42

Other assessments indicate that so long as the threshold is set at an amount above the value of everyday consumer transactions, the social benefits of cash are not necessarily eroded. This is based on evidence that ‘law-abiding’ citizens are increasingly using other payment methods to facilitate large transactions (€1,000 or more) rather than relying on cash.43 In Limiting the Use of Cash for Big Purchases: Assessing the Case for Uniform Cash Thresholds, the authors consider that an effective cash payment needs to be ‘at a level well above the purchase price of most consumer durables, but low enough to capture the purchase of vehicles and luxury items’.44 This appears consistent with the RBA’s observations regarding cash transactions in Australia—that is, large household transactions are not commonly facilitated by cash:

When we look across the five household surveys we've undertaken since 2007, we have a total of about 82,000 consumer payments by 5,700 individuals. Among those 82,000 payments, there were 20 transactions reported for more than $10,000. None of those used cash. But, to get a slightly bigger sample of large transactions, we might look instead at transactions between $5,000 and $10,000.

37. Treasury, ‘Cash payment limit’, Treasury website. 38. European Consumer Centre France (ECCF), ‘Cash payment limitations’, ECCF website, last updated January 2018. 39. P Sands, H Campbell, T Keatinge and B Weisman, Limiting the use of cash for big purchases: assessing the case for uniform cash thresholds, Occasional paper, Royal United Services Institute for Defence and Security Studies, London, September 2017,

p. 13.

40. F Schneider, ‘Restricting or abolishing cash: an effective instrument for fighting the shadow economy, crime and terrorism?’, paper presented to the International Cash Conference 2017, Island of Mainau, Germany, 25-27 April 2017, p. 17; Sands et al, Limiting the use of cash for big purchases, op. cit., p. 23.

41. Schneider, Restricting or abolishing cash, op. cit., p. 17. 42. Ibid., p. 19. 43. Sands et al, Limiting the use of cash for big purchases, op. cit., p. 6. 44. Ibid., p. viii.

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Currency (Restrictions on the Use of Cash) Bill 2019 11

Altogether, there were 61 transactions over $5,000. One of these was in cash. Nearly half of these transactions used bank transfers, while other payment methods included cheques, credit cards, BPAY, debit cards and PayPal in that order. So, while we cannot rule out some reporting bias, including because some people may be reluctant to report all their spending for privacy reasons, our survey suggests that very large transactions by households are very infrequent and, when they occur, they use electronic payment methods or occasionally cheques.

45 [emphasis added]

ECORYS’ and the Centre for European Policy Studies’ Study on an EU Initiative for a Restriction on Payments in Cash: Final Report highlights the targeted nature of cash restrictions—their effectiveness largely depends on the threshold that is set. In relation to curbing money laundering, cash payment limits are likely to be most effective in preventing the purchase of high-value consumer goods but do little to prevent the regular purchase of low to medium value goods because they will fall below the threshold.46 In the case of curbing tax evasion the authors conclude that a high threshold ‘would not fulfil the purpose of reducing tax evasion’ because ‘the vast majority of tax evasion cases concern small amounts and would not be affected’.47 Cash payment limits are also likely to have limited effect, if any, in circumstances where cash generated from crime is hoarded, re-invested into illegal activities or in cases where reporting obligations already exist under the anti-money laundering/counter-terrorism financing (AML/CFT) regime discussed immediately below.48

Role of AUSTRAC The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) requires a reporting entity that provides a designated service to a customer involving a threshold transaction, to report the transaction to AUSTRAC.49

A ‘threshold transaction’ known as a ‘TTR’, is a transaction involving the transfer of physical currency of $10,000 or more. A reporting entity means a person who provides a designated service.50 Section 6 of the AML/CTF Act sets out the services which are designated services and is summarised by AUSTRAC:

A service that is listed in section 6 of the AML/CTF Act (because it has been identified as posing a risk for money laundering and terrorism financing) and which meets the geographical link. Designated services include a range of business activities in the financial services, bullion, gambling and digital currency exchange sectors. Entities that provide any of these services are reporting entities.

51

TTRs52 for transfers of $10,000 or more in cash (or the foreign currency equivalent) must be submitted by a designated entity within ten business days of the date of the transaction.53

45. A Richards, Evidence to Senate Economics Legislation Committee, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019, (proof), 12 December 2019, p. 32. See also: Sands et al, Limiting the use of cash for big purchases, op. cit., pp. 23-25. 46. ECORYS and Centre for European Policy Studies (CEPS), Study on an EU initiative for a restriction on payments in cash: final report, report prepared for the European Commission and Directorate-General for Economic and Financial Affairs, Brussels,

December 2017, pp. 92 and 132. 47. Ibid., pp. 133 and 97-98. 48. Ibid., p. 92. 49. Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), section 43. 50. AML/CTF Act, section 5. 51. AUSTRAC, ‘Designated service’, AUSTRAC website. 52. AUSTRAC, ‘Reporting transactions of $10,000 and over: threshold transaction reports (TTRs)’, AUSTRAC website, last updated

25 February 2020. 53. AML/CTF Act, section 43.

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Currency (Restrictions on the Use of Cash) Bill 2019 12

AUSTRAC can, among other things, apply for a civil penalty order from the Federal Court of Australia for failing to comply with reporting obligations.54

Financial Transaction Reports Act 1988 The Financial Transaction Reports Act 1988 (FTR Act) was largely replaced by the AML/CTF Act but still operates in relation to some entities that are not subject to the AML/CTF Act. In particular it applies to solicitors and car dealers acting as intermediaries who provide insurance or act as insurance intermediaries. Solicitors are required to report any transaction of $10,000 or more in physical currency to AUSTRAC.55 Similarly, motor vehicle dealers who provide insurance or act as insurance intermediaries must also report cash transactions of $10,000 or more to AUSTRAC.56

Committee consideration

Senate Economics Legislation Committee The Bill was referred to the Senate Economics Legislation Committee (the Committee) for inquiry and report by 28 February 2020. Details of the inquiry are at the inquiry homepage.

Submissions closed on 15 November 2019. The Committee received a total of 2,659 submissions. The Committee resolved to publish 147 submissions which represent a selection of recurring views expressed by stakeholders. According to the Committee:

The committee has read and examined all submissions to the inquiry and while they are not all published, they will be referenced and discussed in the inquiry report as concerns regarding the bill alongside discussion regarding those submissions that directly addressed the provisions of the bill itself.

57

Public hearings were held in Canberra on 12 December 2019 and in Sydney on 30 January 2020.58

The Committee delivered its report into the inquiry on 28 February 2020. The Committee recommended the Bill be passed contingent on the following recommendations:

• recommendation 1—noting the evidence from CPA Australia and others, the Government review existing powers and trends in the digital economy to assess whether the Bill is the most effective response to the black economy

• recommendation 2—the Government review the penalty provisions, particularly in relation to one-off breaches as opposed to repeated offences, which are more likely to be money laundering and tax evasion, to ensure they are not overly harsh

• recommendation 3—the Government respond to concerns raised by the Australian Small Business and Family Enterprise Ombudsman, and others, regarding the availability of electronic banking services (ATMs and internet banking) in remote and regional Australia, including during natural disasters, and whether there will be a detrimental economic impact on those areas

54. AUSTRAC, ‘Consequences of not complying’, AUSTRAC website, last updated 7 July 2019. 55. Financial Transaction Reports Act 1988 (FTR Act), section 15A. 56. FTR Act, section 7. 57. Senate Economics Legislation Committee, ‘Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions]’, Inquiry

homepage. 58. Senate Standing Committee on Economics, ‘Public hearings’, ‘Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions]’, Inquiry homepage.

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Currency (Restrictions on the Use of Cash) Bill 2019 13

• recommendation 4—the Government assess the impact of the Bill on particular migrant communities, particularly in relation to funerals, to determine if there are potential negative impacts

• recommendation 5—the commencement date of the Bill be extended, and that a final agreed date be informed through consultation with business to allow sufficient time for businesses to implement system changes and undertake training, as required

• recommendation 6—the Government develop a communications strategy to assist in dispelling some of the unsubstantiated claims regarding the Bill. The strategy needs to be in place before the commencement of the Bill to allow sufficient time to inform the public and businesses of their responsibilities and

• recommendation 7—the exemption for payments relating to personal and private transactions be provided for directly in the Bill.59

Australian Greens’ dissenting report Australian Greens’ Senator Peter Whish-Wilson issued a dissenting report recommending the Bill be opposed.60 In summary, the Greens consider the Bill should be opposed for the following reasons:

• cash offers an individual the ability to transact anonymously outside the banking system—there needs to be a thorough consideration of individual privacy and societal norms if individual’s transactions are going to be subject to further scrutiny61

• the Bill is a step toward the abolition of cash—this is of concern because cash provides the ability to transact when digital systems are disrupted. Further, an abolition would provide greater control over individuals’ money should negative interest rates be implemented62

• there are other mechanisms to reduce tax avoidance and money laundering, including for example, by including real estate agents, accountants and lawyers within the remit of the AML/CTF laws63 and

• the use of strict liability offences is ‘heavy-handed’.64

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) raised concerns about:

• the use of delegated legislation to carve out exceptions to the proposed offences and

• the appropriateness of penalties that may be imposed for contravention of the proposed offences.65

59. Senate Economics Legislation Committee, Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], The Senate, Canberra, February 2020, pp. vii-viii. 60. Australian Greens, Dissenting report, Senate Economics Legislation Committee, Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], The Senate, Canberra, February 2020, pp. 37-42. 61. Ibid., pp. 37-38. 62. Ibid., pp. 38-39. 63. Ibid., pp. 39-41. 64. Ibid., p. 41. 65. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2019, The Senate, 16 October 2019, pp. 19-20.

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Currency (Restrictions on the Use of Cash) Bill 2019 14

Using delegated legislation Clauses 12 and 13 of the Bill create new criminal offences for entities that accept or make a payment in cash where the cash equals or exceeds $10,000. Subclauses 12(5) and 13(3) enable the Minister to, by way of legislative instrument, provide that the proposed offences do not apply to:

• the making or acceptance of a payment of a kind specified by the rules or

• the making or acceptance of a payment in circumstances specified by the rules.

The Scrutiny of Bills Committee considered that unless there is an adequate justification for doing so, the primary legislation should deal with such ‘significant matters’ rather than being left to delegated legislation. The Scrutiny of Bills Committee stated that the need for flexibility, which is the justification provided in the Explanatory Memorandum, is not, of itself, an adequate justification.66 The Committee requested that the Minister provide detailed advice as to:

• why it is considered necessary and appropriate to leave the exceptions to the offences to delegated legislation and

• whether it would be appropriate for the Bill to be amended to include a non-exhaustive list of the currently known kinds of transactions that will be exempt, with further kinds of exempt transactions able to be specified by the rules.67

The Minister’s response to the Scrutiny of Bills Committee indicated that having exceptions to the proposed offences both in the primary legislation and the rules ‘would be cumbersome and introduce unnecessary complexity’. As flexibility was required to establish new defences, the Minister considers that the rules are the most appropriate place for the defences.68

Notwithstanding the Minister’s response, the Scrutiny of Bills Committee does not think that the Minister has adequately justified the need for the defences to be determined by delegated legislation.69

Appropriateness of penalties The maximum penalty that may be imposed on an entity under clause 12 is 60 penalty units (currently equivalent to $12,600) and under clause 13, 120 penalty units, (currently equivalent to $25,200) and/or two years imprisonment.70

The Scrutiny of Bills Committee noted that the Explanatory Memorandum does not provide any specific justification for the proposed penalty that can be imposed under clause 13 nor does it provide any consideration of comparable penalties for other offences in Commonwealth legislation as required by the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.71 Accordingly, the Scrutiny of Bills Committee requested that the

66. Ibid., p. 18. 67. Ibid., p. 19. 68. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 8, 2019, The Senate, 13 November 2019, p. 63. 69. Ibid., p. 64. 70. Subclauses 12(1), 12(2), 13(1) and 13(2); Crimes Act 1914, subsection 4AA(1). Also, under subsection 4B(3) of the Crimes Act,

a court may impose a maximum penalty on a corporation of up to five times the amount that can be imposed on a natural person. 71. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2019, op. cit., p. 19; Attorney-General's Department (AGD), A guide to framing Commonwealth offences, infringement notices and enforcement powers, AGD, Canberra,

September 2011, p. 39.

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Currency (Restrictions on the Use of Cash) Bill 2019 15

Minster provide justification for the custodial penalty under clause 13 and specific examples of applicable penalties for comparable Commonwealth offence provisions.72

In response to that request, the Minister provided information about the comparable offences in the Criminal Code.73 The Scrutiny of Bills Committee requested that the information provided by the Minister be included in the Explanatory Memorandum, but was otherwise satisfied.74

Policy position of non-government parties/independents

Australian Labor Party The Australian Labor Party (Labor) did not oppose the Bill in the House of Representatives (the House).75 In his second reading speech on the Bill, Labor’s Stephen Jones acknowledged the considerable community concern with the Bill and recommended the ‘swift passage’ of the Bill to the Senate ‘where it may be further interrogated and investigated’.76

Labor Senators formed part of the Committee inquiry into the provisions of the Bill, which recommended the Bill be passed contingent on seven wide-ranging recommendations (as set out above under Senate Economics Legislation Committee).

Katter’s Australian Party Bob Katter voted against the Bill in the House citing concerns with the ability of businesses to be able to store and trade in cash in times of crisis and also considered that the Bill amounts to ‘Big Brother is watching’ legislation.77

Bob Katter reiterated his position in March 2020; Mr Katter further cited concerns that businesses would be prevented from transacting where digital transactions methods have been disrupted— because for example, a natural disaster has occurred.78 On 5 March 2020, Mr Katter attempted to highlight the impact the Bill would have by purchasing $19,000 worth of gold bullion with cash, reportedly stating: ‘In a few weeks’ time that will be illegal … Your right to this legal tender is being taken off you’.79

Andrew Wilkie Andrew Wilkie voted against the Bill in the House, citing among other things, considerable community angst with the proposed offences.80 Mr Wilkie emphasised that there are existing laws to address criminal activity, but considers those laws are not being enforced.81

72. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2019, op. cit., p. 20. 73. The information is replicated in Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 8, 2019, op. cit., p. 64-65. 74. Ibid., p. 65. 75. Australia, House of Representatives, ‘Currency (Restrictions on the Use of Cash) Bill 2019’, Votes and proceedings, HVP 27,

24 October 2019, p. 397. 76. S Jones, ‘Second reading speech: Currency (Restrictions on the Use of Cash) Bill 2019’, House of Representatives, Debates, 24 October 2019, p. 5324. 77. Australia, House of Representatives, ‘Currency (Restrictions on the Use of Cash) Bill 2019’, Votes and proceedings, op. cit.,

p. 397; B Katter, ‘Second reading speech: Currency (Restrictions on the Use of Cash) Bill 2019’, House of Representatives, Debates, 24 October 2019, p. 5327. 78. B Katter, Katter urges Senators to use some 'common cents' when voting on Cash Ban Bill, media release, 5 March 2020. 79. ‘Independent Katter splashes cash to highlight ban plan’, The Canberra Times, 6 March 2020, p. 13. 80. Australia, House of Representatives, ‘Currency (Restrictions on the Use of Cash) Bill 2019’, Votes and proceedings, op. cit., p. 397; A Wilkie, ‘Second reading speech: Currency (Restrictions on the Use of Cash) Bill 2019’, House of Representatives, Debates, 24 October 2019, p. 5330. 81. Wilkie, ‘Second reading speech: Currency (Restrictions on the Use of Cash) Bill 2019’, op. cit., p. 5330.

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Currency (Restrictions on the Use of Cash) Bill 2019 16

Mr Wilkie also expressed concerns about the potential effect the Bill might have should Australia experience negative interest rates.82

Centre Alliance Centre Alliance’s Rebekha Sharkie voted against the Bill in the House; however, in her second reading speech, Ms Sharkie stated that Centre Alliance ‘will reserve its position in the Senate until the Senate inquiry into the bill concludes’.83

Ms Sharkie cited a number of concerns with the Bill, including, among other things, that the Bill is an ‘unreasonable restriction’ on peoples’ ‘personal freedom’ and that it criminalises other innocent conduct.84

Ms Sharkie echoed the concerns expressed by Mr Wilkie regarding an alleged failure to enforce existing laws, particularly those administered by AUSTRAC. In addition, she considered that older Australians who live in regional areas would be disadvantaged by the Bill.85

Centre Alliance Senator Rex Patrick formed part of the Committee inquiry into the provisions of the Bill, which recommended the Bill be passed contingent on seven wide-ranging recommendations (as set out above under Senate Economics Legislation Committee).

The Australian Greens The Australian Greens’ Adam Bandt voted against the Bill in the House.86 Senator Whish-Wilson also issued a dissenting report to the Committee inquiry into the provisions of the Bill recommending that the Bill be opposed (the Greens’ reasons are discussed above under the heading ‘Australian Greens’ dissenting report’).87

Pauline Hanson’s One Nation In a Facebook post from August 2019, Pauline Hanson’s Please Explain stated that Pauline Hanson’s One Nation would not be supporting the Bill.88 The Facebook post states that it is an attempt to move cash into the banking system so that it will be spent on consumption and contribute to economic growth.

Position of major interest groups

Community concerns The development of the Bill has generated significant community interest as evidenced by the number of submissions to Treasury during its consultation and to the Senate Economics Legislation Committee in response to its current inquiry. Common grounds on which individual submitters and some stakeholder groups oppose the Bill include:

• it is an unnecessary encroachment on peoples’ civil and economic liberties

82. Ibid. 83. House of Representatives, ‘Currency (Restrictions on the Use of Cash) Bill 2019’, Votes and proceedings, op. cit., p. 397; R Sharkie, ‘Second reading speech: Currency (Restrictions on the Use of Cash) Bill 2019’, House of Representatives, Debates, 24 October 2019, p. 5333.

84. Sharkie, ‘Second reading speech: Currency (Restrictions on the Use of Cash) Bill 2019’, op. cit., p. 5333. 85. Ibid. 86. House of Representatives, ‘Currency (Restrictions on the Use of Cash) Bill 2019’, Votes and proceedings, op. cit., p. 397. 87. Australian Greens, Dissenting report, op. cit., p. 42. 88. P Hanson (Pauline Hanson’s Please Explain), ‘Cash ban on purchases over $10,000’, Facebook update, 5 August 2019.

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Currency (Restrictions on the Use of Cash) Bill 2019 17

• little evidence has been provided by the Government that the proposed measures will be effective in achieving the objects of the Bill and

• an objective of the Bill is to compel people to move their cash into the banking system and that this should be opposed for the following reasons:

- people will be restricted to using the banking system to make large purchases and may incur transaction fees which they may not have incurred had they paid in cash - people have concerns about a perceived ‘bank bail-in’ or the effect that possible negative interest rates may have on their savings.89 It should be noted that in relation to the issue of negative interest rates, Head of Payments Policy at the RBA, Dr Tony Richards, has flagged that ‘[t]here are almost no examples of negative interest rates for household deposits in those few countries that have had negative policy rates’.90

Groups in favour of the Bill Stakeholders such as Chartered Accountants Australia and New Zealand (CAANZ) and Uniting Church in Australia (Synod of Victoria and Tasmania) are in favour of the Bill on the grounds that it is likely to be effective in reducing black economy activity by requiring large transactions to be facilitated through some means other than cash that leaves a reporting trail.91

Such groups also support Treasury’s position that the Bill is unlikely to affect ‘everyday transactions’ and it is a necessary measure to prevent businesses who are engaged in black economy activity from gaining a competitive advantage over businesses that are not.92

Industry groups that oppose the Bill Industry groups that oppose the Bill include the Chartered Practicing Accountants Australia (CPA), NSW Farmers Association, Housing Industry Association (HIA), the Australian Chamber of Commerce and Industry, Gumtree, The Citizens Party (formerly the Citizens Electoral Council) and the Australian Taxpayers Alliance.93 It should be noted that some groups generally state their

89. See for example: Citizens Party, Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 136], 15 November 2019; Civil Liberties Party, Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 18], n.d.; NSW Farmers’ Association, Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 58], 5 November 2019.

90. Richards, Evidence to Senate Economics Legislation Committee, op. cit., p. 32. 91. Chartered Accountants Australia and New Zealand (CAANZ), Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 80], 15 November 2019, p. 2; Uniting Church in Australia, Synod of Victoria and Tasmania (Uniting Church), Submission to Senate Standing Committee on

Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 142], 15 November 2019, p. 10. 92. Treasury, Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 70], 14 November 2019, pp. 2-3; Uniting Church, Submission, op. cit., pp. 7-8; CAANZ,

Submission, op. cit., pp. 2-3. 93. CPA Australia (CPA), Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 67], 13 November 2019, p. 1; NSW Farmers’ Association, Submission,

op. cit., p. 2; Housing Industry Association (HIA), Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 73], 15 November 2019, pp. 1 and 10; Australian Chamber of Commerce and Industry (ACCI), Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 144], 15 November 2019, p. 1; Gumtree, Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 66], n.d., pp. 1-2; Citizens Party, Submission, op. cit., p. 1.; Australian Taxpayer’s Alliance (ATA), Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 35], 2 November 2019.

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Currency (Restrictions on the Use of Cash) Bill 2019 18

support for the objectives of the Bill, but consider that the measures are not the most appropriate means of achieving this outcome.94

Grounds on which the Bill is opposed include that a more appropriate means could be used to achieve the objects of the Bill and, as currently drafted, the objects of the Bill are unlikely to be achieved, whether because:

• those engaged in shadow economy activity are likely to continue to engage in such activity notwithstanding the ban or

• the limit of $10,000 is at a level that it is unlikely to capture the majority of transactions which undermine the integrity of the tax system.95

For example, HIA submits that the ‘Bill will have little effect on tax leakage and criminal activities associated with large cash payments’, because, among other things, and in the context of the residential building industry, the black economy ‘most likely involve[s] payments of less than $10,000, rather than over $10,000’.96 Outside the owner-builder context, payments over $10,000 are likely to be ‘recorded and paid electronically or by cheque’.97 Similarly, CPA Australia expressed its concern ‘about the lack of a strong evidence-based case to justify the contravention of existing criminal law principles and the proposed criminal penalties’.98

Additional issues Notwithstanding stakeholders’ particular positions on the Bill, there are a number of additional issues which have been identified by stakeholders, including:

• allowing the Minster to, by way of legislative instrument, effectively control the scope of the proposed offences by way of exemptions to the offences99

• the lack of any one particular Government agency having oversight of the measure100

• the limited time available to communicate with the public and implement business systems to account for the changes101 and

• the imposition of strict liability criminal offences absent any substantial defences, particularly in the context of employees acting within the scope of their employment.102

Financial implications The Explanatory Memorandum states that the Bill is expected to have an ‘unquantifiable impact on revenue over the forward estimates period’.103 The 2018-19 Budget states: ‘[t]here is no

94. See for example: CPA, Submission, op. cit., p. 7; ACCI, Submission, op. cit., p. 1; Gumtree, Submission, op. cit., p. 2. 95. CPA, Submission, op. cit., p. 1; HIA, Submission, op. cit., p. 4; Citizens Party, Submission, op. cit., p. [3]. 96. HIA, Submission, op. cit., p. 4. 97. Ibid., p. 5. 98. CPA, Submission, op. cit., p. 1. 99. Ibid., pp. 4-5; Law Council of Australia (LCA), Submission to Senate Standing Committee on Economics, Inquiry into the

Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 145], 21 November 2019, p. 2. 100. LCA, Submission, op. cit., p. 1. 101. Gumtree, Submission, op. cit., p. 3; HIA, Submission, op. cit., p. 10; Flight Centre Travel Group (Flight Centre), Submission to

Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 106], 15 November 2019, p. 1. 102. See for example: LCA, Submission, op. cit., pp. 2-3. 103. Explanatory Memorandum, Currency (Restrictions on the Use of Cash) Bill 2019, p. 3.

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Currency (Restrictions on the Use of Cash) Bill 2019 19

quantifiable estimated impact of this measure in isolation. However, this measure is expected to support the measures on the black economy and associated revenue’.104

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government acknowledged that the Bill engages the right to the presumption of innocence and the right to privacy but considers that the Bill is compatible with those rights.105

Parliamentary Joint Committee on Human Rights The Parliamentary Joint Committee on Human Rights (Human Rights Committee) considers that the Bill engages the right to privacy because the effect of the Bill is to require a person to use a digital means of transacting which, ‘creates records of an individual’s private activities and expenditure’.106 The Committee states that limitations on the right ‘will be permissible where they pursue a legitimate objective, are rationally connected to that objective and are a proportionate means of achieving that objective’.107

The Human Rights Committee accepts that that protection of the integrity of the tax system and other Commonwealth laws to prevent participation in the black economy is ‘likely to be a legitimate objective’ and the measure is rationally connected to achieving this objective.108 However, the Committee considers that the Statement of Compatibility with Human Rights contained in the Explanatory Memorandum to the Bill does not consider ‘how the impact of the bill on individuals’ privacy is proportionate to the objective of reducing the costs of black economy activity’.109

The Human Rights Committee takes the view that the cash payment limit of $10,000 assists with the measure being proportionate, but draws the attention of the Minster and Parliament to the fact that if the cash payment limit were lower, the Committee would ‘expect a more detailed justification for this limitation’.110

Key issues and provisions Interaction with the Criminal Code The Criminal Code Act 1995 contains the Criminal Code. Chapter 2 of the Criminal Code entitled ‘General Principles of Criminal Responsibility’ contains a comprehensive statement of principles that apply not only to all offences enacted in the Criminal Code but to all of the Commonwealth offences committed on and after 15 December 2001—unless the relevant legislation specifies that other provisions apply. The Criminal Code provides that offences have:  physical elements, for example doing or not doing an action,111 and

104. Australian Government, Budget measures: budget paper no. 2: 2018-19, p. 23. 105. The Statement of Compatibility with Human Rights can be found at pages 19-22 of the Explanatory Memorandum to the Bill. 106. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 6, 2019, 5 December 2019, p. 68. 107. Ibid. 108. Ibid., p. 69. 109. Ibid. 110. Ibid., p. 70. 111. Criminal Code Act 1995 (Criminal Code), Part 2.2, Division 4.

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 fault elements, such as intention, knowledge, recklessness or negligence.112 If the legislation creating an offence does not specify a fault element for a physical element consisting of conduct, intention is the fault element for that physical element.113 If the legislation creating the offence does not specify a fault element for a physical element that consists of a circumstance or a result, recklessness is the fault element for that physical element.114 If a law that creates an offence provides that the offence is an offence of strict liability there are no fault elements for any of the physical elements of the offence.115 Laws may also provide for strict liability to apply to particular elements of the offence. The standard of proof for a criminal offence is ‘beyond reasonable doubt’ unless otherwise specified.116 The penalties for a criminal offence may be a fine or a term of imprisonment, or both. Operation of the Crimes Act The Crimes Act 1914 is also relevant in that it deals with the amounts of penalties, including the method of calculating the penalty for a person or body corporate.117 Subsections 15B(1) and 15B(1A) of the Crimes Act set out the time within which the prosecution of an individual or body corporate may be commenced. Role of the CDPP The Director of Public Prosecutions Act 1983 (DPP Act) provides that it is a function of the Commonwealth Director of Public Prosecutions (CDPP) to institute prosecutions for offences against the laws of the Commonwealth in most instances.118

Purpose of the Bill The objects of the Bill are set out in clause 3:

• the principal object is to protect the integrity of the Commonwealth taxation system by preventing the use of cash in order to avoid scrutiny by the Commissioner of Taxation (the Commissioner) and

• a secondary object is to protect the integrity of other laws.

Creation of offences Clauses 12 and 13 of the Bill create criminal offences for entities that make or accept certain cash payments. The offences apply both in respect of a single cash payment as well as in the case of series of cash payments that exceed $10,000.

Offence: single payment that is $10,000 or more Subclauses 12(1) and 13(1) provide that an entity commits an offence if:

• the entity makes or accepts a payment to/from another entity

• the payment is or includes an amount of cash and

112. Criminal Code, Part 2.2, Division 5. 113. Criminal Code, subsection 5.6(1). 114. Criminal Code, subsection 5.6(2). 115. Criminal Code, subsection 6.1(1). 116. Criminal Code, section 13.2. 117. See sections 4AA to 4E of the Crimes Act. 118. Director of Public Prosecutions Act, subsection 6(1).

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Currency (Restrictions on the Use of Cash) Bill 2019 21

• the value of the cash equals or exceeds the cash payment limit.119

Offence: series of payments that total $10,000 or more Subclauses 12(3) and 13(2) provide that an entity commits an offence if:

• the entity makes or accepts a payment to/from another entity

• the payment is part of a series of payments that are made for a supply or as a gift

• the payment is or includes an amount cash and

• the total value of all amounts of cash equals or exceeds the cash payment limit.120

Key issue—series of payments made for a supply or as a gift Supply is defined by reference to the definition of ‘supply’ in section 9-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). It is defined in that provision as follows: ‘a supply is any form of supply whatsoever’.121 According to the Explanatory Memorandum to the Bill:

To constitute a series of payments, the payments must be for the same supply or part of a single gift. It is not sufficient that the payments occur between the same parties, even if they occur on a regular basis, where distinct things are supplied. 122

The Explanatory Memorandum to the Bill provides examples of a ‘series of payments made for a supply’ that are likely to be captured by subclauses 12(3) and 13(2), including, the purchase of a car or the payment of a package holiday by instalments.123

However, the definition of supply is modified by clause 10 so that payments for a supply which is made on a periodic basis are not captured, for example, the payment of rent on a periodic basis for a property.124

An example of a series of payments that constitute a gift, would be an individual providing ‘a very substantial donation to a charity in three instalments paid annually - each of the separate payments under the agreement is part of the one committed pledge’.125

Stakeholder comments Notwithstanding the inclusion of clause 10 in the Bill, CPA submits that it is still likely to give rise to interpretational and administrative difficulties as it will be necessary to determine ‘what is a “periodic basis”’ or a “periodic component”’.126

In practice, this is going to require businesses to put in place systems to account for a series of payments they receive from their customers, for example, as submitted by the Law Council of Australia (LCA), ‘fundamental reconfiguration’ of business systems will be required:

119. Subclause 12(1) and subclause 13(1). 120. Subclause 12(3) and subclause 13(2). 121. The definition of ‘supply’ is very expansive and includes, for example, a supply of goods or services, a provision of advice or information, a grant, assignment or surrender of real property, a creation, grant, transfer, assignment or surrender of any

right, a financial supply or an entry into, or release from, an obligation. 122. Explanatory Memorandum, op. cit., p. 9. 123. Explanatory Memorandum, op. cit., pp. 9-10. 124. Clause 10; Explanatory Memorandum, op. cit., pp. 9-10. 125. Explanatory Memorandum, op. cit., p. 9. 126. CPA, Submission, op. cit., p. 7.

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While the basic proposition of the Bill is very simple, the compliance requirements to implement it are far reaching, complex, and will require fundamental reconfiguration of the accounting systems of all businesses that accept cash or digital currency, to recognise and track cash payments including instalment payments.

127 [emphasis added]

It also appears that there are circumstances in which interpretational difficulties may arise, for example HIA takes the view that the payments for each stage of completion for the construction of a residential home will constitute a separate supply, however, ‘HIA understands that under the Bill construction work is to be considered as one ‘supply’ and therefore the proposed offence would apply where the cumulative cash amounts taken equals or exceed $10,000’.128

Key issue—cash and the cash limit For the purposes of the Bill, cash includes both physical and digital currency—these terms are defined by reference to the AML/CTF Act.129

Physical currency means the coin and printed money (whether of Australia or of a foreign country) that is designated as legal tender and circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue.130

Digital currency means a digital representation of value that:

• functions as a medium of exchange, a store of economic value, or a unit of account

• is not issued by or under the authority of a government body

• is interchangeable with money (including through the crediting of an account) and may be used as consideration for the supply of goods or services and

• is generally available to members of the public without any restriction on its use as consideration.131

The Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (AML/CTF Rules) may otherwise declare a means of exchange or digital process or crediting to be digital currency, and also exclude a digital currency.132

In the case of cash paid in foreign currency or digital currency, the value in Australian currency is worked out in accordance with the methods made by the Minster under the Rules.133 The Exposure Draft Rules rely on the method determined by the Commissioner for the purposes of the GST Act.134

The cash payment limit is $10,000; the limit is set under clause 8 of the Bill and any change to the limit will need to be made by way of an Act of Parliament.

127. LCA, Submission, op. cit., p. 2. 128. HIA, Submission, op. cit., p. 9. 129. Clause 7, definition of ‘cash’, ‘digital currency’ and ‘physical currency’. 130. AML/CTF Act, section 5, definition of ‘physical currency’. 131. AML/CTF Act, section 5, paragraph (a) of the definition of ‘digital currency’. 132. Ibid. 133. Clause 7, definition of ‘value’ and clause 9. 134. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), sections 5 and 6. The Commissioner has determined

separate methods for determining the value of foreign currency and digital currency in the Goods and Services Tax: Foreign Currency Conversion Determination 2018 and the Goods and Services Tax: Digital Currency Conversion Determination 2019.

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Application of offences to an entity The offences created by the Bill apply to the making or acceptance of ‘payments’ by an entity that exceed the cash payment limit. According to the Explanatory Memorandum:

Payment is used in its broadest sense encompassing any transfer of financial value. It is not limited to payments that are payments ‘for’ something and includes gifts and loans. Examples of payments include the provision of wages and a donation to a charity. 135

Clause 7 of the Bill adopts the definition of the term entity which is used in the Income Tax Assessment Act 1997; it is an expansive definition and includes an individual, body corporate, body politic, partnership, unincorporated association, trust, superannuation fund and approved deposit fund.136 According to the Explanatory Memorandum these are ‘the structures through which Australians traditionally conduct business and which are subject to tax and other regulatory obligations’.137

Key issue—determining criminal liability of an entity Clause 15 in Part 3 of the Bill imports the provisions in Division 12 in Part 2.5 of the Criminal Code that are used to determine criminal liability of corporate entities. It applies those provisions to determine the criminal liability of entities that are not legal persons, for example, partnerships.

Under section 12.2 of the Criminal Code as modified by subclause 15(1), a physical element of the offence will be attributed to an entity that is not a legal person if it is committed by an employee, agent or officer of the entity who is acting within the actual or apparent scope of their employment or authority. Subclause 15(2) sets out when a person will be deemed to be an employee, agent or officer of the entity and acting within the actual or apparent scope of their employment or authority.

The fault elements of intention, knowledge or recklessness (but not negligence) will be attributed to an entity that is not a legal person if the entity has expressly, tacitly or impliedly authorised or permitted the commission of the offence.138

Key issue—imposing criminal liability on an entity Clause 16 in Part 3 of the Bill imposes criminal liability on certain persons who are in control of entities that are not legal persons—as stated in the Guide to Framing Commonwealth Offences ‘vicarious, collective or deemed liability is when one person is made liable for the wrongful act of another on the basis of the legal relationship between them’.139 According to the Guide to Framing Commonwealth Offences:

A business structure not set up as a corporation, such as a partnership or trust, is not criminally responsible for the acts or omissions of one of its members because it is not a separate legal entity. In a partnership, the partners themselves are often individually or collectively responsible for acts or omissions connected with the business, for example, for upholding contractual obligations made with other businesses. However, holding all partners or members of non-corporate business associations collectively responsible for the criminal conduct of one individual member should generally be avoided

135. Explanatory Memorandum, op. cit., p. 8. 136. Subclause 7, definition of ‘entity’. Entity is defined in section 960-100 of the Income Tax Assessment Act 1997. 137. Explanatory Memorandum, op. cit., p. 8. 138. Criminal Code, subsection 12.3(1). 139. AGD, A guide to framing Commonwealth offences, infringement notices and enforcement powers, op. cit., p. 32.

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Currency (Restrictions on the Use of Cash) Bill 2019 24

because it is inconsistent with the principle that individuals should not be criminally responsible for the conduct of others (guilt by association). 140

Subclause 16(1) imposes criminal liability for offences committed by the following entities in accordance with table 2: imposition of vicarious criminal liability. A defence is available for those persons taken to have committed an offence because of subclause 16(1) if they:

• did not aid, abet, counsel or procure the relevant act or omission and

• were not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission).141

Table 2: imposition of vicarious criminal liability

If an offence is committed by an entity that is … … the offence is taken to have been committed by …

an unincorporated association or body each member of its committee of management.

a partnership each of the partners.

a trust the trustee of the trust, or, if the trust has

more than one trustee, by each of the trustees.

a superannuation fund the trustee of the fund, or, if the fund has

more than one trustee, by each of the trustees. However, if a fund does not have a trustee, the offence is taken to have been committed by the entity or entities that manage the fund.

Source: Explanatory Memorandum, Currency (Restrictions on the Use of Cash) Bill 2019, p. 16; subclause 16(1).

Difference between the offences

Clause 12: application of strict liability Strict liability applies to certain physical elements of the offences under subclauses 12(1) and (3), such as the payment method and the value of the cash.142 Strict liability removes a fault element that would otherwise attach to a physical element of an offence—this means that the prosecution only needs to show the physical element was engaged in, or existed.143 In this case, it will be sufficient for the prosecution to establish:

• that the payment is or includes an amount cash and

• the value of the cash equals or exceeds the cash payment limit.

140. Ibid., pp. 32-33. 141. Subclause 16(2). 142. Subclauses 12(2) and 12(4). 143. Criminal Code, subsection 6.1(2); AGD, A guide to framing Commonwealth offences, infringement notices and enforcement

powers, op. cit., p. 22.

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Currency (Restrictions on the Use of Cash) Bill 2019 25

However, a person will not be liable for a strict liability offence where they can establish an honest mistake of fact.144 The onus is on the entity to establish that it mistakenly but reasonably believed that a payment did not include an amount of cash that was equal to or exceeded the cash payment limit.145 As stated in the Explanatory Memorandum, the use of strict liability ‘places a duty on entities to ensure they design systems to ensure they do not make or accept such a payment, which is necessary for the ban to be effective’.146

Key issue—limit on strict liability While strict liability applies to both the payment method and value of the cash, it does not apply to the making or acceptance of the payment.

In this case, the entity must have intended to make or accept the payment or series of payments, and in the case of the offence under subclause 12(3), the entity must also have intended that the payment is part of a series of payments for a supply or made as a gift.147

Stakeholder comments Several stakeholders expressed their concern with the application of strict liability to the offences.148 For example, the LCA contrasts the proposed offences with the current reporting requirements under the AML/CTF regime and submits:

This ban exposes front line staff of retail and wholesale business operations, potentially including large numbers of low paid and unskilled employees, to criminal consequences for conduct within the scope of their employment and which they may have no control over, without regard to the ML/TF [money laundering/terrorism financing] risk and other circumstances of the transaction underlying the offence, or the individual’s role in it.

149

The LCA further submits that the Bill should include defences for employees acting in accordance with their training and direction.150

Clause 13: intention, knowledge or recklessness Subclauses 13(1) and (2) provide for offences in the same terms as those under clause 12 of the Bill, except that strict liability does not apply. In this case, the fault element that applies to the payment method and value of the cash is recklessness.151 If recklessness is the fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element:

This means that an entity will only commit these offences if, in addition to satisfying the requirements for the strict liability offences, the entity knew that there was at least a real risk that the payment would result in the total amount of cash paid or received equalling or exceeding the cash payment limit. 152

144. Criminal Code, paragraph 6.1(2)(b). 145. Criminal Code, section 9.2. 146. Explanatory Memorandum, op. cit., p. 20. 147. Criminal Code, section 5.6(1). 148. Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Submission to Senate Standing Committee on

Economics, Inquiry into the Currency (Restrictions on the Use of Cash) Bill 2019 [Provisions], [Submission no. 143], 18 November 2019, p. 1; CPA, Submission, op. cit., p. 4; LCA, Submission, op. cit., p. 2. 149. LCA, Submission, op. cit., p. 2. 150. Ibid., p. 3 151. Criminal Code, subsection 5.6(2). 152. Explanatory Memorandum, op. cit., p. 12; Criminal Code, subsection 5.4(4).

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Currency (Restrictions on the Use of Cash) Bill 2019 26

Conduct engaged in outside of Australia Subclauses 12(6) and 13(4) extend the scope of the offences to conduct engaged in by Australian citizens, residents or corporations outside of Australia if the payment or series of payments is for a supply and it occurs wholly or partly in Australia.153 However, a defence is available to Australian residents if the conduct which constitutes the offence is not an offence in the foreign jurisdiction where the conduct occurs.154 According to the Explanatory Memorandum to the Bill extended geographical jurisdiction:

… ensures that entities that are closely linked to Australia cannot escape the application of the cash payment limit in relation to supplies occurring in Australia by arranging for payment to take place outside of Australia. 155

Stakeholder comments The LCA considers that the application of extended geographical jurisdiction ‘imposes a substantial burden of awareness on all Australian citizens and residents shopping online using digital currency, or using cash while overseas’.156 To this end, the LCA submits that the regulatory issue that this aspect of the Bill seeks to address is not justified by the risk and unintended consequences this may have on Australian citizens and residents.157

Penalties for contravention Contravention of subclause 12(1) or (2) may result in a maximum penalty of 60 penalty units— currently $12,600.158 A court may impose a maximum penalty on a corporation that is up to five times the amount that can be imposed on a natural person—that is 300 penalty units, currently $63,000.

The maximum penalty for contravention of the offences in subclause 13(1) and (2) is 120 penalty units, currently, $25,200 and/or two years imprisonment.159 A court may impose a maximum penalty on a corporation that is up to five times the amount that can be imposed on a natural person. The Explanatory Memorandum provides the following justification for the higher penalties under clause 13:

This higher penalty reflects the greater level of culpability involved in deliberately or recklessly breaching the cash payment limit. Unlike the strict liability offences, which operate to ensure compliance with the limit, the recklessness offences apply to penalise entities that have consciously and deliberately decided to risk violating the cash payment limit.

160

Exceptions to the offences Subclauses 12(5) and 13(3) provide that the offences do not apply to:

• the making or acceptance of a payment of a kind specified by the rules or

• the making or acceptance of a payment in circumstances specified by the rules.

153. Criminal Code, subsection 15.2(1). 154. Criminal Code, subsection 15.2(2). 155. Explanatory Memorandum, op. cit., p. 11. 156. LCA, Submission, op. cit., p. 3. 157. Ibid., p. 4. 158. Subclauses 12(1) and 12(3); Crimes Act, subsection 4AA(1)—a penalty unit is currently $210; subsection 4B(3). 159. Subclauses 13(1) and 13(2); Crimes Act, subsection 4AA(1) and 4B(3). 160. Explanatory Memorandum, op. cit., pp. 12-13.

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Currency (Restrictions on the Use of Cash) Bill 2019 27

The Minister is granted the power to make rules by way of legislative instrument under clause 20 of the Bill.

The Exposure Draft Rules propose that there are certain kinds of payments and circumstances in which the offences will not apply, including:

• payments relating to personal or private transactions

• gifts-excluding those made to charities

• payments made or accepted in circumstances where the AML/CTF Act requires a TTR to be submitted or where the FTR Act imposes a reporting obligation

• payments made or accepted by a public official in the performance of their duties

• payments involving cash in transit providers and

• payments made in digital currency and

• payments where no non-cash method is reasonably available.161

As discussed above, the Scrutiny of Bills Committee did not consider that the Minister adequately justified the need for the exceptions to be determined by delegated legislation.162

Of particular concern is the very wide application of the Bill to all physical and digital currency transactions exceeding $10,000 in the absence of proposed exceptions. Although any future amendments to the Rules will be disallowable by Parliament in accordance with the Legislation Act 2003, they may ultimately be narrowed or widened at the discretion of the Minister.

Key issue: payments relating to personal or private transactions and gifts There are broadly three circumstances where it is proposed that the offence provisions of the Bill will not apply under the exception proposed in section 7 of the Exposure Draft Rules, namely:

• a payment made for a supply, acquisition or as a gift which is not made in the course of carrying on an enterprise—both parties exempt

• where the entity making the payment or gift reasonably believes that the payment is not made in the course of carrying on an enterprise—party making the payment exempt or

• where the entity accepting the payment or gift reasonably believes that the payment is not made in the course of carrying on enterprise—party accepting the payment exempt.163

While the first exception is purely a question of fact, the Draft Explanatory Statement states that in relation to the remaining exceptions, ‘whether a belief is reasonable will depend on the circumstances of the transaction and the parties’. The Draft Explanatory Statement provides the following example, in which an entity could be regarded as having a ‘reasonable belief’ as a result of undertaking ‘reasonable enquiries’:

… if an individual sells their car to another individual reasonably believing the other individual has acquired the car for private use after undertaking reasonable inquiries such as searching the Australian

161. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), sections 7 to 13. 162. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 8, 2019, op. cit., p. 64. 163. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), paragraphs 7(1)(a)-(c) and 7(3)(a)-(c).

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Currency (Restrictions on the Use of Cash) Bill 2019 28

Business Register, then the exception applies, even if this belief is incorrect as the other individual had in fact acquired the car for use in a business they are carrying on. 164 [emphasis added]

While the use of ‘carrying on an enterprise’ may be appropriate for the purposes of determining an entity’s taxation obligations, it does appear somewhat ill-suited for the purposes of establishing a defence to a criminal offence—as can been seen from Australian Taxation Office (ATO) guidance, the term ‘enterprise’ is expansive, but not without its own ambiguities.165

Gifts made to or from a charity will not be exempt as the charity is considered to be carrying on an enterprise.166

The proposed exception will not apply in the case of a payment for the acquisition of real property irrespective of whether it is a private transaction.

Key issue: payments where the AML/CTF Act or FTR apply It is also proposed that certain cash transactions that are made or accepted in circumstances in which an AML/CTF Act or FTR Act entity is required to provide a TTR will also be excluded from the offences in clauses 12 and 13 of the Bill. 167 Further information on reporting obligations to AUSTRAC is discussed above under the heading ‘Role of AUSTRAC’.

The justification for the exclusion is that such information will already result in an electronic record if the reporting entities are currently complying with their obligations.168

Consistent with this purpose, the proposed exception applying to AML/CTF exceptions does not apply where:

• the AML/CTF reporting entity is required to be enrolled as a reporting entity, but is not so enrolled and

• if the entity making or accepting the payment is not the reporting entity, that entity either knew, reasonably suspected or ought to have known that the AML/CTF reporting entity was not enrolled.169

Similarly, the proposed exception applying to FTR Act reporting entitles does not apply where:

• the entity is not an FTR Act reporting entity and

• the entity making or accepting the payment either knew, reasonably suspected or ought to have known that the transaction was not going to be reported under the FTR Act.170

Key issue: payments made in digital currency A payment which is or includes an amount of digital currency is proposed to be excluded under the Rules.171 The Explanatory Memorandum justifies the proposed exclusion of all digital currency under the Rules on the basis that it is not currently being used in Australia in such a way that ‘it

164. Draft Explanatory Statement, Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), p. 5. 165. Australian Taxation Office (ATO), MT 2006/1: The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number, ATO legal database, 19 April 2017. 166. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), section 4, definition of ‘enterprise’. Enterprise is

defined in 9-20 of the GST Act. 167. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), subsection 8(1) and 9(1). 168. Draft Explanatory Statement, op. cit., pp. 6 and 7. 169. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), subsection 8(2). 170. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), subsection 9(2). 171. Currency (Restrictions on the Use of Cash) Rules 2019 (Exposure Draft), section 12.

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Currency (Restrictions on the Use of Cash) Bill 2019 29

presents a material risk of facilitating the same sorts of avoidance of obligations currently facilitated by physical currency’.172 Similarly, the Draft Explanatory Statement states: ‘there is little current evidence that digital currency is presently being used in Australia to facilitate black economy activities’.173

Notwithstanding this policy position, the Explanatory Memorandum also states ‘crypto-currencies and other digital currencies are generally unregulated and often do not create clear records of transactions in a form that can easily be used to identify the parties to a transaction’.174 This is consistent with the Taskforce’s observations, for example ‘some non-cash payment methods, including the many cryptocurrencies which are being traded, are just as anonymous as cash.’175

In its 2017 report Organised Crime in Australia, the Australian Criminal Intelligence Commission (ACIC) noted the increasing use of such technology to facilitate criminal behaviour:

Virtual currencies are used by criminals for money laundering and in exchange for illicit goods. Alternative banking services that are based online are being exploited by serious and organised crime to launder illicit funds, evade tax obligations and avoid regulatory oversight … The two key enabling technologies currently used to facilitate serious and organised crime are virtual currencies and encryption. Virtual currencies, such as bitcoin, are increasingly being used by serious and organised crime groups as they are a form of currency that can be sold anonymously online, without reliance on a central bank or financial institution to facilitate transactions.

176 [Citations omitted].

While there have been developments in this space since ACIC’s report, for example the inclusion of digital currency exchange providers within AUSTRAC’s remit,177 it would at least appear that digital currency currently facilitates conduct in the Australian economy, which the Bill, as expressed in its objects in clause 3, seeks to address.178

Stakeholder comments Stakeholder concerns about this particular aspect of the Bill are twofold. Some stakeholders consider that the exclusion of digital currency through the use of a legislative instrument rather than through the Bill has the potential to undermine investment in digital currencies, given that it may be more easily changed in future.179

Conversely, other stakeholders identify cryptocurrencies as having similar attributes to cash and do not agree that they should be excluded.180 For example, the Uniting Church has drawn the Committee’s attention to the 2019 guidance of the Financial Action Task Force (FATF), which states:

VAs [virtual assets] have certain characteristics that may make them more susceptible to abuse by criminals, money launderers, terrorist financiers, and other illicit actors, including their global reach, capacity for rapid settlement, ability to enable “individual user-to-individual user” transactions

172. Explanatory Memorandum, op. cit., p. 9. 173. Draft Explanatory Statement, op. cit., p. 8. 174. Explanatory Memorandum, op. cit., p. 6. 175. Taskforce, Black Economy Taskforce: final report, op. cit., p. 16. 176. Australian Criminal Intelligence Commission (ACIC), Organised crime in Australia 2017, ACIC, Canberra, 2017, p. 11. 177. AUSTRAC, ‘Digital currency exchange providers’, AUSTRAC website, last updated 30 June 2019. 178. Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017. 179. Blockchain Assets, Submission to Senate Standing Committee on Economics, Inquiry into the Currency (Restrictions on the Use

of Cash) Bill 2019 [Provisions], [Submission no. 41], November 2019, p. 2. 180. Uniting Church, Submission, op. cit., pp. 11-13.

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Currency (Restrictions on the Use of Cash) Bill 2019 30

(sometimes referred to as “peer-to-peer”), and potential for increased anonymity and obfuscation of transaction flows and counterparties. 181

Commencement The Bill as currently drafted is set to commence on 1 January 2020. As this date has passed, an amendment to the commencement provisions of the Bill is required, as Treasury has stated that the Bill will not apply retrospectively: ‘[t]he government will consider the appropriate date for the cash payment limit to commence together with any other issues identified in the Senate Committee’s report’.182

A number of stakeholders have submitted that the earliest commencement date should be 1 January 2021 in order to allow them to put in place suitable business systems, train their staff and provide enough time for the government to run a public communication campaign.183

Responsible agency Responsibility for the Bill does not fall within any one particular agency—it appears that multiple agencies will be incidentally involved in investigating matters, for example, the ATO may uncover evidence of an offence in the course of undertaking an audit. Ultimately, however, such information would be provided to the Australian Federal Police (AFP) or CDPP and prosecuted by the CDPP. The following explanation was provided by Treasury to the Committee:

In relation to who is responsible for the bill, Treasury are responsible for the policy and we will also be doing the guidance, so that is different to other tax measures. Once a tax measure is passed, generally, responsibility for implementation will move on to the ATO—that is, both enforcement and guidance.

In this case, guidance will be done by us. Enforcement is probably going to be an amalgam. There is no one agency responsible for this. In relation to taking things to court, it's going to be the AFP and the CDPP. It is a criminal offence, so the AFP will have responsibility. If they investigate something and find a use of cash, they can then investigate that and prosecute. If the ATO find, in some of their audits, that there is a high chance that someone was using cash above $10,000, they can then pass that information on to either the AFP or, if they believe there's enough evidence for prosecution, to the CDPP. That would be the same for something like the Fair Work Ombudsman and ASIC as well. It's deliberately open, and that is because the black economy, as I said at the start, is a whole-of-government issue; it's not just a tax issue. It can show itself in in numerous ways.

184 [emphasis added]

181. Financial Action Task Force (FATF), Guidance for a risk-based approach: virtual assets and virtual asset service providers, FATF, Paris, June 2019, pp. 6 and 25; Uniting Church, Submission, op. cit., p. 13. 182. Treasury, ‘Cash payment limit’, op. cit. 183. Gumtree, Submission, op. cit., p. 3; Flight Centre, Submission op. cit., p. 1. 184. P Boneham, Evidence to Senate Economics Legislation Committee, Inquiry into Currency (Restrictions on the Use of Cash) Bill

2019, (proof), 12 December 2019, p. 49.

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Currency (Restrictions on the Use of Cash) Bill 2019 31

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