National Cooperative Scheme on Unexplained Wealth
24 June 2018 By Edward Greaves Leave a Comment
On 20 June 2018 the Federal Minister for Home Affairs, the Hon Peter Dutton, introduced the Unexplained Wealth Legislation Amendment Bill 2018 (Cth) to Parliament. The Bill passed both houses on 19 September 2018.
The purpose of the Bill is to lay the foundation for a National Cooperative Scheme on Unexplained Wealth.
According to the second reading speech (which runs to all of a page) the National Scheme will allow the AFP to use a single unexplained wealth order to target criminal syndicates instead of the patchwork of orders that would otherwise be sought by Commonwealth, state and territory law enforcement agencies and it will also enhance the capability of state and territory agencies to contribute to national efforts by providing access to enhanced information gathering powers and the ability to use lawfully intercepted telecommunications information in unexplained wealth matters.
The Explanatory Memorandum to the Bill commences by noting:
"…the Bill amends the Proceeds of Crime Act 2002 (Cth) (the POC Act) to give effect to the National Cooperative Scheme on Unexplained Wealth (the national scheme) as recommended by the February 2014 Independent Report of the Panel on Unexplained Wealth (the Report) by former Police Commissioners, Mr Ken Moroney AO APM and Mr Mick Palmer AO APM…"
That report was never made publicly available. In any event the concept of a National Scheme goes back well prior to 2014.
In March 2012 a report from the Commonwealth Parliamentary Joint Committee on Law Enforcement (PJCLE) on its Inquiry into Commonwealth unexplained wealth legislation and arrangements made a series of recommendations, including:
"4.66 The committee notes that a subject referral would be the most effective form of referral, but political realities may necessitate other forms, such as a text or hybrid referral.
Recommendation 15
4.67 The committee recommends that the Australian Government seek a referral of powers from the states and territories for the purpose of legislating for a national unexplained wealth scheme, where unexplained wealth provisions are not limited by having to prove a predicate offence. (my emphasis)
4.96 The committee recommends that the Commonwealth Government create and commit to a plan for the development of national unexplained wealth scheme including … a final objective of achieving a referral of powers from States and Territories to enable the Commonwealth to legislate for an effective and nationally consistent unexplained wealth scheme."
Paragraph 4.66 and 4.67 (quoted above) are telling. The plan (in 2012) was that the States should pass enabling legislation to permit (in a Constitutional sense) the Commonwealth to enact 'pure' unexplained wealth (UEW) laws. I use the term 'pure' UEW laws to describe laws (such as those found in the Criminal Property Confiscation Act 2000 (WA) and the Criminal Property Forfeiture Act (NT) that do not require proof of a predicate offence. That is, UEW laws that enable UEW orders to be made without a nexus/connection between the unexplained wealth and any offence. The current UEW laws in the Proceeds of Crime Act 2002 (Cth) are not 'pure'. Rather existing federal UEW laws require a connection between the unexplained wealth and a relevant offence.
On 26 March 2014 it was noted in a Parliamentary Digest 1 that the tinkering then proposed with the UEW provisions in the Proceeds of Crime Act 2002 (Cth) will not address a more fundamental problem with the Commonwealth unexplained wealth laws, on which the PJCLE made recommendations for significant reform. That is, the 2014 amendments to the Federal Proceeds of Crime Act still did not remove the need for a predicate offence. The digest continued:
"Despite assurances they would still retain proceeds seized under their own laws, the states and territories rejected such a proposal on several occasions. In June 2013, former police commissioners Mick Palmer and Ken Moroney were appointed to negotiate with jurisdictions and 'break the deadlock'."
For reasons I explain below, the political realities spoken of back in 2012 appear to have stood in the way of what the Commonwealth wanted to achieve. The referral of powers that the Commonwealth is seeking in 2018 is of a textual or hybrid model, and simply widens the categories of predicate offences to include a greater number of State offences. It will not do away with the need for the AFP to identify predicate offences.
The 2018 amendments
The substantive effect of the Unexplained Wealth Legislation Amendment Bill 2018 is to:
Amend the UEW provisions of the POCA, ie s 20A and Part 2-6 (which will collectively become known as the main unexplained wealth provisions) so that they also apply to a relevant offence of a participating State along with the existing concepts of Commonwealth offences, foreign indictable offences and State offences with a federal aspect. 2
Allow State police officers to issue notices to financial institutions and to apply for production orders of business records under the POCA. 3
Provide for the sharing of information between State and Federal authorities and the sharing of confiscated assets. 4
The homepage for the Unexplained Wealth Legislation Amendment Bill 2018 (Cth) can be found here.
The Unexplained Wealth (Commonwealth Powers) Bill 2018 (NSW) has also passed the New South Wales Parliament to enable that State to participate in the National Scheme. Information about the NSW Bill is available on the NSW Parliament's website.
At the time of writing no other State has introduced a similar Bill. The Northern Territory and the Australian Capital Territory will automatically join the National Scheme. 5
The Hon Sue Ellery MLC (on behalf of the Attorney-General) told the Legislative Council (WA) on 13 June 2018 that Western Australia and Victoria were not participating in the National Scheme. 6 She added:
"Western Australia gave an indication [on 19 May 2017] that Western Australia would no longer participate in the referral negotiations based on objections from the WA Police. WA Police was not supportive of the scheme and raised a number of objections, including that the proposed sharing arrangements would create a burdensome regime of recording confiscation actions, that the proposed equitable sharing arrangements would capture all confiscation actions, and that other jurisdictions do not have similar drug trafficker declarations. The scheme was likely to oblige Western Australia to share the proceeds of its forfeitures, with little assurance that there would be a corresponding return. No business case was made that the formal scheme proposed would offer any net benefit over the existing operational opportunities for joint operations between the state and commonwealth agencies."
On 28 June 2018, the WA Parliament passed its own Bill to allow the Unexplained Wealth powers contained in the Criminal Property Confiscation Act 2000 (WA) to be utilised directly by the Corruption and Crime Commission (without the need to involve the WA Director of Public Prosecutions). I have previously written about those developments here.
Bills Digest No. 57, 2013–14 at pg 4[top]
See Schedule 2 of the Unexplained Wealth Legislation Amendment Bill 2018.[top]
See Schedules 6 and 5 respectively of the Unexplained Wealth Legislation Amendment Bill 2018.[top]
See Hansard page 3286.[top]
Filed Under: Confiscations & Proceeds of Crime, Proceeds of Crime Act