Unexplained Wealth Legislation Amendment Bill 2018 [2018] AUSStaCSBSD 173 (27 June 2018)

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Purpose	This bill seeks to amend the Proceeds of Crime Act 2002 (POC Act) to: • extend the scope of the Commonwealth unexplained wealth restraining orders and unexplained wealth orders to all Territory offences and relevant offences as specified by participating States; • allow participating State and Territory agencies to access Commonwealth information gathering powers under the POC Act for the investigation or litigation of unexplained wealth matters under State or Territory unexplained wealth legislation; and • amend the way in which recovered proceeds are shared between the Commonwealth, states and territories and foreign law enforcement entities. The bill also seeks to amend the Telecommunications (Interception and Access) Act 1979 to enable Commonwealth, Territory and participating states law enforcement agencies to use, communicate and record lawfully intercepted information in relation to unexplained wealth investigations and proceedings.
Portfolio	Home Affairs
Introduced	House of Representatives on 20 June 2018

Exemption from disallowance^[10]

1.10 The bill seeks to establish a national scheme for targeting unexplained wealth. States electing to participate in the scheme^[11] would either be classified as a 'participating State' or, to participate in elements of the scheme, as a 'cooperating State'. Proposed section 14F outlines the circumstances in which a non-participating state will be considered to be a 'cooperating State' for the purposes of the scheme.

1.11 Proposed subsection 14F(4) would allow the minister, by legislative instrument, to declare that a State is not a cooperating State and proposed subsection 14F(5) provides that a declaration under subsection 14F(4) would be a legislative instrument, but would not be subject to disallowance under section 42 of the Legislation Act 2003 (Legislation Act).

1.12 The committee's consistent scrutiny view is that exempting delegated legislation from disallowance is a serious matter, as to do so may remove or undermine parliamentary oversight. The committee will have particular concerns where the relevant instrument would enable the minister to alter the default position set out in the primary legislation. Consequently, where a bill seeks to exempt delegated legislation from the usual disallowance process under the Legislation Act, the committee would expect a sound justification to be provided in the explanatory memorandum. In this instance, the explanatory memorandum provides no such justification, merely restating the operation and effect of the relevant provisions.

1.13 The committee requests the minister's justification for exempting declarations made under proposed subsection 14F(4) from disallowance under the Legislation Act 2003.

Retrospective application^[12]

1.14 The bill seeks to amend the Proceeds of Crime Act 2002 (POC Act) to provide that the Commonwealth unexplained wealth order regime will apply to certain State and Territory offences, as well as to enable participating State and Territory agencies to access Commonwealth information-gathering powers under the POC Act for the investigation or litigation of unexplained wealth matters under State or Territory unexplained wealth legislation. The effect of an unexplained wealth order is to restrict a person's ability to dispose of, or otherwise deal with, property or to require a person to make a specified payment to the Commonwealth.^[13]

1.15 Schedule 1, item 7 and Schedule 3, item 10 seek to apply these amendments to unexplained wealth orders made in relation to an offence against a law of a participating State or a self-governing Territory whether or not the offence is, or is suspected of being, committed before or after commencement or the application relates to property or wealth acquired, derived or realised or subject to a person's effective control before or after commencement. In addition, Schedule 1, item 8 seeks to apply amendments relating to orders or notices for the production of documents to documents created before or after commencement (or to documents related to property or accounts dealt with before or after commencement). This has the effect that a number of the amendments made by the bill would apply retrospectively.

1.16 The committee has a long-standing scrutiny concern about provisions that apply retrospectively, as this challenges a basic value of the rule of law that, in general, laws should only operate prospectively. The committee has a particular concern if the relevant legislation will, or might, have a detrimental effect on individuals.

1.17 Generally, where proposed legislation will have a retrospective effect the committee expects the explanatory materials should set out the reasons why retrospectivity is sought, whether any persons are likely to be adversely affected and the extent to which their interests are likely to be affected. In this instance, the explanatory memorandum states:

1.18 The committee notes that it has previously raised concerns that the POC Act appears to trespass on the rights of persons who have neither been charged with, nor convicted of, any wrong-doing.^[15] The committee notes that the regime applies where it is reasonably suspected that a person's total wealth exceeds their lawfully acquired wealth by $100,000 or more, and there are reasonable grounds to suspect a person has committed an offence or the whole or any part of the person's wealth was derived from an offence. The regime applies without any need to prove, on the usual criminal standard (that is, beyond reasonable doubt), that the person has committed the offence from which the unexplained wealth is suspected to be derived. Retrospectively applying amendments which widen the scope of the unexplained wealth regime therefore raises particular scrutiny concerns.

1.19 The committee reiterates its long-standing scrutiny concern that provisions that apply retrospectively challenge a basic value of the rule of law that, in general, laws should only operate prospectively, not retrospectively. The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of retrospectively applying amendments which widen the scope of the unexplained wealth regime.

Privilege against self-incrimination^[16]

1.20 Proposed Schedule 1 provides that a magistrate may make a production order requiring a person to produce certain documents, or make those documents available, to a relevant authorised State or Territory officer. Paragraph 5(1)(a) of that Schedule provides that a person is not excused from producing a document or making a document available pursuant to a production order on the ground that to do so would tend to incriminate the person or expose them to a penalty. This provision therefore overrides the common law privilege against self-incrimination, which provides that a person cannot be required to answer questions or produce material which may tend to incriminate himself or herself.^[17]

1.21 The committee recognises that there may be certain circumstances in which the privilege can be overridden. However, abrogating the privilege represents a serious loss of personal liberty. In considering whether it is appropriate to abrogate the privilege against self-incrimination, the committee will consider whether the public benefit in doing so significantly outweighs the loss to personal liberty.

1.22 In this instance, the explanatory memorandum states that it is appropriate to override the privilege against self-incrimination:

1.23 In considering whether it is appropriate to abrogate the privilege against self-incrimination, the committee will also consider the extent to which the use of self-incriminating evidence is limited by use or derivative use immunity provisions. A use immunity generally provides that the information or documents produced in response to the statutory requirement (in this case, in response to a production order) will not be admissible in evidence against the person that produced it. A derivative use immunity generally provides that anything obtained as a direct or indirect consequence of the production of the information or documents will not be admissible in evidence against the person that produced it.

1.24 A use immunity is included in proposed subclause 5(2) with respect to natural persons. The subclause provides that a document produced or made available pursuant to a production order is not admissible in evidence in criminal proceedings, except in relation to proceedings relating to false or misleading documents in response to the production order. However, a derivative use immunity (which prevents information or evidence indirectly obtained from being used in criminal proceedings against the person) has not been included. Indeed, proposed clause 18 provides that a person who gained information as a result of a production order may disclose that information in certain circumstances and paragraph 18(5)(b) provides that this clause does not affect the admissibility in evidence of any information, document or thing obtained as an indirect consequence of a disclosure under this clause. The explanatory memorandum states that the effect of this is that no derivative use immunity will attach to the information to which it applies.^[19]

1.25 The explanatory memorandum provides no explanation as to why a derivative use immunity has not been included in this provision, other than to note that similar provisions overriding the privilege exist in the POC Act. However, the committee emphasises that its consistent scrutiny position is that a proposed provision is not adequately justified merely by the fact that it is consistent with provisions of an existing law.

1.26 As the explanatory materials do not sufficiently address this matter, the committee seeks the minister's detailed advice as to the appropriateness of abrogating the privilege against self-incrimination, including in the absence of a 'derivative use' immunity provision.

Legal professional privilege^[20]

1.27 As outlined above, proposed Schedule 1 provides that a magistrate may make a production order requiring a person to produce certain documents, or make those documents available, to a relevant authorised State or Territory officer. Paragraph 5(1)(c) of that Schedule provides that a person is not excused from producing a document or making a document available under a production order on the ground that producing the document or making it available would disclose information that is the subject of legal professional privilege.

1.28 As recognised by the High Court,^[21] legal professional privilege is not merely a rule of substantive law but an important common law right which is fundamental to the administration of justice. The committee therefore considers that it should only be abrogated or modified in exceptional circumstances. Where a bill seeks to abrogate legal professional privilege, the committee would expect a sound justification for any such abrogation to be included in the explanatory memorandum. In this instance, the explanatory memorandum gives no separate justification for overriding legal professional privilege (that is, separate to the justification for overriding the privilege against self-incrimination) other than noting that 'criminals regularly seek to hide their ill-gotten gains behind a web of complex legal, contractual and business arrangements' and so requiring the production and availability of relevant documents 'is necessary to enable law enforcement to effectively trace, restrain and confiscate unexplained wealth amounts'.^[22]

1.29 The committee considers that abrogating legal professional privilege may unduly trespass on individual rights, as to do so may interfere with legitimate, confidential communications between individuals and their legal representatives. In this regard, the committee notes that while the explanatory memorandum provides a limited policy justification for abrogating legal professional privilege, it does not provide any information about how any interference with individual rights will be addressed (for example, it does not set out any safeguards).

1.30 Additionally, the committee considers that, where legal professional privilege is abrogated, 'use' and 'derivative use' immunities should ordinarily apply to documents or communications revealing the content of legal advice, in order to minimise harm to the administration of justice and individual rights. As outlined above at paragraph 1.15, a 'use' immunity is included in proposed subclause 5(2). However, the bill does not include a 'derivative use' immunity, and the explanatory memorandum provides no explanation as to why such an immunity has not been included.

1.31 As the explanatory materials do not sufficiently address this matter, the committee seeks the minister's detailed advice as to the appropriateness of abrogating legal professional privilege, including in the absence of a 'derivative use' immunity provision.

Significant matters in delegated legislation^[23]

1.32 Clause 12 of proposed Schedule 1 seeks to allow certain officials of participating States and self-governing Territories to give written notices to financial institutions. Such notices would require the institution to provide to an authorised officer of the State or Territory information or documents relating to specified persons' accounts and transactions. The committee notes that the information that must be provided pursuant to a notice may include a substantial amount of personal and financial information.^[24] A failure to comply with a notice under clause 12 would be an offence, subject to a penalty of 6 months imprisonment, 30 penalty units, or both.^[2]

1.33 Subclause 12(3) of proposed Schedule 1 sets out the officials who may give a notice under clause 12, which are mainly the Commissioner or head of the relevant police force or the Director of Public Prosecutions. However, paragraph 12(3)(d) provides that, for a self-governing Territory, a person may give a notice to a financial institution if they are a person of a kind prescribed by the regulations in relation to the Territory. The bill would therefore appear to permit the regulations to confer coercive evidence-gathering powers on a potentially broad range of persons. The bill does not set a limit on the categories of persons on whom powers may be conferred.

1.34 The committee's consistent view is that significant matters, such as the persons empowered to exercise coercive evidence-gathering powers, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided.

1.35 In this instance, the explanatory memorandum does not explain why it is necessary to leave to delegated legislation the definition of who may exercise coercive evidence-gathering powers in self-governing Territories, or who it is intended such persons will be. It only restates the operation and effect of the relevant provisions.

1.36 The committee requests the minister's detailed justification for allowing regulations to prescribe classes of persons authorised to issue notices to financial institutions under clause 12 of proposed Schedule 1.

1.37 The committee also seeks the minister's advice as to the appropriateness of amending the bill to specify the category of persons who may be empowered under the regulations to issue notices under clause 12 of proposed Schedule 1.

Immunity from liability^[25]

1.38 As outlined above, clause 12 of proposed Schedule 1 seeks to allow certain persons to issue notices to financial institutions. Such notices would compel the institutions to provide financial information about persons holding accounts with the institution, or with whom the institution otherwise deals.

1.39 Clause 14 of proposed Schedule 1 provides that no action, suit or proceeding would lie against a financial institution, or an officer, employee or agent of the institution acting within the course of that person's employment or agency, in relation to any action taken by the institution or person under a notice under clause 12, or in the mistaken belief that action was required under the notice. This removes any common law right to bring an action to enforce legal rights. The committee notes that this applies even if the relevant action was not taken in good faith.

1.40 The committee expects that if a bill seeks to provide immunity from liability, particularly where such immunity could affect individual rights, this should be soundly justified. In this instance, the explanatory memorandum provides no such justification, merely restating the operation and effect of the relevant provisions.

1.41 The committee requests the minister's advice as to why it is considered appropriate to confer immunity from civil and criminal liability in relation to certain actions (particularly without any requirement that the action be taken in good faith), such that persons would have no right to bring an action to enforce their legal rights.

Privacy^[26]

1.42 Schedule 6 of the bill seeks to allow officers in Commonwealth, Territory and participating State agencies to use, record or communicate lawfully intercepted information or interception warrant information under the Telecommunications (Interception and Access) Act 1979 (TIA Act) for a purpose connected with an unexplained wealth proceeding in relation to the agency. It would also allow the chief officer of an agency to communicate lawfully intercepted information to the relevant Commissioner of Police if it relates to the unexplained wealth provisions of that jurisdiction. In effect this extends the existing disclosure laws under the TIA Act to ensure they also cover information relevant to unexplained wealth provisions. Currently there is a need to show a link to a prescribed offence before such information can be used or disclosed. The explanatory memorandum notes that this amendment will allow such information to be used in orders where, for example, a person's wealth vastly exceeds the person's known lawful income but the underlying predicate offending is not known.^[27] Thus, it would appear that such information could be used to investigate a person's wealth despite there being no specific information as to any criminal offending. This impacts on a person's right to privacy and raises scrutiny concerns as to whether allowing such information to be used or disclosed for such purposes unduly trespasses on personal rights and liberties.^[28]

1.43 The statement of compatibility for the bill acknowledges that the amendments engage the right to privacy but states that the objective of the amendments is to ensure 'law enforcement authorities are in a position to effectively combat serious and organised crime by improving the information-sharing arrangements between law enforcement agencies that deal with unexplained wealth'.^[29] It also notes that under the TIA Act the purposes for which disclosure can occur, and the authorities with whom information is shared, 'are strictly limited' and the information is subject to a range of protections.

1.44 However, the committee notes that the type of information that can be intercepted can include highly personal information, including potentially the content of private telephone conversations and emails. Allowing the disclosure of such information to investigate a person's wealth, without the need to provide any link to a particular offence, raises scrutiny concerns as to whether these measures risk unduly trespassing on a person's right to privacy.

1.45 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of expanding existing disclosure laws under the Telecommunications (Interception and Access) Act 1979 to cover information relevant to unexplained wealth provisions.

[10] Schedule 1, item 2, proposed subsection 14F(5). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(v).

[11] In order to participate in the scheme, a State would be required to enact legislation either referring power to the Commonwealth or adopting a version of the Proceeds of Crime Act 2002. Territories would be automatically bound by the scheme upon the enactment of the bill.

[12] Schedule 1, items 7 and 8 and Schedule 3, item 10. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(i).

[16] Schedule 4, item 6 proposed Schedule 1, clause 5. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[20] Schedule 4, item 6 proposed Schedule 1, item 5. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[23] Schedule 4, item 6, proposed Schedule 1, paragraph 12(3)(d). The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[24] Information that may be required under a notice includes information relevant to: whether a person holds an account with the institution, the signatory on the account, and the balance of the account; details of transactions on an account over a period of up to six months; details of related accounts; whether a stored value card was issued by the institution, and details of transactions using the card over a period of up to six months; and any transactions conducted by the institution on behalf of a specified person. See proposed Schedule 1, subclause 12(1).

[25] Schedule 4, item 6, proposed Schedule 1, clause 12. The committee draws senators' attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).

[26] Schedule 6. The committee draws senators' attention to this Schedule pursuant to Senate Standing Order 24(1)(a)(i).

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests