Metadata Retention Legislation: ASIC Demands Access
Friday 23 January 2015 @ 11.19 a.m. | Corporate & Regulatory | Crime | IP & Media | Trade & Commerce
On 30 October 2014, the Federal Communications Minister Malcolm Turnbull introduced the government’s widely reported and controversial Telecommunications (Interception and Access) Amendment (the Data Retention) Bill 2014 (see Telecommunications Data Retention Legislation Introduced into Parliament). The Bill, which currently sits at second reading stage in the House of Representatives, will require, among other matters, that internet service providers (ISPs) store details of internet usage by Australians for a period of two years and it will provide access to that stored data to a dozen law enforcement agencies.
However, under the Federal government's proposed data retention regime, which the government claims will "enhances the ability of law enforcement agencies to investigate terrorism and other criminal activities", the corporate regulator, the Australian Securities and Investments Commission (ASIC) has not been given special clearance by the government and is not among the agencies specified in the proposed law to have access.
ASIC's response and case for inclusion
ASIC argues that, in its role as the corporate regulator, it will not be able to do its work effectively if it does not have access to the same "critical metadata" that other enforcement agencies such as the Australian Federal Police (the AFP) and ASIO are allowed to access.
In a recent National Press Club (NPC) lunch in December 2014 the ASIC chairman Mr Greg Medcraft is reported as having told NPC that access to such metadata was critical for ASIC to be able to investigate insider trading and market manipulation, as well as superannuation fraud and further that it meant:
"ASIC's ability to investigate insider trading cases, or the current interest rate rigging scandal that is rocking ANZ bank, would be severely curtailed and in some cases impossible."
At the NPC, Mr Medcraft signalled ASICs intention to make a submission to the government on the matter, and is reported as saying:
"We're an enforcement agency and we believe we should be classified as an enforcement agency under that Act. It's very simple."
In its submissions to the review of the proposed legislation and at the public hearings ASIC is reported as arguing that:
". . . it is a major criminal law enforcement agency and that because white-collar crime is difficult to prove — and capable of causing immense harm to Australia’s financial system — it should have access to tools that help investigations of serious offences that cost the government, the public and corporations hundreds of millions of dollars every year."
The ASIC submission points to the types damage its investigations help to avoid, namely:
“. . . damage to the integrity of Australia’s financial markets, and devastation to individual victims who risk losing their houses and life savings, . . .”
Types of damage which it further says are:
“. . . expected to increase into the future given the ever-growing pool of superannuation investments and large number of Australians expecting to retire from active work in the next 20 years.”
Speculation as to Reasons for ASIC's exclusion
Media reports offer various reasons for why ASIC was excluded, ranging from the current governments attempts to contain data access to matters of terrorism and like crimes to comments relating to a perceived lack of success in criminal prosecutions by ASIC, like this one:
"However, the regulator has come under criticism for the lack of criminal prosecutions in the wake of the global financial crisis, where scores of small investors were wiped out."
Another view as to the reason for exclusion is that ASIC's encounters with technology have not all been positive as for example its use of laws that allow it to block websites it believes are fraudulent or illegal, namely, section 313 of the Telecommunications Act (Cth), where it got into trouble in April 2013 when it accidentally blocked 250,000 websites that were not illegal websites, including the Melbourne Free University, because of a failure to understand how websites addresses work.
More from ASIC's submission
For ASIC, inclusion as an agency authorised to request customer metadata was essential in ensuring it could access the data it needed to catch insider traders and market manipulators using communication tools to disseminate and trade information. ASIC's view is reported that:
“Investigations and prosecutions for Corporations Act offences are notoriously difficult, resource-intensive and time-consuming. Effective performance of ASIC’s law enforcement functions can only be achieved if we have adequate powers to obtain information and evidence about suspected contraventions of the laws we administer, . . . Given the increasing role of telecommunications in the delivery of financial services in Australia, including carrying out trades on Australia’s markets, ASIC anticipates its need to obtain telecommunications data and stored communications will correspondingly increase over time.”
Figures given to support this claim are that between November 2012 and November 2014, ASIC accessed telecommunications data in more than 80 percent of its investigations and that such investigation included the regulator accessing information on 1771 occasions and in civil penalty investigations on 110 occasions.
Going forward
The Bill does include the government's power to extend access to other agencies, but as one report says "the curtailment of ASIC's power is not accidental" and further it is not clear how such extension of access would work, as that report also says:
"It is unclear, for example, whether there could or would be general authorisation, limited authorisation or case-specific authorisation. It is also understood that ASIC is concerned lower level authorisation would invite legal challenges to ASIC probes. The status quo is far superior for Medcraft and ASIC, and they are fighting to retain it."
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