New Commonwealth Proceeds of Crime Act Commences Operation

Thursday 5 April 2018 @ 10.26 a.m. | Crime | Legal Research

Following its assent on 28 March 2018, the Proceeds of Crime Amendment (Proceeds and Other Matters) Act 2018 (Cth) commenced operation on 29 March 2018.

The amending legislation will make a number of amendments to the Proceeds of Crime Act 2002 (Cth) (the "Act") (No 85 of 2002).

Background

The legislation ensures that authorities can appropriately restrain and confiscate property or wealth in certain instances, so that criminals are not able to deliberately structure their affairs to avoid the operation of the Act and retain their ill-gotten gains.

The Explanatory Memorandum (the "EM") to the Bill indicates (page 4, para 16) the legislation:

“… achieves this objective by:
  • expanding the unexplained wealth regime to ensure that it covers wealth that is realised, directly or indirectly, from certain offences
  • clarifying that property will be considered ‘proceeds’ or an ‘instrument’ where encumbrances, securities, liabilities or improvements on the property are funded using ‘proceeds’ or an ‘instrument’ of an offence
  • clarifying that property or wealth will only be ‘lawfully acquired’ in situations where the property or wealth is not ‘proceeds’ or an ‘instrument’ of an offence, and
  • providing that ‘improvements’ extends to additions to, altering, repairing, restoring, structuring, restructuring or any other change to property or wealth (whether or not it results in an increase in value of the property or wealth).”

Brief Overview of the Amendments

Amendments contained in Schedule 1 clarify key terms in the Act, including the terms “proceeds”, “instrument” and “lawfully acquired”.  They also expand the Commonwealth’s unexplained wealth regime to ensure that it covers wealth derived or realised, directly or indirectly, from certain offences. The amendments will ensure that proceeds of crime authorities can appropriately restrain and confiscate property or wealth in cases in which illicit funds are used to make improvements to property or to wholly or partly discharge an encumbrance, security or liability incurred in relation to property.

The need for change was outlined in the Bill’s EM (page 2, paras 4 and 5):

“These amendments have been made in response to developments in case law, which have potentially affected the scope of these terms … The Western Australian Supreme Court in Commissioner of the Australian Federal Police v Huang [2016] WASC 5 held that it could not consider the source of funds used to satisfy a mortgage over a residential property in determining whether this property was ‘lawfully acquired’ or ‘proceeds’ of crime, despite the possibility that unlawfully acquired funds had been used to make mortgage repayments. The court was therefore bound to exclude the residential property from forfeiture.”

Whilst at Bill stage, a Report from the Senate’s Legal and Constitutional Affairs Legislation Committee (the "Committee") of February 2018 noted with regard to unexplained wealth (page 2, paras 1.8 and 1.9):

“Currently … the (Proceeds of Crime Act 2002) Act requires a court to make an order requiring a person to pay an amount (the person's unexplained wealth amount), to the Commonwealth, if the court is not satisfied that the whole or any part of the person's wealth was not derived from one or more relevant offences … The bill proposes to extend the circumstances in which an 'unexplained wealth order' is made by expanding the reference to wealth derived from a relevant offence to  cover wealth 'derived or realised, directly or indirectly' from a relevant offence.”

The Committee also commented on the retrospective application of the legislation (pages 3 and 4, paras 1.15 and 1.17):

“… Some aspects of the bill would apply retrospectively … The EM highlights precedent for retrospective amendments in this policy area and also emphasises that '[t]hese amendments do not have the effect of criminalising conduct which was otherwise lawful prior to the amendments’.”

In closing, the Committee also noted (page 16, para 2.28) of their Report:

“… The committee notes that the bill seeks to address a gap in legislation which allows criminals to structure their affairs to avoid the forfeiture or confiscation of assets that were not lawfully acquired. The committee considers that it is timely and appropriate that this gap is closed.”

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.

Sources:

Proceeds of Crime Amendment (Proceeds and Other Matters) Bill 2017 and Proceeds of Crime Amendment (Proceeds and Other Matters) Act 2018 (No 21 of 2018) (Cth) - Supporting information available from TimeBase LawOne Service.

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