Edwards, David --- "Proceeds of Crime: an inquiry update" [1999] ALRCRefJl 16; (1999) 74 Australian Law Reform Commission Reform Journal 68

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Reform Issue 74 Autumn 1999

This article appeared on pages 68 – 69 & 74 of the original journal.

Proceeds of Crime: an inquiry update

Proceeds of crime legislation - introduced by a succession of Australian federal and state governments - has largely failed to measure up to expectations of ensuring ‘crime does not pay’.

With the Commission’s deliberations on Commonwealth proceeds of crime laws now complete but the final recommendations still under embargo, David Edwards* offers some thoughts on reform of Australia’s confiscation regime.

The Proceeds of Crime Act 1987 (Cth) (POC Act) was introduced and dev-eloped in consultation with the States and internal Territories. The aim was to form a consistent, if not uniform, Commonwealth-wide legislative package providing for conviction based forfeiture of property with orders made in one jurisdiction being capable of enforcement in any other.

Since that time Victoria and South Australia have completely overhauled their original conviction based legislation and New South Wales and Victoria have added a non-conviction based forfeiture regime.

While fine tuning amendments have from time to time been made to the Commonwealth Act, it still embodies the basic scheme first enacted in 1987. So seen, it can be regarded as ‘first generation’ legislation that - in the light of developments - needs to be revisited to ensure that its basic objectives are being met.

What’s wrong?

There are three principal objectives of the legislation, as set out in the POC Act itself. They are to deprive persons of the proceeds of, and benefits derived from, the commission of offences against the laws of the Commonwealth or the Territories; to provide for the forfeiture of property used in or in connect-ion with the commission of such offences; and to enable law enforcement authorities effectively to trace such proceeds, benefits and property.

A number of submissions made to the Commission have pointed out major shortcomings in the legislation. These include:

Failure to meet objectives. There are genuine doubts that the POC Act is achieving its primary objectives, for a number of structural and definitional reasons.

Practical difficulties. From submissions received, it is clear that all persons and bodies involved in the administration and application of the Act have experienced difficulty, including the Official Trustee, who is charged with administrating restrained assets.

Complexity. The draftsperson has sought, in many important instances, to cover every possible combination of events, resulting in an extremely complex scheme. This, no doubt, results from the fact that when first enacted the Act was breaking new ground and establishing novel principles leading to new jurisprudence. The result, however, is a very unwieldy and difficult piece of legislation for law enforcers, prosecutors, judges, administrators and defence attorneys alike.

The Commission inquiry

In December 1997 federal Attorney-General Daryl Williams asked the Commission to review the POC Act. The terms of reference were broadened in April last year, with the Attorney-General further requesting the Commission to inquire into and report on the impact of the POC Act on business. The initial reporting deadline of December 31 last year was recently extended, requiring the Commission to complete its inquiry by the end of March.

At the time of publication of Reform, the Commission had concluded its deliberations and consultations and settled its final recommendations. It is now completing the production of the report.

The Commission’s investigation has led it to conclude that sweeping changes to Australia’s federal confiscation regime are necessary. However, it would be inappropriate to disclose the nature of the recommendations ahead of the presentation of this report to the Attorney-General and, ultimately, the federal parliament.

Some issues

One of the major areas of consideration for the Commission has been whether proceeds of crime legislation should include a non-conviction based regime.

In relation to narcotics dealing, the Customs Act 1901 (Cth) has contained a non-conviction based civil forfeiture regime since 1979. Victoria has recently introduced a non-conviction based regime in relation to drug offences, while New South Wales introduced such a regime in 1990 for a wider range of offences carrying a penalty of five years or more imprisonment. The POC Act, dealing with all indictable Commonwealth offences, is still solely conviction based.

In relation to both conviction and non-conviction based forfeiture, a key issue confronting the Commission has been whether the legislation properly distinguishes, in areas such as sentencing and confiscatory discretion, between, on the one hand profits, and on the other, property, not of itself profits, that is used in or in connection with the commission of an offence.

In particular, questions have arisen whether confiscation of profits ought to be allowed to be taken into account in sentencing and whether courts ought to have any discretion regarding the amount of profits that are forfeited in any case.

Further areas of major concern for the Commission have included a consideration of whether the restraining order provisions are sufficiently flexible to achieve their purposes and whether the money laundering provisions of the Act are of optimal effectiveness.

Any discussion of proceeds of crime legislation generally, and non-conviction based schemes in particular, necessarily give rise to questions regarding the implications of such legislation for people accused of crime.

In the course of this inquiry, the Commission has actively sought a diverse range of views and opinions. Submissions have been received from organisations representing business, third party interests, defence lawyers and academics, as well as agencies such as the National Crime Authority, the Director of Public Prosecutions, Customs, and the Australian Federal Police. Perhaps not surprisingly, no submissions have been made to the inquiry from those who have been the subject of proceeds of crime action.

While the Commission is very sensitive to the views of opponents of proceeds of crime legislation and the intrusive nature of confiscatory laws, it needs to be emphasised that the Commission has not been asked to review the need for such laws, but rather to review the existing legislation and to advise the government on how it might be made to operate more effectively.

Given also the very short time frame permitted by the government, this review has, of necessity, had to focus on the experiences of those who work with confiscation legislation, in its various forms, on a daily basis.

The Commission’s report will be seen to be a practical, detailed review of federal proceeds of crime legislation, providing significant recommendations for efficient and effective reform.

* David Edwards PSM is the Deputy President of the Australian Law Reform Commission and the Commissioner with responsibility for the proceeds of crime reference.