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2019
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CURRENCY (RESTRICTIONS ON THE USE OF CASH) BILL 2019
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Housing and
Assistant Treasurer, the Hon Michael Sukkar MP)
Table of contents
Glossary................................................................................................. 1
General outline and financial impact ...................................................... 3
Chapter 1 Restricting the use of cash .......................................... 5
Chapter 2 Statement of Compatibility with Human Rights .......... 19
Glossary
The following abbreviations and acronyms are used throughout this
Explanatory Memorandum.
Abbreviation Definition
AML/CTF Act Anti-Money Laundering and Counter-
Terrorism Financing Act 2006
Bill Currency (Restrictions on the Use of Cash)
Bill 2019
Criminal Code The Criminal Code in the Schedule to the
Criminal Code Act 1995
FTR Act Financial Transaction Reports Act 1988
ITAA 1997 Income Tax Assessment Act 1997
1
General outline and financial impact
Restricting the use of cash
This Bill introduces offences for entities that make or accept cash
payments of $10,000 or more.
These offences protect the integrity of the taxation law and other
Commonwealth laws by ensuring that entities cannot avoid scrutiny and
facilitate their participation in the black economy by making large
payments in cash.
Date of effect: The cash payment limit applies to payments made or
received from 1 January 2020.
Proposal announced: This Bill fully implements the measure Black
Economy Package -- introduction of an economy-wide cash payment limit
from the 2018-19 Budget.
Financial impact: The Bill is estimated to have an unquantifiable impact
on revenue over the forward estimates.
Human rights implications: This Bill engages with the right to the
presumption of innocence and the right to privacy, but is consistent with
those rights. See Statement of Compatibility with Human Rights --
Chapter 2.
Compliance cost impact: Regulatory costs are estimated to be minor. The
cash payment limit does not introduce any additional reporting
requirement on business. Payments that exceed the limit are likely to be
infrequent and most businesses use banks accounts.
3
Chapter 1
Restricting the use of cash
Outline of chapter
1.1 This Bill introduces offences for entities that make or accept
cash payments of $10,000 or more.
1.2 These offences protect the integrity of the taxation law and other
Commonwealth laws by ensuring that entities cannot avoid scrutiny and
facilitate their participation in the black economy by making large
payments in cash.
Context of amendments
Cash in Australia
1.3 Cash traditionally consists of Australian currency - broadly
notes and coins issued by the Commonwealth of Australia - and foreign
currency - notes and coins issued by other jurisdictions, generally for use
in those jurisdictions. The issue of notes and coinage by any other entity
in Australia is generally illegal (see section 44 of the Reserve Bank
Act 1959 and section 22 of the Currency Act 1965).
1.4 Australian currency is generally legal tender in Australia - see
section 16 of the Currency Act 1965 and section 36 of the Reserve Bank
Act 1959. While entities may specify or accept other non-monetary forms
of payment for a debt, absent any such specification or acceptance, only
payment in Australian currency will validly discharge a debt (see
section 9 of the Currency Act 1965). Foreign currency is not legal tender
in Australia, but can still be used as a form of monetary payment if this is
agreed between the parties.
1.5 That said, despite this status, cash is increasingly being replaced
with various forms of electronic non-cash payments. These most
commonly involve the use of debt or credit arrangements facilitated by
banks and other payment system providers which, whilst generally
designated in Australian currency, are forms of contractual arrangement
between parties.
1.6 These alternative payment methods are often more convenient
for consumers or businesses and increasing involve a lower costs as they
simplify record keeping and avoid the security, insurance and other costs
associated with handling and holding large amounts of cash. They also
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Currency (Restrictions on the Use of Cash) Bill 2019
generally offer significant regulatory benefits as they typically create clear
records of transactions. As a result there are economic benefits arising
from the growing use of these alternative payment methods.
1.7 Many of these non-cash payment systems are subject to
regulatory oversight by the Reserve Bank of Australia using its broad
powers under the Payment Systems (Regulation) Act 1998, the Payment
Systems and Netting Act 1998 and the Reserve Bank Act 1959.
1.8 That said, some forms of electronic payment more closely
mirror physical currency. In particular, crypto-currencies and other digital
currencies are generally unregulated and often do not create clear records
of transactions in a form that can easily be used to identify the parties to a
transaction.
1.9 To mitigate the risk that large, anonymous cash payments may
be used to facilitate money laundering and terrorism financing, businesses
that provide certain high risk services must report cash payments for
goods and services of $10,000 or more under the AML/CTF Act. This
includes businesses that provide financial services, deal in bullion and
provide gambling and digital currency exchange services. Similarly, a
person entering or departing Australia must declare amounts of physical
currency of $10,000 or more (see section 53 of the AML/CTF Act).
Certain other businesses must report other payments in excess of $10,000
under the FTR Act.
The report of the Black Economy Taskforce
1.10 The Final Report of the Black Economy Taskforce
recommended the Government introduce a $10,000 cash payment limit for
transactions between businesses and individuals.
1.11 In its response to the Report in the 2018-19 Budget, the
Government announced that it would introduce a cash payment limit for
such transactions with effect from 1 July 2019. This was extended to
1 January 2020 in the 2018-19 Mid-Year Economic and Fiscal Outlook.
1.12 Public consultation took place on exposure draft legislation to
introduce a cash payment limit from 26 July 2019 to 12 August 2019.
1.13 The Government has also implemented a number of other
measures in response to the other recommendations of the Final Report of
the Black Economy Taskforce. These include establishing the Black
Economy Standing Taskforce as a cross-agency body to address the
challenges of the black economy, and setting up a hotline for individuals
and business to report black economy and phoenix activity to serve as the
basis for cross-agency action.
6
Restricting the use of cash
Summary of new law
1.14 This Bill creates new offences that apply if an entity makes or
accepts cash payments with a value that equals or exceeds the cash
payment limit. However, the offence does not apply if the payment is
either of a kind specified in the rules made under the Bill or made or
accepted in circumstances of a kind specified in the rules.
1.15 The cash payment limit is $10,000. The Treasurer may specify
how to convert an amount of foreign or digital currency into Australian
dollars in the rules made under the Bill.
1.16 This Bill also provides rules, similar to the rules that apply in the
context of the taxation law and under the AML/CTF Act, about the
consequences that apply when an offence is committed by an entity that is
not a legal person.
Detailed explanation of new law
1.17 This Bill establishes the cash payment limit of $10,000. The
amount of this limit is consistent with the threshold for reporting under the
AML/CTF threshold transaction reporting regime. It represents the point
at which the payment is sufficiently large that the risk of facilitating
substantial black economy and other illicit activity justifies the application
of the limit. [Clause 8]
1.18 To give effect to this limit, this Bill establishes new offences for
entities that make or accept cash payments that equal or exceed the cash
payment limit. The use of criminal sanctions reflects the harm to the wider
community that was identified in the Final Report of the Black Economy
Taskforce. The use of an effective deterrent is required to change existing
practices that have facilitated participation in black economy and
particularly the use of cash payments to conceal income and criminal
activity.
1.19 This Bill will ensure a fairer tax and regulatory system for all
Australians by ensuring the majority of Australians that are doing the right
thing are not are not disadvantaged in comparison with entities seeking to
avoid their obligations.
1.20 The offences established by this Bill are relevant to the
responsibilities of a number of Commonwealth regulatory and law
enforcement agencies, and may be considered and investigated by those
agencies in the course of their existing enforcement activities. Consistent
with other criminal offences, primary responsibility for decisions to
charge and prosecute offenders rests with the Australian Federal Police
and the Commonwealth Department of Public Prosecutions.
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Currency (Restrictions on the Use of Cash) Bill 2019
1.21 Two of the offences established by this Bill apply if an entity
makes or accepts a cash payment or series of payments, with strict
liability applying to the circumstances of the payment or payments
including cash of an amount equal to or exceeding the cash payment limit.
That is, the offences are committed regardless of whether the entity
intended to or was reckless about whether the payment or series of
payments included such an amount of cash.
1.22 The other two, more serious, offences apply if the entity intends
or is reckless about making or accepting such a payment or a series of
payments.
1.23 The offences extend to all external territories and to some
conduct that occurs outside Australia - see paragraphs 1.46 to 1.49.
[Clause 6 of the Bill]
1.24 The Bill binds the Crown in all its capacities, but does not make
the Crown liable to be prosecuted for an offence. [Clause 5 of the Bill]
1.25 The new offences only apply to making and accepting payments
in excess of the cash payment limit. Nothing in the Bill makes it an
offence to be in possession of cash of any amount.
Strict liability offences
Physical elements
1.26 The first strict liability offence applies if an entity makes or
accepts a payment that is or includes an amount of cash that equals or
exceeds the cash payment limit. [Subclause 12(1) of the Bill]
1.27 The offence applies to all entities, within the meaning of the
ITAA 1997. Entity includes, among other things, individuals, bodies
corporate, bodies politic, trusts and partnerships - that is, the structures
through which Australians traditionally conduct business and which are
subject to tax and other regulatory obligations.
1.28 Payment is used in its broadest sense encompassing any transfer
of financial value. It is not limited to payments that are payments 'for'
something and includes gifts and loans. Examples of payments include the
provision of wages and a donation to a charity.
1.29 Whether an entity makes or accepts a payment is a question of
fact to be determined using the ordinary meaning of those words.
1.30 A payment consists or includes cash if cash is provided as part
of the payment. Cash is defined as physical and digital currency within the
meaning of the AML/CTF Act. It includes notes and coins that are legal
tender and circulated as a medium of exchange in Australia or a foreign
jurisdiction and digital tokens that have similar characteristics. [Paragraph
12(1)(c) and the definition of 'cash' in clause 7 of the Bill]
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Restricting the use of cash
1.31 While digital currency is included in the definition of cash,
given ways in which digital currency is presently used in Australia, it is
expected that the Treasurer will exempt most transactions involving
digital currency from the cash payment limit. This exemption is expected
to continue until such time as the use of digital currency changes and it
presents a material risk of facilitating the same sorts of avoidance of
obligations currently facilitated by physical currency.
1.32 The value of the cash provided is to be determined at the time of
the payment. This value is its face value as currency; to the extent cash
may have value other than as a medium of exchange this is not relevant
(for example, a collectable coin). Some payments may involve an amount
of foreign currency or digital currency. The Treasurer may determine
methods for how to work out the value of such cash payments in
Australian dollars in the rules. [Clause 9 of the Bill]
1.33 Allowing methods to be determined by legislative instrument is
necessary to ensure that appropriate rules can be made to provide certainty
for entities across the range of foreign currencies for which this is needed.
It is consistent with the approach taken in the AML/CTF Act and other
Commonwealth laws.
1.34 The second offence applies in the same circumstances as the
first, except that you do not look to assess whether the payment itself
equals or exceeds the cash payment limit, but you instead look to assess a
series of payments that relate to a single supply or are a single gift and
determine if, as a result of the payment, the amount of cash provided in
the series of payments equals or exceeds the cash payment limit.
[Subclause 12(3) of the Bill]
1.35 To constitute a series of payments, the payments must be for the
same supply or part of a single gift. It is not sufficient that the payments
occur between the same parties, even if they occur on a regular basis,
where distinct things are supplied.
1.36 An example of a series of payments for a supply is the purchase
of a car by instalments - all of the payments relate to the one supply (the
car). An example of a series of payments that constitute a gift would be a
case where an individual agrees to provide a very substantial donation to a
charity in three instalments paid annually - each of the separate payments
under the agreement is part of the one committed pledge. An example of
payments that do not constitute a series are monthly payments of rent -
each payment is for the use of the property for a different period, which is
a separate supply - see paragraph 1.40.
1.37 Payments made for the same supply or gift may form part of a
series of payments even if they are made by different entities. For
example, if an individual purchases a car for $18,000 and pays $9,000
9
Currency (Restrictions on the Use of Cash) Bill 2019
themselves and arranges for a relative to pay the balance, these two
payments would form a series of payments for the supply of the car.
1.38 Generally, 'supply' is defined as having the same meaning as in
the A New Tax System (Goods and Services Tax) Act 1999. This means it
includes 'any supply whatsoever'. There has been considerable judicial
scrutiny of the meaning of supply in the context of the A New Tax System
(Goods and Services Tax) Act 1999, much of which is outlined in the
Commissioner of Taxation's Goods and Services Tax Ruling GSTR
2006/9. This definition has been adopted here as it is sufficiently broad to
reflect the policy intent while also being familiar to businesses, which will
often need to consider the application of the GST to the same payment.
Using an existing concept that is familiar to business minimises red tape
and avoids additional complexity. [The definition of 'supply' in clause 7 of the
Bill]
1.39 The nature of a supply or supplies should be understood in
context and based on the arrangements agreed between the parties to the
supply. For example, if an individual goes to a travel agent and makes
separate bookings for a number of flights and hotels, then each of these
bookings is likely to be for a separate supply. Alternatively, the individual
may book a single package tour covering both travel and accommodation,
which would likely be a single supply.
1.40 However, some supplies are made and paid for on a periodic
basis - for example an apartment may be rented for a period of a year,
with rent paid monthly. In this context, the definition of supply is
modified to make clear that each part of the supply made and paid in
relation to a defined period is a separate supply. This ensures that
payments relating to different periods do not form part of a series of
payments for one supply. For example, this rule ensures that each monthly
payment of rent under an annual lease relates to the supply of the premises
for that month over the whole period of the lease. [Clause 10 of the Bill]
Fault elements
1.41 There are two different fault elements required for the physical
elements of these two offences: intention and strict liability.
1.42 To commit these two offences the entity must have intended to
make or accept a payment. If an entity inadvertently makes or accepts a
payment, without knowing or being aware of what they are doing, then
they have not committed the offence. For the second offence, the entity
must also have intended that this payment is a payment for a supply or
made as a gift. [Subclauses 12(1) and (3) of the Bill]
1.43 However, strict liability applies to in relation to the amount of
the payment and whether it is cash. Effectively, once an entity
intentionally makes or accepts a payment, the entity commits the offence
if the payment includes cash of an amount equal to or in excess of the
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Restricting the use of cash
cash payment limit. This applies whether or not the entity was aware that
the payment included this amount of cash. [Subclauses 12(2) and (4) of the Bill]
1.44 Consistent with other cases to which strict liability applies, the
defence of mistake of fact is available in relation to these elements. If an
entity can demonstrate, after consideration, that it mistakenly but
reasonably believed that a payment did not include an amount of cash that
was equal to or exceeded the cash payment limit then they will have not
committed the offence.
1.45 The application of strict liability to these elements of the
offences is necessary for the offence to have its intended effect of
deterring the use of large cash payments and ensuring businesses take
action to establish systems and other process to prevent breaches of the
cash payment limit. Payments are often routine or automated and can
often be made or accepted without particular consideration, which can
make demonstrating any level of intention problematic. Applying strict
liability to making or accepting a cash payment effectively places a duty
on entities to take reasonable steps to ensure they do not make or accept
such a payment, which is necessary for the cash payment limit to be
effective.
Geographic application
1.46 Both strict liability offences are subject to category B extended
geographical jurisdiction. Broadly, under standard geographical
jurisdiction, an offence will not apply unless either conduct or a result of
the conduct constituting the offence occurs in Australia or on board an
Australian aircraft or ship, or the offence is ancillary to another offence
for which that was the case. Under category B extended geographical
jurisdiction, the offences will also apply if the entity is an Australian
citizen or body corporate, or, a resident of Australia provided that the
offence is also contrary to the law of the jurisdiction in which it is
committed by the resident. [Subclause 12(6) of the Bill]
1.47 However, this Bill provides category B jurisdiction only applies
to an offence if the payment or series of payments that constitute the
offence is wholly or partly for a supply and the supply is made wholly or
partly in Australia. [Subclause 12(6) of the Bill]
1.48 In most cases, the offence will apply appropriately under
standard geographical jurisdiction, as either the payment or the results of
the payment (the supply) will occur in Australia. However, the extension
ensures that entities that are closely linked to Australia cannot escape the
application of the cash payment limit in relation to supplies occurring in
Australia by arranging for payment to take place outside of Australia.
1.49 In this context, 'Australia' and 'resident of Australia' have their
ordinary meaning under the Criminal Code. This means 'Australia'
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Currency (Restrictions on the Use of Cash) Bill 2019
includes the external Territories and 'resident of Australia' means a
person who resides in Australia within the ordinary meaning of those
words. Any special definitions of Australia and resident that apply in other
statutory contexts, such as the income tax law, do not apply for these
purposes.
Penalty
1.50 The maximum penalty for both strict liability offences is a fine
of 60 penalty units. This reflects the potential seriousness of the conduct
and the importance of deterrence while also being consistent with the
guidelines for strict liability offences set out in the Guide to Framing
Commonwealth Offences, Infringement Notices and Enforcement Powers.1
[Subclauses 12(1) and (3) of the Bill]
1.51 However, under section 4B of the Crimes Act 1914, the
maximum penalty for a corporation is increased to five times the amount
for a natural person. The maximum penalty for this offence for a body
corporate would therefore be 300 penalty units.
Mental element offences
1.52 The remaining two offences apply in the same circumstances as
are set out above and all of the physical elements of the offences are the
same. However, the strict liability is not the fault element for any of the
physical elements of these offences. Instead the fault element for the
circumstances of the payment including cash and the total value of the
cash included is the standard fault element for circumstances under the
Criminal Code: recklessness. [Clause 13 of the Bill]
1.53 This means that an entity will only commit these offences if, in
addition to satisfying the requirements for the strict liability offences, the
entity knew that there was at least a real risk that the payment would result
in the total amount of cash paid or received equalling or exceeding the
cash payment limit.
1.54 The maximum penalty for these offences is also greater -
120 penalty units or 2 years imprisonment or both. [Subclauses 13(1) and (2)
of the Bill]
1.55 This higher penalty reflects the greater level of culpability
involved in deliberately or recklessly breaching the cash payment limit.
Unlike the strict liability offences, which operate to ensure compliance
with the limit, the recklessness offences apply to penalise entities that
1
(2011) Criminal Justice Division of the Attorney General's Department, available at
https://www.ag.gov.au/Publications/Pages/GuidetoFramingCommonwealthOffencesInfringe
mentNoticesandEnforcementPowers.aspx.
12
Restricting the use of cash
have consciously and deliberately decided to risk violating the cash
payment limit.
1.56 Both mental element offences are also subject to category B
extended geographical jurisdiction in circumstances where a payment is
made for supplies occurring in Australia for the reasons outlined in
paragraphs 1.46 and 1.49. [Subclause 11(4) of the Bill]
Defences
1.57 All of the offences provide that the offence does not apply to a
payment if the payment is one that the Treasurer has specified in the rules.
The offences also do not apply to payments that are made or accepted in
circumstances specified by the Treasurer in the rules. [Subclauses 12(5) and
13(3) of the Bill]
1.58 It is expected that exceptions will be created for payments in
transactions in which neither party is acting in the course of a business or
other enterprise and certain payments that are subject to reporting
obligations under the AML/CTF Act.
1.59 Allowing kinds of transactions to be made exempt from the cash
payment limit by legislative instrument ensures that there is flexibility in
the regulatory regime to accommodate new kinds of transactions. Given
the serious nature of the proposed offences and the breadth of the
activities to which they can apply, it is important to ensure that swift
changes can be made to accommodate new kinds of transactions in which
the use of cash is necessary or appropriate.
1.60 Given the importance of speed, the need to minimise the risk of
any unintended economic disruptions and the fact that the power can only
be exercised to limit the scope of the offences, it was considered
appropriate that the power be exercised by rules made by the Treasurer
rather than by regulation.
1.61 Any rules are subject to the full process of Parliamentary
scrutiny including disallowance as set out in the Legislation Act 2003.
1.62 This Bill permits the Treasurer to either exempt a payment in its
entirety or instead to exempt only the making or accepting of a payment in
particular circumstances. This reflects that there are classes of payment
that it may be appropriate to wholly exempt (such as payment occurring
outside the course of an enterprise) and cases where it may be appropriate
to exempt one party but not the other based on their particular
circumstances. For example, if one party is misled by the other party into
believing that a payment was not accepted in the course of an enterprise, it
may well be appropriate to exempt the party that was misled but not the
other party.
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Currency (Restrictions on the Use of Cash) Bill 2019
1.63 A defendant bears an evidential burden to establish the
possibility that their use of cash of an amount equal to or above the cash
payment limit relates to a payment of a kind specified by the Treasurer or
that was made or accepted in circumstances specified by the Treasurer.
1.64 The defendant, as one of the parties to the transaction, is readily
able to assess the nature of the transaction because the details of the
transaction are peculiarly within the knowledge of the parties. This is
particularly the case because the relevant payments will involve cash,
which may well result in no records of the transaction being recorded
outside of those created by the parties. In contrast, law enforcement
agencies would be likely to find it difficult or impossible to prove the
nature of the payment should the parties to the transaction choose to
withhold information because of the limited information created in
relation to cash payments.
1.65 The general defences set out in Part 2.3 of the Criminal Code
can also apply to the cash payment limit offences.
Entities
1.66 The offences apply to all entities. 'Entity' is defined in the same
way as in the ITAA 1997. It includes both legal persons, such as
individuals, bodies corporate and bodies politic, as well as certain
associations, structures and arrangements, such as partnerships, trusts,
unincorporated associations, superannuation funds and approved deposit
funds. These are the structures through which Australians traditionally
conduct business and to which tax and other regulatory obligations apply.
[Clauses 12 and 13 and the definition of entity in clause 7 of the Bill]
Determining the criminal responsibility of entities that are not legal
persons
1.67 This Bill provides that, in working out if an entity that is not a
legal person has committed an offence established by the Bill, the rules in
Division 12 of the Criminal Code for determining corporate criminal
liability apply to an entity as is it were a body corporate. [Subclause 15(1) of
the Bill]
1.68 Broadly, this means that an entity that is not a legal person will
commit the physical element of an offence if is committed by an
employee, agent or officer of the entity acting with the actual or apparent
scope of their employment or authority.
1.69 For this purpose, an entity (the first entity) is taken to be an
agent, employee or officer of another entity acting within their actual or
apparent authority if the first entity is acting on behalf of the other entity
or is carrying on activities that are such that a reasonable person would
consider that the first entity would be an agent, employee or officer of the
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Restricting the use of cash
second entity were that entity a body corporate, and the activities are
similar to the activities that would be carried on by of an agent, employee
or officer of a body corporate. [Subclause 15(2) of the Bill]
1.70 Under Division 12 of the Criminal Code, a fault element other
than negligence relating to a physical element will be attributable to a
body corporate if that entity has authorised or permitted the commission
of the offence. This authorisation may be implied or tacit as well as
express. One manner in which such authorisation may be given is through
the actions of the body or entity exercising the executive authority of the
entity.
1.71 A fault element of negligence is attributable to a body corporate
in the same way it applies to individuals. Negligence may arise even
where none of the individuals involved in the offence were individually
negligent, if the conduct of the entity was negligent when viewed as a
whole.
1.72 As a result of this Bill, these rules for determining whether a
body corporate satisfies the fault element of an offence will apply to
entities other than individuals and bodies corporate for the purpose of the
offences in this Bill. This will mean that fault elements other than
negligence are attributable to such an entity if the entity authorised or
permitted the commissioner of the offence, while a fault element of
negligence is determined consistent with the rules for individuals.
1.73 The approach is modelled on the approach taken in other
Commonwealth legislation such as Division 444 in Schedule 1 to the
Taxation Administration Act 1953 and sections 237 to 239 of the
AML/CTF Act. However, unlike those rules that relate to a wide range of
obligations, the provisions in this Bill only deal with liability for offences.
1.74 The provisions ensure that the offences can be applied
effectively to entities that violate the cash payment limit, however they are
structured. Without these rules it would be difficult or impossible to hold
these controlling entities to account for actions that are ultimately under
their control.
Liability of other entities for offences committed by an entity that is not
a legal person
1.75 To the extent an entity is not a legal person, they cannot be the
subject of legal proceedings. To address this, the Bill provides that if an
offence is committed by an entity that is not a legal person, another entity
or entities (being broadly the entity that has control over the actions of the
first entity), will be taken to commit that offence. [Clause 16 of the Bill]
1.76 The table below sets which entity is taken to commit an offence
when the offence is committed by a particular type of entity.
15
Currency (Restrictions on the Use of Cash) Bill 2019
If an offence is committed by an ... the offence is taken to have been
entity that is ... committed by ...
an unincorporated association or body each member of its committee of
management.
a partnership each of the partners.
a trust the trustee of the trust, or, if the trust
has more than one trustee, by each of
the trustees.
a superannuation fund the trustee of the fund, or, if the fund
has more than one trustee, by each of
the trustees.
However, if a fund does not have a
trustee, the offence is taken to have
been committed by the entity or
entities that manage the fund.
[the table in subclause 16(1) of the Bill]
1.77 These provisions are consistent with the equivalent provisions
that apply under Division 444 in Schedule 1 to the Taxation
Administration Act 1953.
1.78 A defence is available for a person that is taken to commit an
offence because of this provision. The offence does not apply to a person
if the person can demonstrate that they were not in any way involved in
the commission of the offence. [Subclause 16(2) of the Bill]
1.79 Involvement can either be:
• aiding, abetting, counselling or procuring the offence; or
• being knowingly concerned in or party to any act or
omission.
1.80 Effectively, this ensures that a person who was in a position to
have control over the actions of an entity, but neither knew nor was
involved in the commission of a criminal offence by that entity will not be
guilty of an offence.
1.81 Structuring this provision as a defence is appropriate as it is
based on the knowledge and state of mind of the defendant, which is
peculiarly within the knowledge of the defendant and would be difficult or
impossible for the prosecution to ascertain.
1.82 This Bill also provides that, when sentencing a legal person who
has been convicted of an offence under this Bill, if the person was taken to
commit the offence because of the actions of another entity that is not a
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Restricting the use of cash
legal person, the court may take into account the financial circumstances
of that other entity, and any fine may be recovered from the assets of that
entity. [Clause 17 of the Bill]
1.83 This ensures that the courts can ensure that any penalty
appropriately punishes the entity that has directly committed the offence.
It also ensures that the entity that committed the offence cannot escape a
penalty through altering its management arrangements (for example, a
fine will still be enforceable against the assets of a trust even if the trustee
is a corporate trustee that does not seek to be indemnified).
1.84 For avoidance of doubt, this Bill makes clear that the fact that
the financial circumstances of an entity cannot be determined should not
prevent the imposition of a fine on a person. This Bill also makes clear
that these provisions also do not affect the general rule set out in
subsection 16C(1) of the Crimes Act 1914 that the severity of the sentence
for any federal offence must be appropriate in all of the circumstances of
the offence. [Subclauses 17(4) and (5) of the Bill]
Additional constitutional operation
1.85 This Bill relies upon the powers of Parliament to legislate in
relation to, among other matters, taxation, the currency power and the
communications power set out in (see paragraphs 51(ii), (v) and (xii) of
the Constitution). [Clause 19 of the Bill]
Rule making power
1.86 This Bill provides the Treasurer with a power to make rules to
prescribe matters where this is permitted by the Bill, as well as to
prescribe other minor or ancillary matters that are necessary or convenient
for giving effect to the Bill. [Clause 20 of the Bill]
1.87 In the context of this Bill, rules can be made to prescribe
exemptions from the cash payment limit offences (see paragraphs 1.57 to
1.64) and to specify how to determine the value of payments in Australian
currency (see paragraphs 1.32 to 1.33). The rationale for why these
matters are dealt with in rules is set out in paragraphs 1.64 and 1.33.
1.88 Consistent with usual drafting practice and for the avoidance of
doubt, the rule making power is expressly excluded from being able to
alter matters dealt with in this Bill or do things that should be provided for
in primary legislation, such as create new offences or impose a tax.
1.89 Rules made under this power are a legislative instrument and are
subject to tabling, disallowance and all of the other requirements set out in
the Legislation Act 2003.
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Currency (Restrictions on the Use of Cash) Bill 2019
Guide materials and general provisions
1.90 This Bill includes provisions establishing the structure and
object of the legislation and also sets out appropriate guidance materials
for the new offences and related provisions. [Clauses 1, 3, 4, 7, 11 and 14 of the
Bill]
Application and transitional provisions
1.91 The cash payment limit applies from 1 January 2020. [Clause 2 of
the Bill]
1.92 This means that the offences that give effect to the limit apply to
conduct occurring on or after that day.
1.93 The offences do not apply to conduct that occurs before that
time. However, if a payment or series of payments is made after that time,
it is not a defence to the new offences that the payment or payments may
have been made under an agreement made before that time.
1.94 Further, if a payment is made as part of a series of payments,
then the new offence can apply even if some of the previous payments in
the series occurred before 1 January 2020. This is the case even if the total
value of the cash provided in the series of payments only exceeds the cash
payment limit because of cash included in payments made before
1 January 2020.
1.95 This Bill also provides that, except in the event of express
inconsistency, it does not exclude or limit the operation of any other law
of the Commonwealth, a State or a Territory. [Clause 17 of the Bill]
1.96 This makes clear that the passage of this law is not intended to
affect the operation of other laws that may regulate or restrict the use of
cash or other payment methods.
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Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Currency (Restrictions on the Use of Cash) Bill 2019
2.1 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 This Bill introduces offences for entities that make or accept
cash payments of $10,000 or more.
2.3 These offences protect the integrity of the taxation law and other
Commonwealth laws by ensuring that entities cannot avoid scrutiny and
facilitate their participation in the black economy by making large
payments in cash.
Human rights implications
2.4 This Bill engages with the following rights and freedoms:
• right to the presumption of innocence under Article 14(2) of
the International Covenant on Civil and Political Rights
(ICCPR); and
• the right to privacy and reputation under Article 17 of the
ICCPR.
Presumption of innocence - strict liability
2.5 This Bill engages the right to the presumption of innocence
under Article 14(2) of the ICCPR by introducing new offences with strict
liability elements relating to the inclusion of an amount of cash in
payments an entity makes or accepts.
2.6 Article 14(2) of the ICCPR protects the right to be presumed to
be innocent until proven guilty according to law.
2.7 Strict liability offences engage with this right as they involve the
imposition of criminal liability without requiring the proof of a mental
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Currency (Restrictions on the Use of Cash) Bill 2019
fault element, though a defence of honest and reasonable mistake of fact
may be raised. However, strict liability offences are compatible with the
presumption of innocence if they are reasonable, necessary and
proportionate in pursuit of a legitimate objective.
2.8 In the case of the offences introduced in this Bill, the application
of strict liability to these elements of the offences is required for the
offence to have its intended effect of deterring the use of large cash
payments. Payments are often routine or automated and can often be made
or accepted without active consideration, which can make demonstrating
any level of intention problematic. Requiring proof of fault in relation to
the amount of cash paid or accepted would significantly undermine the
deterrent effect of the provisions because it would allow carelessness or
indifference to provide a defence to liability. Applying strict liability to
making or accepting a cash payment effectively places a duty on entities
to ensure they design systems to ensure they do not make or accept such a
payment, which is necessary for the ban to be effective.
2.9 Given the ubiquitous nature of electronic payments and the large
sums involved, this obligation is a reasonable and proportionate means of
achieving the legitimate objective of preventing the use of cash by entities
to avoid creating records of large transactions and facilitate illicit
activities.
Presumption of innocence - liability of controllers of entities
2.10 This Bill also engages the presumption of innocence by
providing that entities that are, broadly, in control of an entity that is not a
legal person, such as a trust, will be responsible should the entity commit
one of the offences set out in this Bill.
2.11 The table below sets which entity is taken to commit an offence
when the offence is committed by a particular type of entity.
If an offence is committed by an ... the offence is taken to have been
entity that is ... committed by ...
an unincorporated association or body each member of its committee of
management.
a partnership each of the partners.
a trust the trustee of the trust, or, if the trust
has more than one trustee, by each of
the trustees.
a superannuation fund the trustee of the fund, or, if the fund
has more than one trustee, by each of
the trustees.
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Statement of Compatibility with Human Rights
If an offence is committed by an ... the offence is taken to have been
entity that is ... committed by ...
However, if a fund does not have a
trustee, the offence is taken to have
been committed by the entity or
entities that manage the fund.
2.12 It is a defence for a person that is taken to commit an offence
because of this provision to demonstrate that the person was not in any
way involved in the commission of the offence by the entity.
2.13 This approach is consistent with the approach taken in other
Commonwealth legislation such as Division 444 in Schedule 1 to the
Taxation Administration Act 1953 and sections 237 to 239 of the
AML/CTF Act.
2.14 It is also reasonable, necessary and proportionate means of
pursuing of the legitimate objective of preventing the use of cash by
entities to avoid creating records of large transactions and facilitate illicit
activities. The provisions ensure that the offences can be applied
effectively to the controllers of entities that violate the cash payment limit.
Without these rules it would be difficult or impossible to hold these
controlling entities to account for actions that are ultimately under their
control.
2.15 At the same time, the defence protects entities that may be in a
position of control but had no involvement in or knowledge of the
wrongdoing.
Prohibition against unlawful or arbitrary interference with privacy
2.16 This Bill also indirectly engages with the right to privacy set out
in Article 17 of the ICCPR as the purpose of the offences it creates are to
prevent the use of cash to avoid the creation of records of significant
transactions.
2.17 Article 17 of the ICCPR provides that individuals shall not be
subject to unlawful or arbitrary interference with their privacy, home
family or correspondence.
2.18 Lawful interference with the right to privacy is permitted under
Article 17 of the ICCPR, provided it is not arbitrary. In order for an
interference with the right to privacy to be permissible, the interference
must be authorised by law, be for a reason consistent with the ICCPR and
be reasonable in the particular circumstances. The United Nations Human
Rights Committee has interpreted the requirement of 'reasonableness' to
imply that any interference with privacy must be proportional to the end
sought and be necessary in the circumstances.
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Currency (Restrictions on the Use of Cash) Bill 2019
2.19 To the extent that the measures in this Bill indirectly impact the
rights protected under Article 17 of the ICCPR, these limitations are not
arbitrary, and are reasonable, necessary and proportionate to the
achievement of legitimate objectives.
2.20 As identified in the Final Report of the Black Economy
Taskforce, the use of cash to facilitate the avoidance of reporting and
other obligations comes at a significant cost to Government, legitimate
businesses and the broader community.
2.21 Restricting the use of cash in transactions is a reasonable and
proportionate means of addressing this broader public interest that is
necessary in light of the substantial costs to Australia of the black
economy activity facilitated by large cash payments, noting that the
restriction is limited to payments in excess of $10,000.
Conclusion
2.22 This Bill is compatible with human rights as while it engages the
right to the presumption of innocence and the right to privacy, the
measures it contains are consistent with those rights.
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