Tag Archive for: legislation

A political fix in hate-crime and terror legislation shows the government isn’t leading

After bowing to the opposition on mandatory minimum sentences, the Australian government needs to reestablish its leadership in national security.

Australia’s new anti hate crime amendment includes mandatory minimum sentencing for terrorism and certain hate crimes. The Labor government had resisted implementing mandatory minimums, but the Liberal-National opposition called for it.

Parliament passed the bill for the law, the Criminal Code Amendment (Hate Crimes) Bill 2024, on 6 February.

Introduced to the House in September, the law commendably extends protection against hate crimes to characteristics including gender, sexual orientation, sexual identity and disability. It also creates a new hate crime offence for damaging (or threatening to damage) property and motor vehicles.

As recently as 20 January, Prime Minister Anthony Albanese, opposing mandatory minimum sentencing in the bill, told the Australian Broadcasting Corporation that such a measure would lead to ‘counterproductive issues’.

The bill as passed, however, includes mandatory minimum sentences for:

—Committing a terrorist act or being a member of a terrorist organisation (six years);

—Financing terrorism (three years);

—Publicly displaying Nazi or terrorist organisation symbols or performing a Nazi salute (one year); and

—Advocating force or violence through damage to property (one year).

The effectiveness of mandatory minimum sentences is debated. Particularly within the legal community, there are concerns that they pose risks to the independence of the judicial system. Their inclusion in the bill is best explained as a government attempt to avoid amplifying the public national security discussion.

The opposition called for the measures six weeks before the bill was passed. It criticised the government’s handling of a range of national security issues, including the response to an arson attack on Melbourne’s Adass Israel Synagogue in December 2024 and, more recently, the prime minister not being briefed on an explosive-laden caravan in Dural, Sydney.

Mounting political pressure appears to be forcing the government’s hand. Albanese reportedly overruled Attorney-General Mark Dreyfus to support mandatory minimum sentencing. This isn’t the first time Albanese has changed his mind on criminal and security policy. He has done so on terrorism and sex crimes against children, so this latest decision doesn’t set a new precedent.

After the addition of mandatory minimum sentencing, Home Affairs Minister Tony Burke quickly shepherded the bill through Parliament, and there was reportedly little need for negotiation with the crossbench in the Senate.

Albanese’s apparent change of heart is a defensive move, protecting the government from further criticism. But the government’s role is to lead on national security issues—something it has struggled to do since the High Court’s 2023 decision in the case NZYQ v Minister for Immigration to release non-citizen criminal offenders held in indefinite detention.

National security demands greater attention. It is rarely the most important issue to the electorate, but poor national security records have bedevilled past governments.

The attorney-general and home affairs minister each have overlapping national security responsibilities, reflecting the unresolved departmental divide of policy and operational responsibilities. The government needs stronger and clearer messaging and policy, driven by a dedicated spokesperson.

ASPI’s Justin Bassi and John Coyne have argued that the muddled national security framework is diminishing departmental capacities to respond to counterterrorism and related issues. Similarly, the unclear division of responsibility appears to limit ministerial responsiveness, opening space for the parliamentary opposition to cut through.

Another issue is the overburdening of ministers. For example, Burke is also minister for immigration and multicultural affairs, cyber security and the arts. Minister for Foreign Affairs Penny Wong is also leader in the Senate. Deputy Prime Minister Richard Marles is also minister for defence. All three are highly capable, but they have been forced to juggle competing priorities. At this moment national security needs unwavering focus.

To reclaim leadership on national security, the government should develop effective policies that can be announced and implemented in the short term. A national hate crime register, for example, would provide a central data source for law enforcement, policymakers and researchers. Better understanding of the problem will allow us to better combat it.

The government should also provide more resources for law enforcement and intelligence to establish a national unit dedicated to combating hate crimes. This could fall within the Australian Criminal Intelligence Commission or a joint taskforce. Special operations currently address hate crimes, but a dedicated unit would provide permanent attention to this challenge.

Incumbent governments must assert themselves as national security leaders. Instead of conceding to implementing doubtful measures, the government should refocus its national security posture to develop effective policy.

Regulatory compliance alone won’t stop financial crime

In the four years since AUSTRAC’s enforcement action against Australia’s largest gambling company, Tabcorp, anti-money-laundering compliance has been in the spotlight. There’s now much more awareness of how financial intelligence on child exploitation, organised crime and terrorism flows from banks to government agencies, and how negligence, system errors and compliance breaches can choke off that flow.

This is a logical and desirable consequence of a run of significant enforcement cases and over $2 billion in fines. Less desirable is the singular focus on regulatory compliance, so that meeting the requirements of the anti-money-laundering and counter-terrorism-financing legislation enacted in 2006 becomes an end in itself.

Under this regime, banks and other reporting entities must maintain a program to mitigate and manage the risk of financial crime. Part of doing this is reporting international transfers, threshold transactions and suspicious matters. Filing reports doesn’t directly prevent financial crime, but it provides government agencies with crucial intelligence to support investigations. Failure to report this intelligence in full, on time or at all results in the ‘loss of opportunity to detect and disrupt possible unlawful activity’.

However, it would be wrong to think that faultless reporting can transform enforcement outcomes. There are much broader issues at play.

For example, the continued exemption of lawyers and accountants from reporting obligations means that they don’t have to report irregularities in the huge volumes of transactions they process. This means a lot of potentially valuable information is lost to investigators.

In addition, the offence of money laundering is slippery and difficult to prove. The Financial Action Task Force’s 2015 observation that Australia’s comprehensive reporting regime wasn’t matched by successful prosecution outcomes remains apt.

Another part of the challenge is the sheer scale of criminal markets and their integration with legitimate ones. The Australian Criminal Intelligence Commission recently estimated that a cartel of organised crime figures responsible for a third of drug importations into Australia generates annual revenue of $1.5 billion. Cashflow on that scale moves in numerous streams, infiltrating the property market and the gaming, hospitality and entertainment sectors.

Australian academic John Langdale has described a triangular illicit trafficking network between China, the United States and Canada. Chinese money-laundering organisations provide funds sourced from criminal groups to wealthy Chinese citizens seeking to invest in the Canadian property market.

In Langdale’s ‘Vancouver model’, money-laundering organisations match these onshore transactions by making equivalent funds available to criminal groups overseas. This allows Chinese citizens to evade currency controls meant to prevent capital flight and enables criminal groups to move illicit funds offshore without using detectable international money transfers.

The model is flexible; money-laundering organisations introduce the illicit funds into the Canadian economy through multiple sectors, including cash-intensive businesses and casinos. Langdale has observed that large Australian cities share characteristics with Vancouver that made the model work. He also warns that China’s increasing dominance in global trade will be matched by an increase in the worldwide influence of Chinese money-laundering organisations.

In addressing this kind of systemic threat, reporting and law enforcement investigations are necessary, but not sufficient.

Money-laundering organisations operate at a remove from the predicate offending, which usually involves drugs, fraud, tax evasion, people smuggling, theft or arms trafficking. Organisations also provide services to multiple criminal groups. The placement of cash is conducted by expendable ‘mules’. These low-level foot soldiers may be susceptible to surveillance, arrests and charges, but their removal won’t stop a network.

Full-scale investigation of both the predicate crime and the money-laundering activity of a criminal syndicate is a massive task. Undoubtedly it can and should be done; the seven-year Millstream investigation in New South Wales is a case in point. However, the question is whether this kind of intensive investigative activity can be scaled across the national economy to have a sufficiently disruptive effect.

Other methods should be explored. In Europe, the ‘administrative approach’ to tackling organised crime has been implemented across several countries. It involves agencies collaborating to create barriers that prevent criminals from using the economic and legal infrastructure of a state. Banks and traditional law enforcement are important stakeholders in this collaboration. So too are other service providers, local governments and industry regulators.

An important tool of the European approach is the ‘barrier model’. It involves a thorough mapping of criminal operating processes to identify the stages and enablers, as well as the touchpoints with the legitimate economy. This exercise helps with determining the barriers that should be created to most effectively disrupt a criminal enterprise.

There are numerous examples of how this could work. A local council rejects a development application for an apartment block funded with drug money. A nightclub with links to an outlaw motorcycle gang is denied a liquor licence. A law firm that funnels tainted funds into property purchases is disciplined by its professional regulator.

In fact, these kinds of barriers are deployed now, tactically and sporadically. There is value in exploring their strategic, coordinated use.

This doesn’t negate the importance of financial intelligence, or of reporting entities meeting their obligations. However, it recognises important truths: that criminal groups cannot exist entirely outside the mainstream economy; that banks, while important, are not the only actors in that economy; and that we can redistribute some of the pressure on law enforcement by using financial intelligence in more creative ways.

Progress towards a national scheme targeting unexplained wealth?

Money money money!

Buried deep in the news about a tax bill of close to $6 million being served on three Victorian ‘racing identities’ was an even more important story: the Commonwealth, state and territory governments are close to agreeing on a new national scheme to target Australia’s ‘unexplained wealth’. This scheme will add to existing Commonwealth and state laws, importantly, promote further unity of effort against serious and organised crime.

That’s good news. It’s taken over five years to get to this point, which suggests that the Commonwealth and at least a number of state governments have come to an agreement about proceed-sharing and addressed concerns over ‘jurisdictional sovereignty’.

To put this effort in context, the negotiations among the states, territories and the Commonwealth started when Kevin Rudd was prime minister the first time around. Success will be of great credit to current Justice Minister Michael Keenan and the ministers and officials who’ve worked with him.

Unexplained wealth laws are a legal innovation that overcome some limitations of the current and ongoing ‘proceeds of crime’ and ‘unpaid tax’ methods used to confiscate illegitimate assets.

Under traditional proceeds of crime laws, the prosecution has to prove that the wealth of a convicted criminal was derived from crime. Unexplained wealth laws don’t require proof of a direct link between the unexplained wealth to a specific crime.

It’s also superior to using tax law because the police can go after the full amount, not just the taxable component and relevant fines (although this remains a useful tool too).

With unexplained wealth laws, the onus is placed on the holder of any assets in Australia to prove that their assets and cash were gained legitimately using the ‘balance of probabilities’ test. Under Commonwealth law, this means that you need to show how you paid for your houses and cars, or earned the cash in your accounts. If you can’t, then a court may require you to forfeit a sum that represents the difference between the explained and unexplained portions of those assets.

There’s a buffer of $100,000 in this, which means the average-Joe worker who takes a few cash jobs on the side shouldn’t get caught in that net—although the tax office will still be interested.

This system of confiscating unexplained wealth requires what every legitimate earner in Australia should be able to do easily.

If implemented to the fullest extent, a national unexplained wealth scheme would allow a single civil court action against an individual. That action might be led by the Commonwealth or a state or territory, but it would involve the active cooperation of all relevant jurisdictions. This would remove the need to launch multiple court cases against one person, make it possible to include assets stashed across jurisdictions, and remove the distinction between state and federal jurisdiction. The ability to launch criminal cases would also remain.

As a result, legal proceedings should become easier and faster to mount and, hopefully, Australia should see more illegitimate money put to productive use (but remember—Commonwealth law has yet to be tested in court).

One limitation is the continued restriction of such laws to Australian jurisdiction. As Australia’s international organised crime links increase, this new law and system won’t be directly applicable to overseas wealth. That provides an opportunity for criminals—and importantly, an opportunity for Australian diplomacy—to convince others of the value of adopting similar laws in their own countries.

That limitation aside, this multi-jurisdictional agreement will seriously promote the efforts of our nation’s law enforcement and regulatory agencies to counter serious and organised crime by improving their tools to choke the financial lifeblood out of organised criminals. As I’ve argued recently, providing law enforcement agencies with tools like unexplained wealth are important innovations that are worth pursuing—even if it’s over a marathon, rather than the Cox Plate distance.