Combating corporate crime

Australia will strengthen its ability to prevent, detect and respond to corporate crime, particularly bribery of foreign public officials, money laundering, and terrorism financing, by strengthening relevant legislation including the Criminal Code Act 1995 and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

Completion Status:
Not fulfilled

Commitment filtering:

Specific:yes

This commitment is specific because it identifies a sufficiently narrow policy area, namely to prevent, detect and respond to corporate crime, particularly bribery of foreign public officials, money laundering and terrorism financing.

Measurable:yes

This commitment is measurable as it identifies a clear action to strengthen relevant legislation, particularly the Criminal Code Act 1995 and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Australia’s First Open Government National Action Plan (for the years 2016 to 2018),[1] which is where this commitment was first made (commitment 1.4), identifies the removal of unnecessary barriers to effective prosecution and the introduction of a possible deferred prosecution scheme as important aspects of strengthening the legislative regime. The national action plan also committed to reviewing the Australian Securities and Investments Commission’s enforcement regime.

[1] Australia’s First Open Government National Action Plan 2016-18, https://ogpau.pmc.gov.au/national-action-plans/australias-first-open-government-national-action-plan-2016-18

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Evaluation:

The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (which would amend the Criminal Code Act 1995) is a key reform aimed at combatting corporate crime. The bill would amend the offence for bribery of foreign public officials in the Commonwealth Criminal Code to remove impediments to the successful investigation and prosecution of foreign bribery (including, for example, by replacing the existing requirement that the benefit or business advantage be “not legitimately due” with the broader concept of “improperly influencing” a foreign public official) and introduce a new corporate offence of failing to prevent foreign bribery by an associate.1 The bill also introduces a Commonwealth Deferred Prosecution Agreement scheme for serious corporate crime and amends the definition of dishonesty in the criminal code to reflect current high court jurisprudence and ensure persons who intentionally engage in dishonest criminal conduct can be better held to account.2 Aspects of the bill have been modelled on measures in the UK and US, which have successfully incentivised anti-bribery corporate compliance, self-reporting and cooperation by companies with law enforcement agencies where an offence has been committed. The bill also requires the attorney general to publish guidance on the steps a corporation can take to prevent an associate from bribing foreign public officials (the so-called adequate procedures guidance). A consultation draft was published in November 2019,3 and final guidance will be published when the bill becomes law. Civil society stakeholders have commended the efforts of the Attorney-General’s Department staff to further this and their willingness to engage with the private sector and civil society to develop the draft guidance. The bill would further implement Australia’s obligations under the OECD Anti-Bribery Convention. The OECD Working Group on Bribery has welcomed the introduction to parliament of the Crimes Legislation Amendment (Combatting Corporate Crime) Bill.4 However, parliament has not yet passed the bill.1

Strengthening the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) is another key element of the commitment. In December 2020, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019 passed the parliament.5 The bill implemented some welcome but modest measures to strengthen Australia’s capabilities to address money laundering and terrorism financing. However, the AML/CTF Act does not currently extend to designated non-financial business or professions (DNFBPs), which can be a high-risk enabler for money laundering. DNFBPs include casinos, real estate agents, lawyers and accountants. The real estate sector, for example, has continually been identified as a weak spot in Australia’s AML/CTF regime (including by the Financial Action Task Force) because large sums of illicit funds can be concealed and integrated into the legitimate economy through real estate.6 The Financial Action Task Force has expressed concern that no legislative or regulatory measures have been promulgated in Australia to mitigate the high risks identified with some types of DNFBPs, and that some types of DNFBPs are not monitored by competent authorities and are not subject to suspicious transaction reporting obligations.7 More generally, Australia has low compliance with the Financial Action Task Force recommendations.8

Australia also invests in preventing corporate crime through other initiatives. One such initiative is the Bribery Prevention Network (BPN).9 The BPN is a partnership between government (namely the Attorney-General’s Department and the Australian Federal Police), the private sector and civil society (Transparency International Australia is a founding member and has a seat on the initiative’s steering and editorial committees) aimed at supporting Australian businesses to prevent, detect and address bribery and corruption risks. It provides resources and guidance, through the BPN portal, webinars and case studies,10 and is directed at smaller businesses that have fewer internal resources to manage bribery risks. The initiative is the first of its kind and has been recognised by the OECD Working Group on Bribery as making an important contribution to bribery prevention. The Australian Federal Police also undertakes foreign bribery enforcement action1112 and other programmes including, for example, to incentivise self-reporting and cooperation from companies who believe they may have breached Australia’s foreign bribery laws.13

While there has been important legislative development work, development of guidance for the corporate sector and anti-corruption enforcement in the period between 2018 and 2021, the commitment is focussed on achieving legislative change which has not occurred. The commitment is therefore assessed as being not fulfilled.

 

Challenges to effective commitment implementation
The Crimes Legislation Amendment (Combatting Corporate Crime) Bill was initially introduced into parliament in 2017, lapsed in 2019 due to the federal election, and was then subsequently reintroduced in December 2019. It is still awaiting debate, although with a federal election due by May 2022 and limited parliamentary sitting days before then, the bill may lapse again.

Australia has been considering passing the so-called second tranche of its AML/CTF Act since 2006; this second tranche should bring DNFBPs into the AML/CTF Act and would address high-risk areas for money laundering and a key gap in Australia’s AML/CTF regime.

COVID-19 has affected the parliamentary sitting calendar, with fewer sittings in 2020 and 2021, limiting the opportunity for debate on these and other legislative reforms. However, some stakeholders cite a lack of political will and interest on the part of government in progressing these reforms for political reasons; this is despite some very good work done by relevant government departments.14 Stakeholders have also noted that there has been strong lobbying from some sectors, including the legal profession, arguing against expanding the scope of the AML/CTF Act to many types of DNFBPs.15

 

Opportunities to accelerate commitment implementation
The Senate Standing Committee on Legal and Constitutional Affairs is currently conducting an inquiry into the adequacy and efficacy of Australia’s AML/CTF regime and recently held a public hearing. Transparency International Australia made a submission and was called as a witness.16 The inquiry offers an opportunity for government to accelerate implementation of this commitment. The committee is due to report in March 2022.17 The report will be published, as is usual practice for parliamentary inquiries, and that report can be expected to usefully inform options for further legislative reform, including with regards to DNFBPs.

 

Recommendations
It is recommended that the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 be passed by parliament as a matter of urgency.

It is also recommended that legislation be developed and introduced to parliament to address risks and gaps in the AML/CTF Act, this must include extending the AML/CTF Act to include all DNFBPs including real estate agents, lawyers and accountants.

 

Sources:
  1. Australian Parliament, Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019, 2 December 2019, https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=s1246
    30 Dec 2021
  2. 30 Dec 2021
  3. Australian Government Attorney General’s dept, Draft Guidance on Adequate Procedures to Prevent the Commission of Foreign Bribery, February 2020, https://www.ag.gov.au/crime/consultations/draft-guidance-adequate-procedures-prevent-commission-foreign-bribery
    30 Dec 2021
  4. OECD Working Group on Bribery, Implementing the OECD Anti-Bribery Convention: Phase 4 Two-year follow-up report Australia, 2019, https://www.oecd.org/corruption/anti-bribery/Australia-Phase-4-Two-Year-Written-Follow-Up-Report-ENG.pdf
    30 Dec 2021
  5. Australian Parliament, Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019, October 2019, https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6431
    30 Dec 2021
  6. FATF, Anti-money Laundering and Counter-Terrorist Financing Measures – Australia Fourth Round Mutual Evaluation Report, 2015, https://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-Australia-2015.pdf
    30 Dec 2021
  7. FATF, Anti-money Laundering and Counter-Terrorist Financing Measures – Australia Fourth Round Mutual Evaluation Report, 2015, https://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-Australia-2015.pdf
    30 Dec 2021
  8. FATF, Anti-money Laundering and Counter-Terrorist Financing Measures – Australia, 3rd Enhanced Follow-up Report & Technical Compliance Re-Rating, 2018, http://www.fatf-gafi.org/media/fatf/documents/reports/fur/FUR-Australia-2018.pdf
    30 Dec 2021
  9. Bribery Prevention Network, https://briberyprevention.com
    30 Dec 2021
  10. Bribery Prevention Network, Implementing an Anti-Bribery and Corruption Policy, https://briberyprevention.com/case-studies/implementing-an-anti-bribery-and-corruption-policy/
    30 Dec 2021
  11. Australian Government Attorney-General’s Dept., Australia’s Enforcement of the Foreign Bribery Offence, https://www.ag.gov.au/crime/foreign-bribery/australias-enforcement-foreign-bribery-offence
    30 Dec 2021
  12. Australian Federal Police, Man Convicted As Part of Foreign Bribery Investigation, 27 August 2020, https://www.afp.gov.au/news-media/media-releases/man-convicted-part-foreign-bribery-investigation
    30 Dec 2021
  13. Australian Federal Police, Companies – Self-reporting and Cooperating, https://www.afp.gov.au/companies-self-reporting-and-cooperating
    30 Dec 2021
  14. Stakeholder interviews, November 2021
    30 Dec 2021
  15. See for example the Law Council of Australia submission the Senate Standing Committee on Legal and Constitutional Affairs inquiry into the adequacy and efficacy of Australia’s AML/CTF regime, https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Legal_and_Constitutional_Affairs/AUSTRAC/Submissions
    30 Dec 2021
  16. TIA, Submission: The Adequacy and Efficacy of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Regime, 27 September 2021, https://transparency.org.au/submission-the-adequacy-and-efficacy-of-australias-anti-money-laundering-and-counter-terrorism-financing-aml-ctf-regime/
    30 Dec 2021
  17. Australian Parliament, The Adequacy and Efficacy of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Regime, https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Legal_and_Constitutional_Affairs/AUSTRAC
    30 Dec 2021

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