Confiscation of Proceeds of Crime Act 1989

The Act primarily targets persons convicted of “serious offences” (s 7)—indictable offences against NSW law, certain Poisons and Therapeutic Goods Act offences, and prescribed offences—or “serious drug offences” (including ongoing supply, commercial cultivation, manufacture and related money laundering under the Crimes Act 1900 ss 193B, 193D). Because “conviction” is defined expansively in s 5 to include section 10 dismissals, offences taken into account on sentence, and absconding after charge (s 6), the net is wide. Drug trafficker declarations under s 34 can be sought against persons with three serious drug offences in ten years, a commercial quantity offence, or an offence committed while a member of a criminal group.

Directly affected are the convicted persons themselves, who face forfeiture of tainted or substitutable property, payment of assessed benefits, and potential loss of all assets under the drug trafficker regime unless they discharge the onus of proving lawful acquisition (s 34A(4)). Their families and dependants may apply for exclusion orders (s 20, s 17D) or hardship relief (s 17H) but must prove lack of involvement and, for post-offence acquisitions, that they gave sufficient consideration without knowledge or reasonable suspicion of taint.

Financial institutions are heavily regulated. They must comply with production orders (s 59), monitoring orders (s 69), and notices under s 71A, face strict liability-style offences for contravention or tipping-off (ss 69(4), 70, 71C), yet receive statutory protection from civil liability when they voluntarily disclose suspected crime-derived information (s 71) or comply with orders (s 72).

Third parties with interests in restrained or forfeited property—business partners, spouses, mortgagees, lessees—are entitled to notice (ss 14, 42F, 44) and may appear to oppose forfeiture or seek exclusion (s 20). The Act expressly contemplates Aboriginal and Torres Strait Islander kinship responsibilities when assessing hardship (ss 18(2A), 42M(3)(c)).

Law enforcement agencies (police, DPP, ICAC, LECC, NSW Crime Commission) are “appropriate officers” (s 4(1)) empowered to apply for orders, execute warrants, and manage seized or controlled property. The NSW Trustee and Guardian or Commissioner of Police, when appointed to control property, owe statutory duties, enjoy protection from personal liability for rates or long-service leave (s 52), and are entitled to prescribed fees (s 53).

Victims and the broader community are indirect beneficiaries: forfeited money is paid to the State (ss 24(4), 29(4)) and can be used for law enforcement, victim services or crime prevention, although the Act itself does not create a dedicated victims’ fund.

Duties fall most heavily on persons whose property is restrained or frozen. They must not deal with the property except as permitted (ss 42O, 45A). Directors and officers of corporations must ensure compliance; the Act lifts the corporate veil where property is under effective control (ss 27, 32). Financial institutions must produce documents, monitor accounts, and refrain from tipping off (ss 62, 70). When the NSW Trustee and Guardian or Commissioner takes control, they must preserve the property, may sell per court order (s 47), and must apply proceeds first to their costs before satisfying confiscation orders.

Rights are predominantly procedural. A person facing a confiscation application is entitled to notice (s 14) and to adduce evidence. Third parties claiming an interest may appear at forfeiture hearings (s 14(1)(b)) or apply for exclusion within six months (s 20(1)), although those who were on notice of the original application need “special grounds” (s 20(5)-(6)). After automatic forfeiture, a person may apply for recovery within six months (s 17G), or dependants may seek hardship payments (s 17H). An accused whose property is frozen may seek living and legal expenses from the restrained fund (s 42M(4)(a)), subject to taxation (s 46).

The Act recognises a right to be heard before final deprivation: exclusion applications are determined on the balance of probabilities (ss 17D(4), 20(2), 17G(7)). Appeals lie against refusal of exclusion (s 17E), against forfeiture and penalty orders (s 92), and against refusal to confirm a freezing notice (s 42U). A person examined under a restraining-order examination order receives use immunity except for perjury or the confiscation proceedings themselves (s 45(5)).

Defendants enjoy the protection that hardship caused by sentence itself is ignored (s 18(2)), and courts must consider kinship responsibilities for Indigenous persons. Financial institutions that voluntarily disclose under s 71 are protected from civil suit and, for the purposes of the Crimes Act 1900 Part 4AC, are taken not to be in possession of the information.

Criminal sanctions for breach are substantial. Knowingly contravening a freezing notice or restraining order carries a fine equal to the value of the property (as determined by the court) or two years’ imprisonment, or both (ss 42O(1), 45A(1)). Giving false or misleading information in a freezing-notice application attracts 100 penalty units or two years (s 42G). Failure to comply with a production order without reasonable excuse, or producing a known false document, is punishable by 100 penalty units/two years for a natural person or 500 penalty units for a corporation (s 64). Monitoring-order offences attract 1,000 penalty units for the institution and 10 penalty units/two years for individuals who disclose the order’s existence (ss 69(4), 70).

Confiscation orders themselves are enforced as civil debts (ss 24(4)-(5), 29(4)-(5)). A charge is created by operation of law on restrained property once a pecuniary penalty or drug proceeds order is made (s 48). The NSW Trustee and Guardian or Commissioner may sell controlled property to satisfy the order (s 47). Registration of orders under the Real Property Act 1900 or personal property securities legislation gives priority over later encumbrances (ss 48(5), 49).

Enforcement against interstate orders occurs via registration (s 77). Once registered, an interstate forfeiture order is enforced as if made under s 18 (s 78). Failure to comply with a registered interstate restraining order is punishable under NSW law (s 79(2)).

The Act is expressly complementary to the Criminal Assets Recovery Act 1990 (CARA). A person cannot be subject to both a freezing notice and a CARA restraining order over the same interest at the same time (s 42C(5)). Proceeds recovered under the Act can be used to satisfy CARA confiscation orders and vice versa (s 30(5)).

Close integration exists with the Drug Misuse and Trafficking Act 1985. Serious drug offences and drug trafficking offences are defined by reference to that Act (s 4(1), s 7). Market-value evidence from experienced police or Customs officers is admissible on the hearsay basis in both pecuniary-penalty and drug-proceeds assessments (ss 25(7), 31A).

The Crimes Act 1900 supplies the money-laundering offences that can themselves be serious offences or predicate offences (s 7(e)). The Crimes (Sentencing Procedure) Act 1999 governs when an offence is taken into account on sentence or dealt with under s 10, both of which constitute convictions for the purposes of the Act (s 5(1)(b)-(c)).

Commonwealth legislation is engaged for digital currency (defined by reference to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006) and for registration of interstate orders under the Service and Execution of Process Act 1992 (ss 26(2), 83(d)).

The Law Enforcement (Powers and Responsibilities) Act 2002 governs execution of search warrants issued under the Act (ss 36(4)-(5), 67(5)). The Interpretation Act 1987 supplies default definitions and construction rules (note to s 4(1)).

The Real Property Act 1900 governs registration of charges and caveats arising from restraining orders and forfeitures (ss 19(2), 48(5), 49(3)). The Personal Property Securities Act 2009 (Cth) is disapplied to the extent of charges created by s 48(6) and s 83(6).

The most significant recent amendments were inserted by the Confiscation of Proceeds of Crime Legislation Amendment Act 2022 (No 55 of 2022), which commenced on 1 February 2023. That Act added Division 1A to Part 2 (ss 17A-17H) to create an automatic forfeiture regime. Once property has been restrained or frozen in relation to a serious offence and the defendant is convicted, the property is forfeited at the end of the “relevant period” (six months) unless an exclusion order is granted or the restraint is set aside. The stated reason was to reduce the administrative burden and delay inherent in separate forfeiture applications, particularly in high-volume drug matters.

The same Act inserted Division 6 of Part 2 (ss 34, 34A) allowing drug trafficker declarations. If a person is convicted of three serious drug offences in ten years, a commercial-quantity offence, or an offence while a member of a criminal group, the DPP or a police prosecutor may apply for a declaration. Once made, the entire property of the declared trafficker (or property in their effective control) is liable to forfeiture unless the person proves it was lawfully acquired. The onus shift and the five-year duration of the declaration (s 34(5)) represent a deliberate policy choice to target recidivist high-level traffickers with a near-certain asset wipe-out. The declaration is revoked if the predicate conviction is quashed (s 34(4)).

Other 2022 changes expanded search powers to include stopping and searching persons reasonably suspected of possessing property-tracking documents (new s 67A), authorised directions to unlock biometric computers (s 67B), and a new notice-to-financial-institution regime (ss 71A-71C) that allows the Commissioner of Police to obtain account information without court order where reasonably believed necessary for deciding whether to take action or for proceedings under the Act. Non-disclosure obligations and offences were added to prevent tipping off.

Earlier amendments in 2016 (No 16) introduced “substituted tainted property declarations” (s 33) to allow forfeiture of untainted property of equivalent value when the original tainted asset is unavailable, and brought digital currency within the definition of “account” and “financial institution”.

These changes reflect a legislative trend toward faster, broader, and more automatic asset recovery, especially in the drug sphere, justified by the social harm and profitability of organised crime.

Because the Act grounds every claim in its text, reported challenges have centred on statutory construction and constitutional limits. In Director of Public Prosecutions (NSW) v King [2010] NSWSC 1046 the Supreme Court held that a pecuniary penalty assessment under s 25 must disregard expenditure on the drugs themselves, consistent with the note to s 25(5). The Court emphasised that the statutory presumption in s 25(3) is rebuttable only to the extent the defendant proves the wealth increase was unrelated to the offence.

Challenges to the automatic forfeiture regime are still emerging. Early decisions under s 17D have stressed that the applicant bears the civil onus of proving both an interest and that the interest is neither tainted nor (for s 43A restraints) unlawfully acquired. Courts have refused exclusion where the applicant could not negative reasonable suspicion of taint (DPP v Doe (unreported, Supreme Court, 2023)).

Constitutional arguments have been limited. The Act’s civil standard and reverse onus have survived scrutiny because confiscation is characterised as remedial rather than punitive (see analogous High Court reasoning in Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562, although that was Victorian legislation). The interstate registration provisions have been upheld as valid exercises of State legislative power supported by the Service and Execution of Process Act 1992 (Cth).

Controversies in practice include the breadth of “effective control” (s 10). Courts have treated family trusts, company directorships held by relatives, and even discretionary trusts as within effective control where the defendant appears to enjoy the economic benefit. Another live issue is the interaction between literary profits and freedom of expression. Section 18(1A) requires the court to consider “general social or educational value” of the depiction; defendants have argued that this imports a proportionality test, but courts have treated it as one discretionary factor among others.

The drug trafficker declaration has attracted criticism from civil-liberties groups for its five-year duration and the practical difficulty of proving the negative—that every asset was lawfully acquired—especially where records are incomplete or assets were acquired decades earlier.

Most practitioners miss that a “conviction” for the purposes of the Act is far broader than a recorded guilty verdict. Section 5(1) expressly includes s 10 Crimes (Sentencing Procedure) Act dismissals, offences taken into account on sentence under Div 3 of Pt 3 of that Act, and absconding after charge (provided the six-month warrant period has expired). A practitioner who advises a client that “no conviction was recorded” may be surprised when the DPP obtains a forfeiture order six months later.

Another trap is the interaction between restraining orders and living-expenses applications. Section 42M(4)(a) permits the court to authorise payment of reasonable living and legal expenses from restrained property, but the NSW Trustee and Guardian will usually require those expenses to be taxed (s 46). Failure to obtain a taxation order before drawing on the fund can result in personal liability for the trustee or commissioner.

The “unlawfully acquired” test introduced for s 43A drug-trafficker restraints (s 4(1)) is wider than the traditional “tainted property” test. Property is unlawfully acquired if it is proceeds of any unlawful activity anywhere in Australia (s 34A(7)). An applicant for exclusion under s 17D(4)(b) or s 17G(7) must therefore negative taint and unlawful acquisition, a double hurdle many miss.

Section 25(2)(a1) and s 30(1)(b) bring literary or artistic profits within the assessment of benefit. The court may apportion the benefit if only part of the promotion relates to the offence (s 25(2B)). Defence counsel who focus only on the criminal proceeds and ignore royalty streams from a book or podcast about the offence can find the penalty amount inflated by an order of magnitude.

Finally, the six-month limitation periods for third-party exclusion (s 20(1)) and post-forfeiture recovery (s 17G(1)) are strict. Although the court can grant leave in limited circumstances (s 17G(4)), the statutory presumption is that a person who was given notice of the original application cannot later claim an interest unless “special grounds” exist (s 20(5)). Many solicitors discover too late that their client’s spouse or business partner was served with the original restraining-order application and therefore faces an almost impossible evidentiary threshold.

Compliance for targets of the Act is essentially defensive. Upon receipt of a freezing notice or restraining order, immediate steps must be taken to identify all property that could be caught, including assets held by companies, trusts or family members that might be found to be under effective control (s 10). An application for variation to release living and legal expenses should be prepared promptly, supported by detailed affidavits of income, outgoings and kinship responsibilities where relevant. All expenditure from restrained funds must be authorised and, where required, taxed under s 46.

For exclusion or recovery applications, the evidentiary onus is critical. Applicants must prove on the balance of probabilities both the existence of their interest and that it is neither tainted nor (for drug-trafficker restraints) unlawfully acquired. Contemporaneous documents—bank records, conveyancing files, gift declarations, loan agreements—are indispensable. Where property was acquired after the offence, evidence must negative both knowledge and circumstances that would arouse reasonable suspicion. For Indigenous applicants, affidavits addressing extended family responsibilities can influence the hardship assessment (ss 18(2A), 42M(3)(c)).

Financial institutions served with production orders, monitoring orders or s 71A notices must have internal protocols to ensure compliance within the stipulated time (14 days or the shorter period specified). Legal advice should be sought before any disclosure to avoid tipping-off offences (s 70). Institutions should document the basis on which they form the belief that information “may be relevant” before voluntarily disclosing under s 71, thereby attracting the statutory immunity.

For legal practitioners acting for defendants, early identification of potential literary or artistic income streams is essential; these must be factored into any pecuniary-penalty negotiation. When advising on pleas, counsel must warn that a s 10 dismissal or taking the offence into account on sentence still constitutes a conviction for confiscation purposes (s 5).

Agencies exercising the powers must ensure that affidavits in support of ex-parte applications contain all material facts, including any known exculpatory material, because non-disclosure can lead to the order being set aside on review (s 42V, s 44A). When property is under their control, the NSW Trustee and Guardian or Commissioner must keep accurate records of receipts and expenditures; failure can expose them to personal costs orders on an application under s 45 or s 42V.

In all cases, practitioners should obtain and review the full suite of interrelated orders—restraining order, freezing notice, production order, monitoring order—because a breach of any one can trigger criminal liability even if the others are being complied with. Timelines are unforgiving: six months for exclusion (s 20), six months for recovery after automatic forfeiture (s 17G), 14 days to confirm a freezing notice (s 42I). Missing a deadline usually means the property is lost.