Proceeds of Crime (Consequential Amendments and Transitional Provisions) Act 2002

Criminal defendants and suspects: Anyone who deals with money knowing or suspecting it to be proceeds of crime is exposed to Division 400 offences. The reach is broad the predicate offence can be any Commonwealth, State, Territory or foreign indictable offence, and neither the specific offence nor the person who committed it needs to be identified in the money laundering prosecution.

Financial institutions: Schedule 3 extends financial record-keeping obligations to casino operators and totalisator agency boards, and inserts a new retention obligation for customer-generated financial transaction documents into Part VIA of the Financial Transaction Reports Act 1988.

The Director of Public Prosecutions: The DPP gains new powers under the Proceeds of Crime Act 2002 (via this consequential Act). The DPP can no longer bring new applications under the old 1987 Act after commencement of the 2002 Act. Existing applications continue to completion under the 1987 Act.

Bankruptcy trustees and insolvency administrators: The Bankruptcy Act 1966 amendments (Schedule 4) ensure that proceeds of crime orders are recognised in insolvency administration and take priority in the way the new Act provides. Property subject to a restraining order does not simply fall into the bankrupt estate.

Separated spouses and partners: The Family Law Act 1975 amendments (Schedule 5) require that family property proceedings accommodate the DPP's forfeiture interests. The DPP is entitled to notice of proceedings and may intervene when a forfeiture application is on foot.

Tax practitioners and accountants: Schedule 6 amendments to the Income Tax Assessment Acts ensure that forfeited property is not treated as a taxable gain in the hands of the person from whom it was forfeited. Property that vests in the Commonwealth under the Proceeds of Crime Act 2002 is treated as not having been disposed of for CGT purposes.

Record retention financial institutions (Schedule 3, Part VIA of Financial Transaction Reports Act 1988): Financial institutions (now including casino operators and totalisator agency boards) must retain customer-generated financial transaction documents for a defined minimum retention period. The definition of "financial institution" in the Financial Transaction Reports Act was extended by Schedule 3 to capture bodies corporate that are financial corporations, casino operators, and totalisator agency boards.

DPP cut-off for 1987 Act applications (Schedule 7): After the commencement of the Proceeds of Crime Act 2002, the DPP must not make new applications under the Proceeds of Crime Act 1987 for restraining orders, forfeiture orders or pecuniary penalty orders. The power to act survives only for pre-commencement matters and applications already lodged.

DPP notice and intervention in family law proceedings (Schedule 5): Where a forfeiture application is on foot or a proceeds of crime order has been made, the DPP must receive notice of family property proceedings and has the right to intervene to protect the integrity of the confiscation regime.

Finance Minister income tax determinations: Schedule 6 amendments to the Income Tax Assessment Acts give the Commonwealth power to determine the tax treatment of assets forfeited to the Commonwealth the forfeiture itself does not trigger CGT or income tax consequences for the person whose property is forfeited.

Courts third party applications for exclusion from registered foreign forfeiture orders (Schedule 2, new s 46A): Courts have power under the new section 46A of the International War Crimes Tribunals Act 1995 to make orders excluding third party interests from property subject to a registered foreign forfeiture order. The court must be satisfied that the applicant was not involved in the predicate offence and (if the interest was acquired after the offence) acquired in good faith for adequate consideration.

DPP discretion to continue proceedings under 1987 Act: Applications already made under the 1987 Act before commencement of the 2002 Act may continue to completion under the 1987 Act's rules. This is not a discretion given to the DPP it is a vested right in the already-commenced proceedings.

Division 400 money laundering offences (Schedule 1):

| Section | Value threshold | Maximum penalty | |---|---|---| | 400.3 | $1,000,000 or more | 25 years, or 1,500 penalty units, or both | | 400.4 | $100,000 or more | 20 years, or 1,200 penalty units, or both | | 400.5 | $50,000 or more | 15 years, or 900 penalty units, or both | | 400.6 | $10,000 or more | 10 years, or 600 penalty units, or both | | 400.7 | $1,000 or more | 5 years, or 300 penalty units, or both | | 400.8 | Any value | 12 months, or 60 penalty units, or both | | 400.9 | Any value (possession, reasonable suspicion) | 2 years, or 120 penalty units, or both |

The two-tier structure (knowledge and recklessness) within sections 400.3 to 400.8 produces a further differentiation in penalty exposure within each value band.

Proof provisions (s 400.11): In a money laundering prosecution, the Crown is not required to prove: (a) that a specific offence generating the proceeds was committed; (b) that a particular person committed the predicate offence; or (c) for foreign predicate offences, that the foreign law creates that specific offence. This significantly reduces the prosecution's evidentiary burden.

Combining transactions in one charge (s 400.12): Prosecutors may aggregate multiple separate transactions into a single charge where the combined value meets the threshold. This prevents offenders from structuring transactions to stay below thresholds.

Mistake of fact (s 400.10): A defendant charged with an offence against sections 400.3 to 400.8 who mistakenly believed the value of the money or property was less than the applicable threshold commits the lesser offence corresponding to the value they believed it to be. This is a partial defence that reduces (but does not eliminate) liability.

Cut-over from 1987 Act to 2002 Act: The transitional architecture in Schedule 7 creates a clean cut-over. Applications under the Proceeds of Crime Act 1987 lodged before the commencement of the 2002 Act continue under the 1987 Act's rules to completion. No new applications may be lodged under the 1987 Act after the 2002 Act commences. All new proceeds of crime proceedings must use the 2002 Act.

Family law proceedings DPP notification: Where a forfeiture application is on foot, family property proceedings must give the DPP notice. The timing for intervention is determined by the Family Law Act 1975 as amended by Schedule 5.

Bankruptcy priority of proceeds of crime orders: Proceeds of crime orders made before or after bankruptcy are recognised in the bankruptcy estate administration. The interaction between forfeiture orders and the Bankruptcy Act 1966 is now governed by the amended provisions in Part IA of that Act.

Proceeds of Crime Act 2002: This Act is the companion instrument. The 2002 Act creates the confiscation framework (restraining orders, forfeiture orders, pecuniary penalty orders, literary proceeds orders, examination powers). This Act performs the legislative housekeeping to align every other Act with that framework.

Proceeds of Crime Act 1987: The old confiscation Act continues to apply to proceedings commenced before the 2002 Act's commencement. Schedule 7 inserts transitional provisions into the 1987 Act to make this explicit.

Criminal Code Act 1995: Division 400 is inserted into the Criminal Code by Schedule 1. The Criminal Code's general principles (including fault elements, physical elements, defences, and combination provisions) apply to Division 400 offences unless Division 400 provides otherwise.

Mutual Assistance in Criminal Matters Act 1987: Extensively amended by Schedule 2 to update references to proceeds of crime legislation for foreign forfeiture orders and mutual assistance requests.

Bankruptcy Act 1966: Amended by Schedule 4 to ensure proceeds of crime orders take priority in insolvency administration. The Official Trustee must respect proceeds of crime orders when administering a bankrupt estate.

Family Law Act 1975: Amended by Schedule 5 to coordinate property settlement proceedings with forfeiture applications and orders. The DPP has standing to intervene and the court's property order powers are constrained when a forfeiture application is on foot.

Financial Transaction Reports Act 1988: Amended by Schedule 3 to extend record-keeping obligations to financial institutions (including casino operators and totalisator agency boards) and to insert the new Part VIA retention regime for customer-generated financial transaction documents.

Income Tax Assessment Acts 1936 and 1997: Amended by Schedule 6 to prevent forfeited property triggering tax consequences for the former owner. Property that vests in the Commonwealth under the Proceeds of Crime Act 2002 is treated as not disposed of for CGT purposes.

Administrative Decisions (Judicial Review) Act 1977: DPP and approved examiner decisions under Part 3-1 of the Proceeds of Crime Act 2002 are added to Schedule 1 of the ADJR Act as decisions excluded from ADJR Act review.

Australian Federal Police Act 1979: AFP gains an explicit statutory function to perform functions under the Proceeds of Crime Act 2002.

This Act is where the Division 400 money laundering offences live. Despite appearing to be a purely administrative amending Act, Schedule 1 inserts Division 400 into the Criminal Code. Anyone researching money laundering offences under federal law needs to look at the Criminal Code Act 1995 as amended by this Act but the original source of Division 400 is this consequential amendments Act.

The identification of the predicate offence is not required. Under section 400.11, the prosecution does not need to prove that any specific offence was committed or that any specific person committed it. It is enough to prove the money is proceeds of crime. This is a very significant evidential shortcut that departs from traditional criminal law proof requirements.

Threshold aggregation (s 400.12). Multiple small transactions may be combined in a single charge. A person who structured money transfers to keep each below $10,000 can still be charged with a section 400.6 offence if the aggregate meets the threshold. This closes the structuring loophole.

The recklessness form of each offence. Subsection (2) of each of sections 400.3 to 400.7 (and the corresponding provision in 400.8) creates liability for recklessness it is not necessary to prove the defendant knew the money was proceeds of crime. Recklessness as to whether money is proceeds of crime exposes defendants who wilfully close their eyes to warning signs.

Transition from 1987 Act: the cut-off is the commencement of sections 3 to 338 of the Proceeds of Crime Act 2002, not the commencement of the whole 2002 Act. This distinction matters for pre-commencement proceedings: check whether the specific application was lodged before that defined commencement date.

Family law proceedings are not exempt from DPP intervention. A separated spouse cannot shield their assets from forfeiture by commencing family property proceedings. The DPP has the right to receive notice and to intervene when a forfeiture application is on foot, and the Family Court's powers are correspondingly constrained.

Scenario 1: High-value money laundering prosecution A property developer receives $2 million knowing it represents the proceeds of drug trafficking. The developer channels the funds through property purchases. Under section 400.3(1), this is a Commonwealth money laundering offence. The prosecution does not need to identify the specific drug transactions or prove who committed them it only needs to prove the developer believed the money was proceeds of crime. The maximum penalty is 25 years imprisonment or 1,500 penalty units, or both.

Scenario 2: Structuring defence fails An associate of criminals receives 15 payments of $8,000 each (total $120,000) into various accounts, knowing the funds are drug proceeds. Section 400.12 allows the prosecution to combine all 15 transactions into a single charge, making it a section 400.4 offence (over $100,000). The structuring to keep each payment below $10,000 does not prevent aggregation.

Scenario 3: Possession with reasonable suspicion A person is found to possess $50,000 in cash in a carpark. There are objectively reasonable grounds to suspect the money is proceeds of crime (no legitimate explanation, association with known offenders). Under section 400.9, the person may be charged even without evidence of knowledge or belief. The maximum penalty is 2 years imprisonment or 120 penalty units.

Scenario 4: Forfeiture order and bankruptcy A person subject to a forfeiture order made under the Proceeds of Crime Act 2002 later becomes bankrupt. The Official Trustee in Bankruptcy administers the estate, but the forfeiture order is given priority under the amended Bankruptcy Act 1966 provisions inserted by Schedule 4. The forfeited property does not become available for distribution to creditors.

Scenario 5: Family property settlement with DPP forfeiture application on foot A couple separates. One spouse is subject to a pending forfeiture application under the Proceeds of Crime Act 2002 over jointly held property. The other spouse commences Family Court proceedings. Under the Schedule 5 amendments to the Family Law Act 1975, the DPP must be given notice and may intervene. The Family Court's power to make property orders is constrained to protect the integrity of the forfeiture proceeding.