Unexplained Wealth Report
What is Unexplained Wealth and the law?
Unexplained wealth are government regulations imposed on an individual who lives beyond their apparent means. These laws require an individual to justify the legitimacy of their financial circumstances. Basically, these laws were mandated in order to dissuade crime, especially organised crime, by way of reducing the profitability of illegal activities.
Unexplained Wealth Laws in Australian States
New South Wales
The Criminal Assets Recovery Act of 1990 (NSW) Section 28A mandates the NSW Crime Commission to apply for an unexplained wealth to the Supreme Court, which will require a person to pay the Treasurer an amount assessed by the Court as the value of the unexplained wealth of the said individual.
Under the said provision, the Supreme Court is required to release an unexplained wealth order if there is a reasonable suspicion that the individual whom the order is sought has, at any given time, before the making for the order:
- Involved in a serious crime-related activity or activities; or
- Acquired a property derived from a serious crime activity committed by another person, whether or not the person against whom the order is made has knowledge of the acquisition or if the person only suspected that the property was derived from illegal activities.
Northern Territory
Unexplained Wealth provisions in Northern Territory and Western Australia has three definitive differences:
Unexplained Wealth provisions in Northern Territory and Western Australia has three definitive differences:
- In Northern Territory law, the courts are allowed to take an offender’s cooperation in the proceedings as mitigating factors in sentencing, whereas in WA, confiscation pursuant to an unexplained wealth order is not taken into account on sentencing.
- Northern Territory requires for a drug trafficker to be convicted at least three times, before his assets are declared unexplained wealth, whereas in Western Australia law, one conviction is required to declare assets as unexplained wealth for asset confiscation purposes.
- In NT, even after a declaration has been made that a specific asset is unexplained wealth, authorities are still required to get a court order for confiscation. This is because NT is a territory, as such, government authorities are mandated to confiscate a property ‘on just terms. Such requirement is not needed in Western Australia.
Queensland
Queensland’s Criminal Proceeds Confiscation and Other Acts Amendment Act 2009 was passed into law on 22 June 2009. Although in general, the provisions under this Act are not considered as unexplained wealth laws, unlike the ones discussed previously, the amendments create a statutory presumption that the unexplained portion of an individual’s total asset or wealth is acquired through illegal activities, subject to a finding that the person is engaged in ‘serious crime related activities’ and evidence of unexplained wealth. The burden thus fall upon the said individual to disprove that presumption.
South Australia
In South Australia, government authorities are allowed to confiscate any wealth specified in an application for unexplained wealth order, in the event that the properties or assets were acquired unlawfully. Such provisions are discussed under the Serious and Organised Crime (Unexplained Wealth) Act 2009 (SA).
In South Australia, government authorities are allowed to confiscate any wealth specified in an application for unexplained wealth order, in the event that the properties or assets were acquired unlawfully. Such provisions are discussed under the Serious and Organised Crime (Unexplained Wealth) Act 2009 (SA).
Western Australia
Western Australia provisions were the main model for the key aspects of the WA and NT legislation pertaining to unexplained wealth. Here are the key aspects of the legislation:
- The courts are required to make a confiscation order if satisfied that the total wealth of a person is greater than their lawfully obtained wealth;
- The reversal of the onus of proof in favour of the Crown; and
- The individual or respondent has the right to refute the restraint on or the confiscation of his/her property within 28 days of being served with the confiscation order or an order restraining the property.
The law enforcement and prosecution may obtain information about criminal assets by following processes as mandated by the legislation:
- The Director of Public Prosecutions (DPP) or police may entail a financial institution to provide information about the transactions, properties and/or assets of a particular individual;
- The DPP can ask the courts to issue an order that allows them to conduct an examination of a suspected person, which can require said individual to submit information/documents to the court;
- The DPP is required to apply for a production order to obtain documents related to assets or properties;
- The DPP is required to ask the court to issue an order that will require a financial institution to monitor or freeze an individual’s account and submit such information to the police or office of the DPP; and
- If there is reasonable suspicion that a person has, in their possession, property liable to forfeiture, or documents that identify or determine the value of an individual’s unexplained wealth, the police has the power to detain such individual.
Commonwealth
The Proceeds of Crime Act 2002 (Cth) governs Commonwealth confiscation. Under the legislation as originally mandated, a relevant court is required to issue an unexplained wealth order in the event of:
- A preliminary order has been issued; and
- The court is not convinced that the overall wealth of an individual was not obtained from one or more of the following:
- An offence against the Commonwealth law;
- An indictable foreign offence; and/or
- A state offence that has a federal aspect.
Unlike the NT and WA legislation, the principal difference of the Commonwealth Bill is that it is limited to confiscating unexplained wealth obtained from crimes/illegal acts within the Commonwealth Constitutional power.
Arguments in favour of unexplained wealth laws
The following are the recognised benefits of unexplained laws:
- What unexplained wealth laws does is prevent the occurrence of a crime by making sure that profits cannot be reinvested in criminal activity, instead of simply reacting to serious organised crime;
- Disrupting criminal organisations;
- Targeting an organised criminal group’s profit motive; and
- Ensuring that the law captures the individuals who are benefiting most from organised crimes, which in most cases, are not under ordinary criminal laws and proceeds of crime laws that require link to establish crime.
Arguments against unexplained wealth laws
- The presumption of innocence is undermined by the reverse burden/onus of proof;
- The right to silence and exclude legal professional privilege is infringed on by the provisions;
- The inadequacy of appeal rights in respect of the unexplained wealth declarations; and
- There is a potential subjective application of the unexplained wealth laws, there has been concerns in the Law Council that the legislations may be used for political motives and/or may target individuals who fail to keep receipts or records, arbitrary.
Kingston & Knight Audit has been providing professional service and advice regarding the audit of unexplained wealth, and are the experts to call when you need an expert consultation, analysis and report. For more of our services, please give us a call at 03 9088 2242 or leave us a message.
