National Integrity Spotlight – March 2023

The third edition of the National Integrity Spotlight considers updates to the Australian Criminal Intelligence Commission, an overview of recent Australian Commission for Law Enforcement Integrity operations, details from the OECD convention on Combatting Bribery Foreign Public Officials in International Business Transactions, developments from the Senate Inquiry into ASIC Investigation and Enforcement, and confirmation of the highly anticipated NACC appointments.

Australian Criminal Intelligence Commission (ACIC) Update

The ACIC is the federal statutory body tasked with protecting Australia from serious criminal threats. It does this by collecting and analysing criminal intelligence information and acting as a conduit where it shares that information between federal, state, and territory law enforcement agencies. The board of ACIC includes the Commissioners for the Australian Federal Police (AFP), the Australian Border Force, the Australian Taxation Office (ATO), each state-based police force in Australia, and the Chairperson of the Australian Security Intelligence Organisation. ACIC works with its national and international partners to conduct investigations, collect intelligence, and provide advice to combat serious and organised crime, cybercrime, and national security threats.

The ACIC has listed financial crime as a priority theme for 2023. The ACIC works with the ATO to coordinate the serious financial crime taskforce which facilitates the coordinated identification of and response to financially motivated criminal activity. The ACIC also participate in other taskforces to enhance the integrity of the financial system in Australia, including the Phoenix Taskforce, the Black Economy Standing Taskforce (led by the ATO) and the Fintel Alliance (led by the Australian Transaction Reports and Analysis Centre).

On 17 March 2023, Taskforce Avarus was launched by the AFP, in conjunction with the ACIC. This is a multi-agency taskforce to target criminals who are laundering money in Australia. ACIC Executive Director of Intelligence Operations Jennifer Hurst said that the ACIC is committed to supporting its partners deliver on their functions as they relate to money laundering which is a key enabler for transnational serious organised crime. “The vast majority of organised crime is motivated by profit. The ACIC is committed to working collaboratively with our partners to develop intelligence on money laundering to better inform operational responses and insights.”

Australian Commission for Law Enforcement Integrity (ACLEI) Operations

Operation Cane

Operation Cane concerned an allegation that a former Home Affairs employee, ‘Employee X’, had used their access to the Integrated Client Services Environment (ICSE) system to obtain information about and subsequently interfere with witnesses in a criminal trial. Upon investigation, it was discovered that Employee X had accessed the ICSE records of at least 20 people or organisations, on more than 1,000 occasions. Separately, it was also revealed that Employee Y (being Employee X’s relative) had also accessed the ISCE records of members of the same religious community. No evidence was discovered indicating that Employee X or Employee Y disclosed information from the ICSE system with the intention of tampering with witnesses in a criminal trial.

Ultimately, the investigation resulted in Employee X and Employee Y each pleading guilty to unauthorised access to restricted data contrary to section 478.1(1) of the Criminal Code (Cth), with a subsequent corruption finding against Employee X also being made by ACLEI.

In making these findings, the ACLEI noted that this ‘demonstrates that education and awareness is not sufficient to prevent corruption; and that it must also be partnered with appropriate oversight and audit controls’.

Operation Starburst

Operation Starburst concerned allegations that a Home Affairs employee, ‘Officer T’, exploited their position as Visa Decision Maker to allow an associate to obtain two Australian visas, and that they accessed the relevant Home Affairs Systems through their employment without business need or prior authorisation.

The Acting Integrity Commissioner ultimately made three corruption findings in relation to Officer T, consisting of:

• two corruption findings, pursuant to section 6(1)(a) of the Law Enforcement Integrity Commissioner Act 2006 (Cth), relating to abuse of office, on the basis that they used their knowledge and position as a Visa Decision Maker to assist their contact in obtaining two Australian visas; and
• a corruption finding, pursuant to section 6(1)(c) of the Law Enforcement Integrity Commissioner Act 2006 (Cth), relating to corruption of any other kind, on the basis that they had improperly accessed the Home Affairs systems to obtain information to benefit their associate.

The investigation also resulted in prosecution, in which Officer T plead guilty to two counts of abuse of public office, contrary to section 142.2(1) of the Criminal Code, and ten counts of unauthorised access to Commonwealth data, contrary to section 478.1(1) of the Criminal Code.

The full investigation report by the can be found here.

Operation Kent

Operation Kent concerned allegations of corrupt conduct by an Australian Border Force (ABF) staff member, ‘Officer Y’. Officer Y was alleged to have used their access to relevant Home Affairs systems, and knowledge as a staff member of ABF and Home Affairs to assist in the approval of fraudulent visas.

The investigation ultimately found that there was no evidence:

• to support the allegations that Officer Y approved fraudulent visas to friends, family, or other associates living overseas
• of any telephone contact between Officer Y and visa applicants
• to refute Officer Y’s explanation that he had been provided with cash by friends, family, and business associates who had brought cash with them from India
• to support the allegation that Officer Y used a separate ‘burner phone’
• that Officer Y received any financial benefit stemming from visa applications
• that Officer Y had misused the Home Affairs databases
• that Officer Y had provided information to any other parties.

OECD Convention on Combatting Bribery Foreign Public Officials in International Business Transactions

Australia is a party to the OECD convention on Combatting Bribery Foreign Public Officials in International Business Transactions. The Convention itself establishes an open-ended, peer-driven monitoring mechanism to ensure the thorough implementation of the international obligations that countries have taken on under the Convention, including in relation to bribery.

In December 2022 Australia submitted an update to the OECD Working Group on Bribery with a peer evaluation report published on 9 January 2023. Actions taken by Australia and detailed in the report include:

• the release by AUSTRAC of comprehensive guidance to assist reporting entities to identify the source of funds and source of wealth for certain high risk customers and transactions, or where the beneficial owner is a PEP
• the publishing by AUSTRAC of three risk assessments providing guidance on the ML/TF risks the sector faces at the national level, and to assist the sector to identify and disrupt ML/TF risks to Australia’s financial system and report suspected crimes to AUSTRAC. The risk assessments were:
  • Bullion dealers in Australia risk assessment
  • Independent remittance dealers in Australia risk assessment
  • Remittance Network Providers and affiliates risk assessment

Senate Inquiry into ASIC Investigation and Enforcement

In October 2022, the Senate referred an inquiry into the capacity and capability of ASIC to undertake proportionate investigation and enforcement action, stemming from reports of alleged misconduct. The Senate Economics References Committee is to deliver a report by the final sitting day in June 2024.

Submissions into the inquiry recently closed and a number have been published for public review. Relevantly, these submissions included the following:

• The Australian Banking Association (ABA) highlighted that the role of ASIC as set out in legislation is to ‘promote confidence and informed participation by investors and consumers in the financial system’, noting that there is a corollary in respect to the role of ASIC to promote confidence in the financial system by efficiently resolving matters. The ABA additionally noted that ASIC has a range of regulatory tools at its disposal, and in some circumstances Enforceable Undertakings and Infringement Notices may be more appropriate and expeditious, as well as driving faster industry change;
• The Financial Services Council stated that ASIC needs to strike a better balance in the use of the regulatory tools to better meet the expectations of government, business, and the community regarding regulatory action and enforcement; and
• The Law Council of Australia (the LCA) emphasised that the existing regulatory resources are used by ASIC to reduce risk of compensation failure and as a deterrent, however ASIC should consider the opportunities to engage in non-litigious options, such as enforceable undertakings. The LCA also highlighted the counter-productive nature of the breach reporting regime, given the unnecessarily large volume of reportable breaches that are lodged, largely for minor breaches.

The remainder of the submissions can be viewed here. We will continue to provide updates as the inquiry continues.

NACC Appointments

It has been announced that Justice Paul Brereton has been appointed as the first Commissioner for the National Anti-Corruption Commission (NACC). Justice Brereton has previously led an inquiry into the allegations of war crimes by Australian soldiers, as well as serving on the New South Wales Court of Appeal.

Additional roles have also been announced, being Deputy Commissioners Nicole Rose (former chief executive of AUSTRAC) and Dr Ben Gauntlett (former disability discrimination commissioner at the Human Rights Commission). Jaala Hinchcliffe, current head of ACLEI, has also been appointed an interim Deputy Commissioner.

We continue to eagerly await updates as the commencement of the NACC approaches.

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Authored by: 
Cinzia Lee Donald, Partner (Lavan)
Kathy Merrick, Partner
Kelly Griffiths, Partner
Daniel Maroske, Director
Phoebe Brosnan, Senior Associate
Anna Fanelli, Associate
Kasia Jaruzelska, Associate
Sarah Maneckshana, Associate
Emma Bolton, Solicitor
Jethro Schoeman, Solicitor
Sophia Liu, Lawyer
Stefani Giangregorio, Lawyer