KEY TAKEAWAYS
Unexplained wealth laws permit state and territory governments across Australia to seize the assets of individuals who cannot account for their wealth. The legal means to do this is to apply to the Supreme Court for an unexplained wealth order.
WHAT IS UNEXPLAINED WEALTH?
In summary, a person's unexplained wealth is the value of their wealth less the value of their lawfully acquired wealth.
Unexplained wealth orders require wealth deemed to be 'unexplained' to be paid to the government.
Such laws have been put into place seeking to target the business model of serious and organised crime. They do so by removing the 'rewards' connected to criminal activity.
It is said to prevent crime by diminishing an offender's capacity to finance future criminal activity that they might engage in, whilst also deterring those who contemplate criminal activity by reducing the possibility of keeping a profit from that activity.
The first unexplained wealth laws were introduced in Western Australia in 2000.
By 2014, all other Australian jurisdictions introduced such laws except the Australian Capital Territory, which introduced them in 2019 as part of reforms to ensure the effectiveness of unexplained wealth laws across the country. There are also laws at the Commonwealth level.
Here is more on money laundering laws.
NEW SOUTH WALES UNEXPLAINED WEALTH ORDERS
The Criminal Assets Recovery Act 1990 (NSW) outlines unexplained wealth laws in New South Wales. The New South Wales Crime Commission can apply to the Supreme Court for unexplained wealth orders in NSW, which essentially require someone to pay the state Treasurer an amount which has been assessed as the value of their unexplained wealth, as per section 28A.
The Supreme Court is required to make an unexplained wealth order against a person if the Court finds that there is a reasonable suspicion that the person:
- engaged in a serious crime related activity, or
- acquired serious crime derived property from another person's serious crime related activity, whether or not the person knew or suspected the property was derived from illegal activities.
It is also required that the person has current or previous wealth that exceeds the value of their lawfully acquired wealth by $250,000 (for money) or $2,000,000 (otherwise).
The court is not required to be satisfied based on a reasonable suspicion as to the commission of a particular offence and this can instead be based on a reasonable suspicion that some offence constituting a serious crime related activity was committed.
What is 'unexplained wealth' will be assessed with reference to the whole or any part of the current or previous wealth of the person that the Supreme Court is not satisfied on the balance of probabilities is not or was not illegally acquired property, or the proceeds of an illegal activity.
The burden of proof in proceedings is upon the person whom the unexplained wealth order is sought against. This means that they are required to prove that their current or previous wealth is not or was not illegally acquired property or the proceeds of an illegal activity.
It is important to note that the quashing or setting aside of a conviction for a serious crime related activity does not affect the validity of a proceeds assessment order or unexplained wealth order.
Once unexplained wealth order is made, the amount becomes a debt payable by the person to the Crown and is recoverable as such.
The Supreme Court can refuse to make an unexplained wealth order or may reduce the amount that would otherwise be payable, if it thinks it is in the public interest to do so.
Furthermore, when assessing the amount payable or to be seized, the Supreme Court may deduct the reasonable necessities of life of the person subject to the order, and their dependents, if it considers it necessary.
QUEENSLAND UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in Queensland is the Criminal Proceeds Confiscation Act 2002 ( QLD).
The Queensland Crime and Corruption Commission or the police are able to apply to the Supreme Court for an unexplained wealth order.
As per section 89G, the Supreme Court must make an unexplained wealth order against a person if it is satisfied there is a reasonable suspicion that the person:
- has engaged in 1 or more serious crime related activities, or
- has acquired, without giving sufficient consideration, serious crime derived property from a serious crime related activity of someone else, whether or not the person knew or suspected the property was derived from illegal activity, and
- any of the person's current or previous wealth was acquired unlawfully.
Serious crime related activity is defined as anything done by a person which was a 'serious criminal offence'. This essentially refers to an indictable offence for which the maximum penalty is at least 5 years imprisonment.
However, the court may refuse to make the order if the court is satisfied it is not in the public interest to do so.
Where the unexplained wealth order is made due to the person engaging in in 1 or more serious crime related activity, this does not need to be based on a reasonable suspicion that a particular offence was committed.
It instead may be based on a reasonable suspicion that some offence that is a serious crime related activity was committed – which is a considerably vaguer test.
VICTORIA UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in Victoria is the Confiscation Act 1997 ( VIC).
As outlined in section 40C, they are referred to as 'unexplained wealth restraining orders' which direct that specified property must not be disposed of or otherwise dealt with by anyone except in the way specified in the order.
The purpose of the order is to essentially 'preserve' the property to make it available to satisfy forfeiture of property that may occur.
The Director of Public Prosecutions may apply to the court for an unexplained wealth restraining order in respect of property if a police officer suspects on reasonable grounds that the person has engaged in serious criminal activity and has an interest in property which is worth $50,000 or more.
Serious criminal activity means an act or omission, or a course of conduct done or occurring in Victoria that constitutes offences including any offence that is punishable by a term of imprisonment of 5 years or more and involves theft, fraud, money laundering, extortion, violence, perverting the course of justice, tax or revenue evasion, illegal gambling, sex work, production or distribution of child abuse material, drug cultivation, drug trafficking, forgery or homicide.
It may be sought where the property is located in Victoria, the serious criminal activity occurred within Victoria, or the person who has acquired the property is ordinarily resides in Victoria.
The application will be supported by an affidavit from a police officer.
Property that is the subject of an unexplained wealth restraining order is forfeited to the Minister on the expiry of 6 months after the making of the unexplained wealth restraining order, as per section 40ZA.
Upon application, the court may make an order which excludes one's property from the operation of unexplained wealth forfeiture if the court is satisfied that the property was lawfully acquired by the applicant.
However, the applicant's interest in property is presumed not to have been lawfully acquired unless the applicant proves otherwise. This means that it is up to the applicant to prove that the property was lawfully required.
WESTERN AUSTRALIA UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in Western Australia is the Criminal Property Confiscation Act 2000 ( WA).
The court is required to declare that the person subject to the order has unexplained wealth if it is more likely than not that the total value of their wealth is greater than the value of their lawfully acquired wealth, as outlined in section 12.
Any property, service, advantage, or benefit that is constitutes their wealth is presumed not to have been lawfully acquired unless they establish the contrary. This means that it is up to the person to prove that the wealth was lawfully required.
Respondents have a right to object to their property being restrained within 28 days of being served with an order restraining the property.
In this jurisdiction, it is not necessary to demonstrate reasonable grounds to suspect that the person committed an offence to apply for an unexplained wealth declaration.
NORTHERN TERRITORY UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in the Northern Territory is the Criminal Property Forfeiture Act 2002 ( NT).
This was modelled off the Western Australian provisions, and largely mirrors this scheme.
Therefore, there is no requirement to show reasonable grounds to suspect that the person committed an offence to apply for an unexplained wealth declaration.
The Supreme Court will be required to declare that the respondent (i.e., person subject to the order) has unexplained wealth if it is more likely than not that the total value of their wealth is greater than the value of their lawfully acquired wealth, as per section 71.
Any property, service, advantage, or benefit that is a constituent of the respondent's wealth is presumed not to have been lawfully acquired unless the respondent establishes the contrary.
When the court makes an unexplained wealth declaration, it will order the respondent to pay to the Territory the amount specified in the declaration as the value of their unexplained wealth.
AUSTRALIAN CAPITAL TERRITORY UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in the Australian Capital Territory is the Confiscation of Criminal Assets Act 2003 (ACT).
In the Australian Capital Territory, an unexplained wealth restraining order is an interim order which is preserves the property subject to the order, essentially preventing its disposal while proceedings for unexplained wealth orders are underway.
The unexplained wealth order is the 'final order' that makes payable to the Territory an amount which the court deems constitutes the difference between the person's total wealth and the sum of the property that the court is satisfied, on the balance of probabilities, was not derived from serious criminal activity, as per section 98D.
Again, the burden of proof is reversed so that the respondent is required to prove that their wealth was lawfully acquired.
Serious criminal activity is defined as conduct by any person which, at the time of the conduct, was a serious offence. A serious offence essentially refers to an offence punishable by imprisonment for 5 years or longer.
Conduct will nevertheless be deemed serious criminal activity whether or not charges for a serious offence have been laid against a person for the conduct or they have been tried, acquitted, been found guilty or have had a conviction for the offences quashed.
The court may refuse to make an unexplained wealth order or reduce the amount that would otherwise be payable, if the court thinks it is in the public interest to do so.
SOUTH AUSTRALIA UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in South Australia is the Serious and Organised Crime (Unexplained Wealth) Act 2009 ( SA).
The Director of Public Prosecutions can authorise a Crown Solicitor to apply to the District Court for an unexplained wealth order if it reasonably suspects that a person or an incorporated body has unlawfully acquired wealth, as per section 9.
In South Australia, there is no requirement to show reasonable grounds to suspect that a person committed an offence. Again, the respondent has the onus of establishing that their wealth was lawfully acquired.
If the Court finds that any components of a person's wealth have not been lawfully acquired, the Court may make an unexplained wealth order, that the person pays the government a specified amount.
However, the Court may decide not to make such an order if it determines that it would be manifestly unjust to do so. In this circumstance, the Court may reduce the amount payable or decline to make the order.
Furthermore, in determining an application relating to wealth of a person, if the Court is satisfied that it is not reasonably possible for the person to establish that a component of their wealth was lawfully acquired (i.e., due to time passed or other reasons) and the person has acted in good faith, the Court may determine that this component should be excluded from the application.
TASMANIA UNEXPLAINED WEALTH ORDERS
The legislation which governs unexplained wealth laws in Tasmania is the Crime (Confiscation of Profits) Act 1993 ( TAS).
This was modelled off the Northen Territory provisions, and largely mirrors this scheme.
The Director of Public Prosecutions may apply to the Supreme Court for an unexplained wealth declaration to be made against a person, as per section 141.
The Court must make an unexplained wealth declaration if satisfied that it is more likely than not that the value of the person's total wealth is greater than the value of their lawfully acquired wealth.
Therefore, there is no requirement to show reasonable grounds to suspect that the person committed an offence to apply for an unexplained wealth declaration.
If the Court makes an unexplained wealth declaration, the respondent must pay their unexplained wealth liability to the State.
COMMONWEALTH UNEXPLAINED WEALTH ORDERS
There is also Commonwealth legislation which governs unexplained wealth laws which is applicable Australia-wide. The Proceeds of Crime Act 2002 (Cth) was amended to incorporate unexplained wealth provisions in 2010.
It is important to note that the Commonwealth provisions are only applicable where the matter is related to an offence linked to a Commonwealth power (which is primarily those under the Criminal Code Act 1995 (Cth)).
Under this Act, unexplained wealth means property or wealth that might not have been lawfully acquired.
A preliminary unexplained wealth order will be made where a proceeds of crime authority (Australian Federal Police or Director of Public Prosecutions) applies for one, and the court is satisfied that an authorised officer has reasonable grounds to suspect that the person's total wealth exceeds the value of the person's wealth that was lawfully acquired.
This must be supported by an affidavit which contains the grounds on which the authorised officer holds such a suspicion.
As per section 179E, the Court is required to make an unexplained wealth order where:
- a preliminary order has been made,
- the court is not satisfied that the whole or any part of the person's wealth was not derived or realised, directly or indirectly, from an offence against a law of the Commonwealth, a foreign indictable offence and/or a state offence that has a federal aspect.
The person subject to the order has the burden of proving that their wealth is not derived from any such offence.
The Court may refuse to make an order if it is satisfied that the person's unexplained wealth amount is less than $100,000 or it is not in the public interest to make the order.
