The Implications and Penalties of Business Crime in Australia

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With an estimated GDP of A$1.89 trillion as of 2019, Australia ranks among the most developed economies in the Asia-Pacific region (APAC) and the world.

The country has a strong financial sector, which hosts several banks, insurance companies, investment companies, and financial services institutions, including 600+ Fin-Techs.   

Australia’s financial institutions, banks, and other companies will now have to comply with the new Corporations Law, announced by the Minister for Revenue and Financial Services.

The new law intends to refine the country’s Anti-money laundering (AML) and Combating the Financing of Terrorism (CFT) acts, following the Westpac and Commonwealth Bank scandals.

Interpretation of Business Crimes Under the Australian Corporations Law

In the 1940s, eminent American criminologist Edward H Sutherland conceived the term white-collar crime. According to Sutherland, crime is not only confined to the lower classes but is a practice that also thrives within the higher classes.

Edward H Sutherland’s in-depth research work challenged the established definition of ‘criminal’, leading to the implementation of white-collar or business crime laws in countries around the world.

In line with Sutherland’s deep sociological understanding, the Parliament of Australia drafted the country’s business crime act, defining it as “corporate and financial misconduct”.

Offenses in Australia that fall under corporate and financial misconduct “committed by educated and/or [those] who can be described as ‘well off’ individuals or corporations” include

  • Bribery
  • Tax evasion
  • Fraud
  • Money laundering
  • Regulatory offenses
  • Terrorism financing

The law states that although the perpetrators do not reflect any specific social status, a “white-collar criminal is generally acting from a position of trust and authority”.

Regulatory Agency AUSTRAC Monitors Business Crimes in Australia

AUSTRAC (Australian Transaction Reports and Analysis Centre) is Australia’s primary regulatory agency for monitoring business crimes. The agency has been entrusted with the task of preventing terrorism financing, money laundering, and other white-collar crimes.

AUSTRAC strives to ensure that banks, financial institutions, Fin-Techs, and corporations operating in Australia comply with the country’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and adhere to FATF (Financial Action Task Force) regulations.

The Australian Parliament has given the regulatory agency absolute power to conduct investigations and impose penalties on any enterprise that violates the AML/CFT regulations or is found guilty of corporate and financial misconduct.

AUSTRAC, in 2019, started a legal proceeding against Westpac Banking Corporation, after it found twenty-three million AML breaches involving transactions amounting to $11 billion. In 2018, the Commonwealth Bank ended up paying a $700 million fine for similar CFT/AML violations. 

Heftier Penalties and an Uncompromising Stance Against Business Crimes

Corporations, if proven to have committed a business crime under the new law passed by the Senate, will have to pay a penalty of A$9.45 million, or alternatively, 10% of the annual turnover or 3 times the benefit received, whichever is greater. 

For individuals, the punishment for white-collar crimes is 10 years imprisonment, and/or a penalty of A$945,000, or 3 times the benefit gained, whichever is higher.

The new law has also increased civil penalties for both corporations and individuals.

Civil penalties for corporations will now be the greater of A$10.5 million, or 3 times the benefit received, or 10% of the annual turnover.

For individuals proven guilty of business crime, civil penalties will be the higher of A$1.05 million, or 3 times the benefit gained.

The business section of The Sydney Morning Herald reported that banking executives may face a jail term of up to 15 years under the tough new bill, passed by the Australian Senate.

Daniel Crennan, deputy chairman, enforcement, ASIC (Australian Securities and Investments Commission), welcomed the long-awaited bill, saying that ASIC will now be in a better position to impose harsh criminal sanctions and civil penalties against banks and their executives violating Australia’s Corporation law.

If you or your company is charged with a business crime and on the lookout for a criminal lawyer Parramatta has many reliable law firms that can help you understand the charge against you, the various options you have, and the possible outcomes you may have to face if your case goes to court.

You should always keep in mind, to choose a team of legal experts who can strategically examine your case and explore all available defences to guarantee you the best legal representation.

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