This overview was first published in the Chambers Global Practice Guide: White-Collar Crime.
In 2018, a wide-scale investigation of these issues in the context of the financial services sector was undertaken by a former judge of the High Court of Australia, Kenneth Hayne, known as the Royal Commission into the Banking, Superannuation and Financial Services Industry (the “Financial Services Royal Commission”).
Arising from the Financial Services Royal Commission and broader criticisms, there has been increased interrogation of the adequacy with which corporations and their officers are held accountable for serious corporate misconduct (including criminal conduct) and a growing sense that penalties must be set at a level sufficient to deter corporate misconduct and so as not to be capable of being regarded as an “acceptable cost of doing business”.
This backdrop has given rise to various recommended and proposed legislative reforms and higher levels of enforcement activities against individuals and corporations, including in the financial services and consulting sectors. But not all of the proposals from the Financial Services Royal Commission have been implemented, with several of the reforms failing to pass through the Australian Parliament before the change from the Liberal/National coalition government (who had been in power for a decade) to a Labor government in the May 2022 federal election. Some, but not all, of the reforms have been picked up by the Labor government in bills it has introduced to parliament.
In 2023, the government signalled additional reforms arising from a new focus on accounting, audit and consulting firms. Those proposed reforms have arisen on the back of a Senate Committee inquiry, which commenced in March 2023, into the management and assurance of integrity by consulting services, and a Parliamentary Joint Committee on Corporations and Financial Services inquiry into allegations of, and responses to, misconduct in the Australian operations of major accounting firms (including, but not exclusive to, the “Big Four”). Those inquiries came about following a damaging investigation by the tax practitioner’s board into one of the Big Four accounting firms, who were found to have shared confidential government information in relation to Australia’s forthcoming anti-avoidance tax laws with various private sector clients. The Senate Committee delivered its report in June 2024, making 12 recommendations for reform, notably that the Department of Finance improve training for employees on procurement processes and revise its conflicts of interest guidance, while also introducing the requirement that its service providers act in the public interest. The Parliamentary Joint Committee is due to deliver its report by December 2024.
In the following, this chapter describes some of the key matters of note arising from shifts in the strategic focus of key Australian regulators and notable outcomes in white-collar crime prosecutions over the past 12 months.
Recent and proposed legislative reforms
Financial Accountability Regime
In response to recommendations made by the Financial Services Royal Commission, the Australian parliament, in September 2023, passed legislation repealing the existing Banking Executive Accountability Regime (BEAR) and replacing it with the new Financial Accountability Regime (FAR). The new legislation commenced for authorised deposit-taking institutions (ADIs) and their non-operating holding companies (NOHCs) on 15 March 2024, and will apply to insurance entities, their licensed NOHCs and superannuation trustees from 15 March 2025.
The new regime seeks to strengthen the accountability, key personnel, deferred remuneration and notification obligation measures that were in place under the BEAR, and to extend them beyond the banking sector to the insurance and superannuation sectors. It includes a variety of mechanisms for enforcement once a contravention or likely contravention has been established, which align with those in place under the BEAR to ensure continuity and consistency of approach. Enforcement mechanisms under the FAR include directions powers, disqualification, enforceable undertakings, injunctions, civil penalties and some limited criminal offences relating to non-compliance with an investigation or request for information from the Australian Prudential Regulation Authority (APRA) or Australian Securities and Investments Commission (ASIC).
New offence of failure to prevent foreign bribery and reform to existing foreign bribery offence provisions
The Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (Cth) received Royal Assent and passed into law on 8 March 2024. It:
extended the foreign bribery offence to include the bribery of candidates for public office and bribery conducted to obtain a personal advantage;
removed the requirement that a benefit or business advantage be “not legitimately due” and replaced it with the concept of “improperly influencing” a foreign public official;
removed the requirement that the foreign public official be influenced in the exercise of their official duties;
clarifies that the foreign bribery offence does not require the prosecution to prove that the accused had a specific business, or business or personal advantage, in mind, and that the business, or business or personal advantage, can be obtained for someone else;
created, with effect from 9 September 2024, the offence of failure of a body corporate to prevent foreign bribery by an associate, along with an “adequate procedures” defence whereby corporations can avoid liability by demonstrating they had adequate procedures in place to combat bribery (reflecting similar provisions in the UK and elsewhere); and
made consequential amendments to the Income Tax Assessment Act 1997 to preserve the existing rule prohibiting a person from claiming as a deduction for a loss or outgoing a bribe to a foreign public official.
Significant penalties apply to corporations if found guilty of an offence, being the greater of:
100,000 penalty units (equivalent to AUD31,300,000 as of 1 July 2023);
three times the value of the benefit directly or indirectly obtained that is reasonably attributable to the conduct constituting the offence; and
if the value of the benefit obtained cannot be determined, 10% of annual turnover during a 12-month period.
The new legislation did not introduce a deferred prosecution agreement (DPA) regime. The former coalition government, while they were in power, made two unsuccessful attempts to introduce a DPA scheme. When the Senate Legal and Constitutional Affairs Legislation (LCAL) Committee reviewed the first unsuccessful coalition government DPA bill (introduced in 2019), two Labor senators on the LCAL Committee, in their report on the bill, contended that whilst there may be a place for a DPA scheme in Australia, the particular DPA scheme proposed in the bill was “too weak” and could not be supported in its proposed form.
National Anti-Corruption Commission
A key election campaign policy of the current Labor government was the introduction of the National Anti-Corruption Commission. It commenced operations on 1 July 2023 under the National Anti-Corruption Commission Act 2022. Its aim is to prevent, investigate and publicly report on serious or systemic corrupt conduct involving Commonwealth public officials. The inclusion of private contractors providing goods and services to the Commonwealth under Commonwealth contracts within the definition of “public official” has the implication of including companies, their directors, officers, and employees within the NACC’s investigative purview.
On 6 August 2024, the NACC published its strategic priorities for 2024 to 2025, which include:
corruption in senior public official decision-making;
corruption relating to contractors and consultants;
corruption in complex procurements; and
corruption in the environmental sector.
On 27 March 2024, the government introduced the Crimes and Other Legislation Amendment (Omnibus No 1) Bill 2024 (Cth), which inter alia amends the Crimes Act 1914, Proceeds of Crime Act 2002 and National Anti-Corruption Commission Act 2022 to clarify certain aspects of the NACC framework relating to the seizure of digital assets.
Since commencement, the NACC has received more than 3,700 referrals. As of 25 September 2024, the NACC:
was conducting 32 preliminary investigations;
was conducting 28 corruption investigations, including seven joint investigations;
was overseeing or monitoring 18 investigations by other agencies – in the last week, one additional matter was referred to an agency for investigation with oversight;
had six matters before the court; and
had 458 referrals pending assessment.
Amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act
Included in an “omnibus” amendment bill on the criminal law and law enforcement are various technical amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). The amendments are intended to strengthen and modernise various aspects of the regime and to assist the Australian Transaction Reports and Analysis Centre (AUSTRAC) in fulfilling its functions efficiently. The amendments:
clarify the application of civil penalties for failing to enrol with AUSTRAC within 28 days of commencing to provide a designated service;
clarify the existing secrecy and access framework for certain sensitive AUSTRAC information to make clear that the information cannot be inappropriately disclosed for the purposes of, or in connection with, court or tribunal proceedings; and
introduce new provisions authorising the AUSTRAC CEO to use computer programmes for certain decision-making and the exercise of certain powers.
The Bill was introduced to Parliament on 29 March 2023, was passed by both houses on 4 September 2023 and received Royal Assent on 13 September 2023.
On 11 September 2024, the government introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) to:
extend the anti-money laundering and counter-terrorism financing (AML/CTF) regime to additional services that are recognised by the Financial Action Task Force as posing high money laundering and terrorism financing risks, including lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious metals and stones;
reframe and clarify the AML/CTF programme and customer due diligence obligations;
enable AUSTRAC to require the disclosure of information and conduct examinations; and
update the AML/CTF regime to reflect changing business structures, technologies and illicit financing methodologies.
The Bill also makes consequential or contingent amendments to ten other Acts and repeals the Financial Transaction Reports Act 1988. At the date of writing, the House of Representatives had agreed to a third reading of the Bill.
Potential regulatory reforms for the consulting industry
The wider investigation into the consulting industry is in its early stages, and the end shape of any legislative reform is far from certain. However, on 6 August 2023 the government announced a package of reforms focused on three “priority areas for action” in “tax adviser misconduct”: (i) strengthening the integrity of the tax system; (ii) increasing the powers of regulators; and (iii) strengthening regulatory arrangements so that they are fit for purpose. New laws took effect on 1 July 2024 that increase maximum penalties for advisers and firms who promote tax exploitation schemes from AUD7.8 million to over AUD780 million. There may well be further significant legislative reforms in this space in the future; the government is currently seeking stakeholder feedback on the effectiveness of the current regime in deterring and addressing the promotion of tax exploitation schemes, the operation of the framework and whether existing exemptions provide appropriate safeguards to tax practitioners providing genuine advice, and how other existing, comparable regimes effectively deter misconduct. Stakeholder feedback is sought by 1 November 2024.
Recent regulatory and enforcement activity
ASIC
In July 2024, the Senate Economics References Committee made highly critical findings in relation to ASIC’s investigation and enforcement activities. Its eleven recommendations included that “the Australian Government should recognise that ASIC has comprehensively failed to fulfil its regulatory remit” and “the government should strongly consider separating its functions between a company’s regulator and a separate financial conduct authority”.
In August 2024, ASIC published its Corporate Plan 2024–25, whose strategic priorities are broadly similar to its strategic priorities in previous years:
better outcomes for consumers of financial products and services, with a focus on the design and distribution of financial products; predatory sales and lending; financial hardship assistance; insurance claims handling and dispute resolution;
address financial system climate change risk with a focus on climate-related disclosure over greenwashing; integrity and fairness in energy and carbon credit markets; and insurer claims and complaints handling following severe weather events;
better retirement outcomes and member services, with a focus on improved services for superannuation fund members; driving industry progress towards improving the retirement outcomes and service experience of members through implementation of the retirement income covenant; and compliance by superannuation trustees and providers of managed investments and financial advice; and
manage and minimise technology, cyber and data-related risks, with a focus on business, cyber and operational resilience; technology-enabled scams and misconduct; and the poor use of AI.
These priority areas are aligned with a number of ASIC’s recent regulatory, investigative and enforcement activities. ASIC’s enduring enforcement priorities are:
misconduct that damages market integrity, including insider trading, continuous disclosure breaches or failures, market manipulation and governance failures;
misconduct that impacts First Nations peoples;
misconduct involving a high risk of significant consumer harm, particularly conduct targeting financially vulnerable consumers; and
systemic compliance failures by large financial institutions that result in widespread consumer harm.
In the first half of the year, ASIC says it was successful in 95% of its civil and criminal prosecutions, securing AUD32.2 million in civil penalties and nine criminal convictions. ASIC also launched 63 new investigations, commenced 12 new civil proceedings and completed 550 surveillances throughout the period.
Reflecting those priorities, some of ASIC’s key regulatory actions for the period 1 July 2023 to 30 June 2024 have included the following.
A civil penalty action against Westpac Banking Corporation after alleged failures to address financial hardship notices.
An action against AustralianSuper to further protect superannuation members, alleging failures to address multiple member accounts. The failure to merge duplicate accounts is problematic across the Superannuation industry.
Filing its second and third greenwashing matters during the quarter, with allegations of misleading statements made against Active Super and Vanguard Investments Australia.
An action against Australia and New Zealand Banking Group Limited (ANZ) finalised with an AUD15 million penalty handed down by the federal court for misleading customers as to the funds available in certain credit card accounts.
In April 2024, ASIC unsuccessfully challenged a federal court decision that privilege had been waived in an investigation report prepared by PwC into Noumi Limited (formerly Freedom Foods) under a voluntary disclosure agreement (VDA). The court decided that despite the VDA, the disclosure to ASIC was inconsistent with the maintenance of confidentiality in the report. An appeal to the decision is scheduled for November 2024.
In August 2024, ASIC completed its review of 15 banks outside the four major banks on their scam prevention, detection and response activities, as part of ASIC’s ongoing focus on anti-scam practices in the broader financial services landscape and following on from an April 2023 review of the scam-related activities of the four major Australian banks.
Australian Competition and Consumer Commission (ACCC)
For the year 2024–25, the ACCC has identified the following as its enforcement objectives:
competition and consumer issues in the aviation sector;
competition, consumer, fair trading and pricing concerns in the supermarket sector, with a focus on food and groceries;
consumer, product safety, fair trading and competition concerns in relation to environmental claims and sustainability;
promoting competition in essential services with a focus on telecommunications, electricity, gas and financial services;
misleading pricing and claims in relation to essential services, with a particular focus on energy and telecommunications;
consumer and fair-trading issues in the digital economy, with a focus on misleading or deceptive advertising within influencer marketing, online reviews, in-app purchases and price comparison websites;
improving compliance by National Disability Insurance Scheme (NDIS) providers with their obligations under Australian Consumer Law;
unfair contract terms in consumer and small business contracts;
improving industry compliance with consumer guarantees, with a focus on consumer electronics and targeting misconduct by retailers in connection with delivery timeframes; and
consumer product safety issues for young children, with a focus on the safety of nursery products including furniture, infant self-feeding and infant sleep products.
These priority areas are aligned with a number of the ACCC’s recent regulatory, investigation and enforcement activities, which include the following.
The Australian High Court dismissed an appeal by Captain Cook College and upheld findings that the college engaged in systemic unconscionable conduct when it removed consumer safeguards from its enrolment and withdrawal processes, in order to secure additional government funding for online diploma courses under the former VET FEE-HELP scheme. ACCC commenced proceedings against Captain Cook College, Site Group, Ian Cook (the former CEO of Captain Cook College) and Mr Wills in November 2018. The Court’s decision is gaining attention in legal circles for changes to what constitutes “unconscionable conduct” by a corporation that could see regulators and prosecutors placing greater focus on holding individuals within those corporations responsible.
The ACCC commenced proceedings in the federal court against Woolworths Group Limited (Woolworths) (ASX: WOW) and Coles Supermarkets Australia Pty Ltd (Coles) (a subsidiary of Coles Group Limited – ASX: COL) for allegedly breaching the Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products. The ACCC alleges that the supermarkets offered certain products at a regular price for at least 180 days. They then increased the price of the product by at least 15% for a relatively short period of time, and subsequently placed it onto their “Prices Dropped” or “Down Down” programme. The ACCC notes that the subject of this proceeding pre-dates an inquiry it was directed to conduct by the Treasurer in January 2024 into the Australian supermarket sector, pricing practices and the relationship between wholesale, farmgate and retail prices.
On 8 October 2024, in a case brought by the ACCC, the Australian federal court ordered Qantas, Australia’s largest airline, to pay AUD100 million in penalties for misleading consumers by offering and selling tickets for flights it had already decided to cancel, and by failing to promptly tell existing ticketholders of its decision.
AUSTRAC
AUSTRAC continues to increase its presence and prominence in the white-collar regulatory landscape, following funding boosts from the Australian government in 2020–21.
With respect to significant AUSTRAC enforcement activities:
in ongoing civil penalty proceedings commenced by AUSTRAC in November 2022 against The Star Pty Limited and The Star Entertainment QLD Limited, AUSTRAC alleges non-compliance with Australia’s anti-money laundering and counter-terrorism financing laws – the action followed an industry-wide AUSTRAC compliance campaign that began in September 2019 and led to an enforcement investigation into The Star Pty Limited being opened in June 2021;
AUSTRAC has recently secured enforceable undertakings against Sportsbet Pty Ltd, Gold Corporation, Bank of Queensland Ltd and PayPal Australia Pty Ltd, each of which are ongoing at the time of writing; and
in 2024, AUSTRAC issued eight infringement notices against various entities, in circumstances where AUSTRAC has reasonable grounds to believe they have breached certain AML/CTF laws. This is a significant increase over recent years, with no notices recorded as being issued in the years 2020–23.