In May 2012, following “Operation Polaris”, the (then) Federal Government announced a number of measures to be adopted to strengthen the supply chain and reduce the risk of criminal involvement in that supply chain.
The measures incorporated a combination of procedural and legislative changes including limiting access to the Integrated Cargo System (‘ICS’) operated the Australian Customs and Border Protection Service (“Customs”), imposing additional conditions on those licensed by Customs for various activities in the supply chain, creating new offences particular to those in the supply chain and generally increasing penalties for a variety of offences as well as increasing the penalties which could be imposed pursuant to Customs Infringement Notice System (“INS“).
Commencement of the Auscheck Act
A crucial part of this reform was the introduction of the Customs and AusCheck Legislation Amendment (Organised Crime and Other Measures) Act 2013 (“AusCheck Act”) which was introduced into Federal Parliament March 2013. The AusCheck Act was rapidly passed by Federal Parliament in May 2013 and received Royal Assent on 28 May 2013. A summary of the content and the effect of the Act was included in Updates I subsequently sent out regarding the AusCheck Act and other procedural changes, in CBFCA Member Forums and in presentations by Customs and myself at the CBFCA State and National Conferences. Most recently we delivered a further CPD on 6 November 2013. Further details on the AusCheck Act and the receipt of Royal Assent are found in ACBPN No 2013/25. On 29 May 2013, one set of provisions in the AusCheck came into effect relating to new offences for using and disclosing information held on a Customs computer to another person to commit an offence against the Commonwealth, a State or Territory.
The majority of the other provisions of the AusCheck Act commenced on 28 November 2013. These included new offences and increases in penalties for existing offences. There are also new obligations imposed on those holding licences from Customs.
Commencement of the new INS
The remaining element of the AusCheck Act (the new INS) commenced on 1 February 2014. There was a limited process of consultation on the INS. The initial draft of the Regulation and the associated Guide was circulated by ACBPN 2013/52 on 18 October 2013 requesting submissions by 8 November 2013.
A number of parties made submissions and Customs then issued the finalised new Regulation and associated Explanatory Statement with ACBPN 2013/67 on 18 December 2013. However, the important Guide to the new INS was not issued until late on 29 January 2014 pursuant to ACBPN 2014/67, only very shortly before the commencement of the new INS on 1 February 2014.
Concerns with the new INS
From my perspective, there are a number of problems associated with the INS:
- That the clear intention is that the INS needs to be easier for Customs to use to press for higher compliance by parties by punishment of non-compliance. A recent review of Customs operations by the Australian National Audit Office (“ANAO”) found that Customs was not using the original INS to the degree which was thought appropriate to improve compliance. Part of the response from Customs was that the original INS was too prescriptive and difficult to implement. Customs promised to work to develop a more efficient and useful INS. This is reflected with new INS provisions.
- The consultation process was far from ideal. While affected parties were invited to make submissions, there were no specific responses to those submissions and no explanation provided of changes when the revised Regulation and Guide were issued. This hardly seems consistent with the notion of co-operation and transparency.
- The revised Guide was only issued very shortly before the new INS commenced. This made it impossible to educate the affected parties as to the approach by Customs to their liabilities under the INS and mitigate their position. This is hardly a reasonable position.
- While there have been some changes made to the Regulation and the Guide (discussed in the recent CBFCA CPD on 6 February 2014), the majority of concerns I expressed in our Update of 5 November 2013 remain as issues of concern. I remain of the view that the new version of the INS is less transparent as to the grounds on which INs will be issued.
Dealing with the Auscheck Act and the INS
Those in the supply chain need to prepare themselves for the changes effected by the AusCheck Act including:
- reviewing their terms and conditions of trade to, so far as possible, pass liability for increased penalties to others in their supply chain
- increasing professional indemnity cover and ensuring that it covers liability for a longer period even after employees leave or businesses are closed
- improving compliance arrangements
- preparing advice to staff that they could be required to sign a form consenting to their personal information being provided to Government to check whether they are appropriate people to be working in licensed premises or businesses. We have worked with the CBFCA to develop forms of notification to new and existing employees. Anecdotal evidence suggests that there are already increased requests for such searches to determine if there are persons not “fit and proper” in the supply chain who need to be excluded and
- developing a cunning plan to respond to the receipt of an IN. This would include notification to your insurer (and client if it is affected or contributed to the issue of the IN), ensuring that the IN is reviewed properly, that the consequences of payment of the IN are properly considered as well as the possibility of an application to withdraw the IN.
Details of the commencement of the AusCheck Act are also summarised in Customs Notice No 2013/62 and additional details of the effect of the AusCheck Act on licensed customs brokers and operators of licensed premises can be found in Customs Notices numbered 2013/55 and 2013/56 respectively, as well as the other ACBPNs, referred to above.