Regulatory Regimes and Organised Crime: Report (html)

2. Overarching principles

2.27 The following overarching principles should be considered in developing a regulatory response to organised crime infiltration of lawful occupations and industries:

42. The regulatory response should be specific to the occupation or industry at risk of infiltration.

43. A collaborative approach should be taken in responding to organised crime infiltration.

44. Government agencies should seek to maximise information sharing.

45. A regulatory regime should promote good administrative decision making.

46. Government agencies should pursue nationally consistent best practice in regulatory responses.

47. A uniform concept of organised crime is necessary for effective regulatory responses.

Occupation- and industry-specific regulatory responses

2.28 A regulatory response to organised crime infiltration should be specific to the occupation or industry at risk of infiltration. A key theme to emerge from the Commission’s consultations is that there is no single, optimal regulatory regime for the prevention of organised crime infiltration. This view was encapsulated by the Australian Security Industry Association Limited (ASIAL), which stated that ‘no one model suits all in preventing the infiltration of organised crime groups into lawful occupations and industries’.[1]

2.29 Liberty Victoria cautioned that there would be, in fact, significant risk in adopting generalised regulatory responses to infiltration, insofar as a generic approach would disregard the different purposes for which particular occupations and industries are infiltrated, the different scales and characteristics of diverse occupations and industries, and the utility of any existing regulatory regimes within an occupation or industry.[2]

2.30 As this report proposes, policy makers should tailor the regulatory response to organised crime infiltration by: a) examining the particular form that infiltration takes in an occupation or industry and the specific opportunities and vulnerabilities that organised crime groups exploit, and b) considering the most beneficial regulatory strategies to reduce those opportunities and vulnerabilities.

2.31 For example, the private security industry is vulnerable to the entry of organised crime groups as providers of private security services. The regulatory response in the private security industry therefore involves the licensing and monitoring of private security operators.

2.32 A different regulatory response may be required where an organised crime group does not seek to enter an occupation or industry, but instead seeks to use legitimate service providers or professional advisors for the purpose of unlawful conduct. In this case, the regulatory response may not necessarily require the licensing of business operators, but may instead rely on regulatory measures aimed at bringing transparency to transactions and the provision of goods and services, such as customer due diligence requirements.

2.33 In developing an occupation- or industry-specific regulatory response, it is important that policy makers both address risks of organised crime infiltration and avoid undue impediments to the entry and operation of legitimate occupation/industry participants. In other words, the regulatory regime should endeavour to let the ‘right’ people in, as much as it seeks to keep the ‘wrong’ people out. As noted at numerous points in this report, a well-functioning, flourishing legitimate business sector can help to marginalise illegitimate operators within a particular occupation or industry and make infiltration by organised crime groups more difficult.

A collaborative approach to regulation

2.34 A collaborative approach should be taken in responding to organised crime infiltration. While the Commission recognises that collaborative approaches may be difficult to implement in practice, consultation participants frequently expressed the view that a regulatory response to organised crime infiltration requires greater collaboration among government agencies, and between government agencies and the private sector.[3]

The stages of collaboration

2.35 Collaboration is important at all stages of the regulatory response, from assessing the risks of infiltration to evaluating regulatory measures.

2.36 First, in assessing the risks of infiltration, collaboration is important because several government agencies may have information in relation to risk factors. For example, the combined intelligence of Victoria Police, the Australian Taxation Office, and the Fair Work Ombudsman may reveal that an industry is at risk of infiltration due to opportunities for taxation fraud, phoenix activity, and the exploitation of workers.

2.37 It would also be desirable for regulators and law enforcement agencies to collaborate at this stage in order to assess the relative risks of infiltration across multiple occupations and industries, and to determine where regulatory intervention is most warranted and limited resources best allocated. In assessing these relative risks, agencies should consider factors such as the degree of harm caused by infiltration in a particular occupation or industry, and whether a regulatory response in a particular occupation or industry is likely to have a significant disruptive effect on organised crime activity more broadly.

2.38 Second, relevant government agencies should collaborate in developing a regulatory response to organised crime infiltration of a particular occupation or industry, in order to identify the most beneficial strategies for reducing the risk of infiltration. It is also necessary for government agencies to collaborate with industry in developing a regulatory response. Members of a legitimate occupation or industry are unlikely to support regulatory measures that they perceive as unfair or lacking in credibility.[4]

2.39 Third, the implementation of each of the regulatory strategies outlined in this report requires some degree of collaboration among government agencies, and between government agencies and the private sector. Enforcement activity increasingly requires collaboration between government agencies. The most effective means of disrupting organised crime infiltration may lie within the regulatory regime that governs that occupation or industry (such as the use of licence cancellations), or may lie outside that regulatory regime (such as a prosecution for money laundering, customs or taxation-related offences).

The elements of effective collaboration

2.40 Consultation participants remarked on several factors that enable effective collaboration. These factors are not exhaustive; the Commission notes that a considerable body of literature exists on the barriers to inter-agency/inter-sector collaboration and their possible solutions.[5] The experiences of consultation participants suggest that effective collaboration requires:

• clear organisational structures and role delineation in order to avoid:

responsibility shifting between agencies

delays in decision making and enforcement action owing to confusion about roles

uncertainty among industry members and other stakeholders about points of contact[6]

• common objectives and projects, which may require a recasting of performance goals and indicators to reward staff and their agencies for collaborative work with other agencies[7]

• leaders who recognise the importance of addressing organised crime infiltration and promote shared commitments to this goal[8]

• mechanisms for managing conflicts of opinion between agencies or a clash of organisational cultures[9]

• the co-location of agencies or individual staff, whether on a permanent or temporary basis, in order to form meaningful, trusting relationships and facilitate information sharing[10]

• governance arrangements which ensure that agencies feel confident in the sharing of information (see [2.33]–[2.38]).[11]

2.41 Potential models for inter-agency collaboration were suggested by consultation participants. One model is the waterfront taskforces used in Melbourne, Brisbane and New South Wales to address waterfront crime (Taskforces Trident, Jericho and Polaris), which involve collaborations between the Australian Crime Commission (ACC), the Australian Federal Police, the Australian Border Force, state police forces and private companies.[12] Another model is the National Environmental Security Task Force (NEST) concept developed by INTERPOL. A NEST is a multi-agency cooperative comprising policing, customs and environmental agencies, prosecutors and non-governmental

organisations. INTERPOL publishes guidance on how governments can establish a NEST. The NEST model is being adopted internationally by INTERPOL’s member countries.[13]

2.42 The ACC cited the Precursor Industry Reference Group (PIRG) as a model for government-industry collaboration.[14] The PIRG is comprised of representatives of the pharmaceutical/chemical manufacturing and supply industries. The PIRG advises the wider Precursor Advisory Group, which is chaired by the Commonwealth Attorney-General’s Department and coordinates risk assessments about the diversion of precursor chemicals for illicit drug manufacturing, and recommends strategies to reduce these risks. These collaborations have resulted in regulatory measures such as the Project Stop database for community pharmacies and legislated precursor control regimes.

Information sharing among government agencies

2.43 Government agencies should address barriers to information sharing. Many consultation participants stated that improving information sharing is critical to using regulatory regimes to help prevent organised crime infiltration of lawful occupations and industries.[15]

2.44 Information sharing may improve:

• the quality of decision making, by providing a regulator with information it would not be able to obtain on its own

• the efficiency of regulation (for example, by enabling regulators to benefit from previous investigations of licence applicants by other agencies).

2.45 Several sources of information are likely to be useful to regulators in this context.

2.46 First, regulators may rely heavily on criminal intelligence from law enforcement agencies when considering the probity and suitability of a licence applicant or existing occupation/industry participant. Several agencies noted that criminal intelligence is particularly important for detecting ‘cleanskins’ (applicants with clean backgrounds who apply for licences as front people for organised crime groups).[16] Further, some regulators do not have the skills and powers to investigate organised crime infiltration. For example, they may not be able to perform surveillance or other investigatory functions that can be used to detect the presence of an organised crime group in an occupation or industry. Instead, a regulator may rely on the police to perform such tasks and provide intelligence to the regulator.[17]

2.47 Second, non-law enforcement agencies may also have useful information. For example, information held by the Australian Taxation Office about a licence applicant may give rise to suspicions and indicate that the applicant should be thoroughly investigated before a licence is granted.

2.48 Third, occupation and industry regulators may benefit from sharing their information with each other. For example, a regulator assessing a licence applicant may benefit from investigations previously conducted by another regulator in assessing that applicant and/or its associates.

2.49 There are a number of barriers to information sharing. A study of the use of ‘administrative measures’ (a similar concept to regulatory regimes) to combat serious and organised crime in a number of European Union member states found that the sharing of law enforcement intelligence with regulatory agencies can be hindered by legal barriers. Furthermore, law enforcement agencies:

may feel that sharing information with administrative bodies will endanger their own investigations or information sources. [In addition], government agencies may have doubts about the integrity of their counterparts.[18]

2.50 Very similar barriers to information sharing were described by Victorian and federal government agencies during the Commission’s consultations.

Legislative barriers to information sharing

2.51 Government agencies may be prohibited from sharing information that they hold or they may be restricted with regard to which other agencies (and other entities) they can share information with and the purposes for which it can be shared.

2.52 Barriers can be found in legislation of general applicability (for example, the Privacy and Data Protection Act 2014 (Vic)) and the legislation which governs a specific government agency.[19]

2.53 There is also some potential for government agencies to misunderstand the scope and applicability of legislative restrictions and, as a result, share less information than they could.[20]

2.54 Policy makers should consider whether any legislative restrictions on information sharing between relevant agencies are appropriate, having regard to the value of information sharing in preventing organised crime infiltration of lawful occupations and industries. That consideration should include whether any available exemptions to legislative restrictions[21] are sufficiently broad, and whether those exemptions can be obtained in a way that enables regulators to fulfil their functions in a timely manner.

2.55 Policy makers should also consider whether provisions that expressly permit information sharing under an occupation/industry regulatory regime would be appropriate. Under the Tattoo Parlours Act 2012 (NSW), the Commissioner for Fair Trading is responsible for determining licence applications for tattoo operators.[22] The Act allows the Commissioner to enter into information-sharing arrangements with various bodies, including New South Wales Police, government departments and local councils, for the purposes of sharing or exchanging any information held by the Commissioner.[23] Under an information-sharing arrangement, the Commissioner is authorised, despite any other law of the state, to receive information that is held by the other party to the arrangement.

2.56 As countenanced by the objects of the Privacy and Data Protection Act, it is important to balance competing public interests in determining whether information should be shared, including the public interest in the free flow of information, and the public interest in protecting the privacy of personal information in the public sector.[24]

2.57 The appropriate balance should be determined on an industry-by-industry basis and will depend partly on the severity of the risk of organised crime infiltration, including the harm that may result from infiltration. In the Commission’s view, higher levels of risk may justify greater incursions into the privacy of individuals and entities. In all cases, the assessment of risk should be well-informed and based on the available evidence.

2.58 Further, relevant government agencies should ensure that they have staff assigned to facilitating information sharing. Those staff should have a thorough understanding of the nature and extent of the legislative restrictions on information sharing.

Inadequate governance arrangements

2.59 Some law enforcement agencies told the Commission that one barrier to information sharing is their concern that non-law enforcement agencies may not handle information in such a way that it remains confidential and will only be used for an appropriate purpose.[25]

2.60 Those concerns were supported (though not exclusively in relation to non-law enforcement agencies) by a 2015 report by the Independent Broad-based Anti-corruption Commission (IBAC). In Organised Crime Group Cultivation of Public Sector Employees, IBAC advised that public sector bodies most likely to be targeted by organised crime groups include those with access to law enforcement information.[26] Organised crime groups may seek to access that information by corrupting public sector employees. IBAC concluded that:

2.61 Many Victorian public sector bodies lack an awareness of the threat posed by organised crime groups and do not have prevention and detection measures to address the threat.[27] 
A reluctance of law enforcement agencies to share information may cause difficulties for regulators. For example, if Victoria Police forms a view that a licence applicant is unsuitable to be granted a licence but does not provide the regulator with the information on which that view is based, then it may be difficult for the regulator to determine how much weight to place on that view.[28] Further, a regulator may be provided with relevant information but told that because of the nature and confidentiality of the information it cannot be used in making administrative decisions.

2.62 Regulators should develop governance arrangements that will ensure that any information received will be protected and used appropriately.[29] Different levels of security may be required for different information, depending on its nature and source. Regulators will need to work with law enforcement agencies to develop satisfactory governance arrangements.

2.63 The Commission was frequently told that the development of formal, overarching agreements between regulators and other government agencies (typically through memoranda of understanding) can be effective in facilitating information sharing.

2.64 The practices followed by the Australian Securities and Investments Commission (ASIC) provide an example of such arrangements:

ASIC and the ATO have established information-sharing guidelines to clarify how and when information should be shared. Information is released through one formal channel with a single point of contact at each agency. This approach ensures appropriate record keeping, minimises the risk of a request being missed and allows the liaison staff to develop an enhanced understanding of the needs of the other agency.

ASIC and the ATO hold a National Liaison Committee meeting every six months where senior staff of both agencies discuss issues of strategic importance, the effectiveness of information exchange, the utility of ongoing working groups and specific operational matters.[30]

Lack of centralised information-sharing mechanisms

2.65 Even if the barriers described above are addressed, there remains the issue that information is diffused among various law enforcement agencies, regulators and other government agencies, such as the Australian Taxation Office. In Australia, this diffusion of information is compounded by the federal system: relevant information may be held by Commonwealth, state or territory, or local government agencies.

2.66 This diffusion of information creates a number of problems.

2.67 First, a regulator may not be able to access all the information relevant to a decision (either at all or in a timely manner). This could lead to decisions that allow infiltration, such as a person connected with organised crime being granted a licence to operate in an occupation or industry.

2.68 Second, checking whether relevant information is held by other agencies may be time-consuming and resource-intensive.

2.69 The solution may be some form of centralised information sharing. One option is the creation of a multi-agency information-sharing network. Another option is the creation of a centralised assessment agency that is empowered to access and assess information from a range of agencies for the purpose of licence determinations and other regulatory assessments.

2.70 When considering how best to address the issue of diffusion of information (whether by one of the following two options or other options that may be suitable), policy makers should consider how to prevent infiltration while maximising the efficiency of decision-making processes and minimising duplication. In this regard, policy makers should consider the likely behaviour of organised crime groups, including that they may seek to infiltrate multiple occupations or industries, be displaced from one jurisdiction to another, or seek to infiltrate businesses within several jurisdictions. In addition to the risk of infiltration, this behaviour can lead to the duplication of work by different regulators who each independently assess licence applications by the one person or entity across several occupations or industries. Centralised information-sharing mechanisms would likely assist in preventing infiltration and reducing such duplication.

2.71 A centralised information-sharing mechanism could also play a relevant role in the post-entry regulation of occupation/industry members, including by helping to discover organised crime groups that have:

• evaded detection during any licensing process

• corrupted or acquired a legitimate business

• exploited a lack of restrictions on entry.

Multi-agency network

2.72 Multi-agency information-sharing networks would likely assist regulatory work. In a submission by the Victorian Competition and Efficiency Commission (VCEC) it was noted that recent discussions among major Victorian regulators:

strongly suggest regulatory work would be helped by pooling information on the identity of seriously recalcitrant individuals and businesses. There was a strong view that recalcitrant offenders in one regulatory regime were likely to be high risks under other regimes. Sharing information about serious offenders was considered likely to improve the visibility of high risk organisations and to help detection of regulatory breaches in related regimes. Such serious offenders may include organised crime bodies.

Some regulators have discussed some of these matters with the recently established Commissioner for Privacy and Data Protection. The new regulatory arrangements appear to have significantly increased the scope and simplicity for regulators to share information provided the regulators have appropriate regulatory objectives and authority.[31]

2.73 The new regulatory arrangements to which the VCEC referred are contained in the Privacy and Data Protection Act. That Act allows agencies to seek exemptions to the prohibition on breaching Information Privacy Principles. Exemptions can apply to ongoing practices (and not merely one-off acts) of an organisation.[32] It may, however, also be necessary to amend a regulator’s governing legislation to remove or modify any restrictions on information sharing.

2.74 An approach used in England and Wales may provide a useful model for a multi-agency information-sharing network. There, the Government Agencies Intelligence Network (GAIN) brings together agencies to share information and intelligence. It is ‘specifically aimed at reducing the threat, harm and risk associated with serious and organized crime’.[33]

2.75 A range of government agencies are involved in the network, including all police forces, the National Health Service, the Gambling Commission and the Environment Agency. The network allows for the sharing of information and intelligence between partner agencies, within legislative constraints:

Information between the partner organizations is shared through a secure online system comparable to an e-mail network. It uses a standard form for posing a request for information and data-sharing. If a colleague requests information, a GAIN authorized employee fills in the form, signs it, and forwards it to the regional GAIN coordinator. From there, the form is distributed to all the other partners, or a selection depending on the wishes of the requesting agency. The partners establish whether they have relevant information and report this as either a ‘hit’ or a ‘no-hit.’ The requesting party is informed about both outcomes. The system itself therefore does not store intelligence. In the event of a hit, further information is exchanged bilaterally.[34]

2.76 This may be a useful means of facilitating information sharing. Its advantages include that individual agencies remain in control of their information, but are freed from the burden of submitting multiple requests for information to a series of other agencies. This likely enables greater efficiency in decision making.

2.77 In Australia, several federal government agencies and state and territory law enforcement agencies are presently able to exchange information through the ACC’s ‘Fusion Capability’ for the purpose of identifying organised crime threats. The ACC has access to ‘[m]ore than 1200 data sets collected from a range of government and industry sources’ and advanced analytical tools for interpreting the data.[35] The ACC has experience in working closely with other, predominantly federal, government agencies in providing intelligence.

2.78 Victorian government agencies should consider the merits of multi-agency information-sharing networks such as the GAIN used in England and Wales, and the ACC’s Fusion Capability.

Centralised assessment agency

2.79 Another option is the creation of a centralised assessment agency that is empowered to both access and assess information from a range of sources. Unlike the approach taken under the GAIN model, such an agency would be responsible for evaluating the information held by government agencies and advising a regulator about whether a licence should be issued or other regulatory step taken (for example, whether a subsidy should be issued).

2.80 The Netherlands follows this approach through its ‘Bureau BIBOB’. When considering licence (and other) applications in certain high-risk industries, administrative authorities (that is, regulators) will first search for information about the applicant from a range of sources, including the police. If the results of that search cause the administrative authority to suspect there is a serious danger that the licence will be used for criminal activities, the authority may invite the applicant to a meeting to discuss those suspicions. If, following that meeting, the suspicions remain, the licensing authority may request in-depth screening of the applicant by the Bureau BIBOB.[36] The Bureau:

is responsible for systematically analysing the criminal background and affiliations of applicants and, based on this analysis, for advising the administrative authorities about the risks of issuing a licence [to the applicant].[37]

2.81 The Bureau may draw on information from a wide range of sources including public and ‘semi-closed’ sources such as the Dutch Tax and Customs Administration, the Dutch Immigration and Naturalization Service, and the Unusual Transactions Reporting Centre. The Bureau can also request information from police sources, including criminal intelligence.[38]

2.82 Once the Bureau has provided its assessment of the applicant’s integrity and the risks involved in granting it a licence, the licensing decision still rests with the relevant administrative authority.[39]

2.83 The approach taken by the Bureau BIBOB has been contrasted with the situation in Australia, where:

systems to access the information of multiple government agencies for the purpose of risk assessment are rare. Police intelligence is usually the sole source of additional information (other than information gathered by the regulatory agency itself) on which the agency can rely to base its decisions, and the extent to which there is any sharing of that information by the police with the agency depends on the governing legislation. In Australia, information exchange between criminal justice and other agencies is usually highly constrained by legislation. Special arrangements may be made for the purpose of whole-of-government initiatives such as task forces, but overall information sharing is not of the same order as the institutionalised form of information exchange that is part of the Dutch administrative approach.[40]

2.84 Julie Ayling, a member of the Commission’s advisory committee, suggested in her submission that consideration should be given to the establishment of a body like the Bureau BIBOB in Australia. Ms Ayling noted that:

[t]he advantage of a centralised body would be that last resort risk assessment could be based on a broader picture drawn from police, tax, immigration, customs, and local government agencies, AUSTRAC etc., not just the criminal past/present of an applicant as is the case where the sole repository of information is Victoria Police.[41]

2.85 A multi-agency information-sharing network would similarly allow a more comprehensive review of the probity and suitability of a licence or other applicant. However, in performing an evaluative role, a centralised assessment agency would be able to go one step further, by developing particular expertise in the detection of organised crime infiltration, and identifying common organised crime groups and infiltration strategies across several occupations and industries. In this respect, the use of a centralised assessment agency may reduce duplication, such as where the same people may be connected to applications for licences in a number of occupations and industries in different jurisdictions across Australia.

Good administrative decision making

2.86 Regulatory regimes should be designed and implemented in a way that promotes good administrative decision making.

2.87 The Commission’s research and consultations have highlighted two particular risks to good decision making when using regulatory regimes to help prevent organised crime infiltration of occupations and industries:

• corruption of a regulator’s staff by organised crime groups

• restrictions on a person’s ability to know all the information relied on by a regulator when making a decision that affects that person.

Corruption of regulatory staff

2.88 The ACC and IBAC have each identified the risk of organised crime groups targeting public sector employees.[42] One motivation for this is to influence decision-making processes.[43] Professor Michael Levi, an international expert on organised crime, warned the Commission of the risk of licensing regimes being undermined by the corruption of public sector employees.[44]

2.89 In its submission to the Commission, the National Heavy Vehicle Regulator noted the risk of public servants being used as ‘facilitators and insiders for organised crime’ in order to, for example, provide ‘permits or accreditations to entities to whom such would not ordinarily be given’.[45]

2.90 In its October 2015 report, the Queensland Organised Crime Commission of Inquiry considered the issue of public sector corruption. It noted that the Australian Institute of Criminology (AIC):

has reported that little research has been conducted in Australia regarding any links between organised crime and corrupt public officials.[46]

2.91 However, despite that lack of research and some indications that the level of public sector corruption in Australia may be relatively low by global standards, the report further noted that, according to the AIC, efforts to combat organised crime through legislation and the actions of law enforcement agencies over the last decade:

create a risk of ‘tactical crime displacement’. Tactical crime displacement refers to criminals modifying their tactics in order to circumvent the effects of new legislation or increased law enforcement activity. One particular risk of tactical crime displacement is the potential for organised crime groups to focus more on forming corrupt relationships with public officials.[47]

2.92 The Western Australia Corruption and Crime Commission told the Commission of the following two areas it has identified as being high-risk areas for public sector corruption, with potential for organised crime infiltration:

• agencies with regulatory functions such as licensing

• agencies engaged in law enforcement-type activities due to their access to confidential information and the exercise of discretionary powers. This would include not only police forces but also regulators whose officers perform law enforcement-type functions such as investigation of breaches of regulations.[48]

2.93 Organised crime groups may also corrupt public sector employees in order to ‘defraud the public purse by subverting public procurement processes’.[49]

2.94 IBAC warned that some regulatory agencies are unaware of the threat posed by organised crime groups.[50] In its 2015 report, Organised Crime Group Cultivation of Public Sector Employees, IBAC provided advice on the factors that regulatory agencies should consider when identifying work areas and members of staff that may be vulnerable to corruption. IBAC also provided advice on prevention strategies.[51]

2.95 Victorian regulatory agencies should review IBAC’s advice and consider whether they are taking appropriate measures to guard against the risk of their staff being corrupted, particularly where a regulator oversees an industry that is likely to be attractive to organised crime, conducts procurement that may be attractive to organised crime, or has access to law enforcement information, large volumes of identity information or credit card details.[52]

2.96 In addition to IBAC’s recommended measures, the risk of organised crime profiting from public procurement processes may be mitigated by effective due diligence measures that aim to identify possible organised crime involvement (see [ ]–[ ]).

Disclosure of material relied on by regulator

2.97 Ordinarily, procedural fairness requires that a person be given an opportunity to deal with adverse information that is credible, relevant and significant to a decision to be made that will affect that person.[53] However, this principle is not absolute and public interest considerations may circumscribe the disclosure of information.[54]

2.98 This issue may arise where criminal intelligence is used in the assessment of licence applications. Regulators may rely heavily on criminal intelligence when determining the probity and suitability of a licence applicant, especially if a regulator is attempting to discover any hidden links between an applicant and organised crime.

2.99 There may be a public interest in keeping criminal intelligence confidential where, for example, its disclosure would reveal police methods or the identity of informants.[55]

2.100 If criminal intelligence used in licensing decisions were to be revealed to applicants as a matter of course, law enforcement agencies would be far more reluctant to share their intelligence with regulators. Regulators would then not be able to consider that intelligence when making a licensing decision. That might lead to unsuitable people being granted licences.

2.101 However, if an applicant does not know all the information relied on by the regulator in making its determination, then the applicant’s ability to challenge that decision is undermined. That may lead to suitable people being denied licences. Not only would that be contrary to the interests of the applicant, but the public has an interest in competition in occupations and industries not being unduly stifled by suitable applicants being denied entry.

2.102 In 2003, the Council of Europe described the risk of relying on untested information:

Though pragmatically useful, the use of agency ‘intelligence’ is especially controversial, since it may not have been tested in any adversarial proceedings, and the suspected offenders who in consequence are excluded from exercising ‘normal’ rights may not have had the opportunity to refute the allegations. In repressive hands, such approaches can be abused or even become the tools of extortion by public authorities, sometimes in league with external criminals.[56]

2.103 One option for resolving the conflicting interests in disclosure and non-disclosure is to rely less on criminal intelligence in administrative decision making and to rely more on alternative, non-confidential sources of information (see [ ]–[ ]).

2.104 However, assuming that the use of criminal intelligence is likely to be necessary, at some point, in order to prevent organised crime infiltration of an occupation or industry, a regulatory regime could incorporate measures that allow a court/tribunal to consider criminal intelligence on any review of a licensing decision, while allowing a regulator to seek restrictions on the disclosure of that intelligence to a licence applicant.

2.105 The High Court held in Assistant Commissioner Condon v Pompano Pty Ltd that the permissibility of such restrictions will require a consideration of the statutory scheme as a whole, and the particular powers given to the court or tribunal under that scheme to resolve the matter on review.[57]

2.106 The Private Security Act 2004 (Vic) provides an example of a regime that seeks to balance the public interest in the disclosure of information, with the public interest in the protection of sensitive criminal intelligence.

2.107 The Private Security Act contains a number of provisions that allow Victoria Police to seek to prevent the disclosure of ‘protected information’ on review of licensing decisions (Victoria Police issues licences in the private security industry). Protected information has a broad definition under the Act which incorporates criminal intelligence.[58]

2.108 If Victoria Police makes a decision not to grant a private security licence, to the extent that its reasons relate to protected information, the applicant is not entitled to be provided with those reasons and the applicant is not entitled to be given an opportunity to comment on those reasons before the decision is made.[59]

2.109 If the applicant applies to the Victorian Civil and Administrative Tribunal (VCAT) for a review of the licence refusal, Victoria Police must provide VCAT with the reasons for its decision.[60] VCAT must then determine whether or not the information in question is protected information under the Act.[61] This provides the applicant with some protection, as it should reduce the likelihood of information being arbitrarily classified as protected, and allows VCAT to be the arbiter of this classification.

2.110 If VCAT rules that the information is indeed protected information, then VCAT may determine that the hearing of the appeal (insofar as it relates to that protected information) will be held in private. In that case, only Victoria Police and a special counsel appointed by VCAT to represent the applicant may be present.[62] The special counsel’s ability to communicate with the applicant will be restricted; the special counsel may only seek further instructions from the applicant in relation to the protected information with the approval of VCAT.[63]

2.111 In making its determination, VCAT must decide what weight to give the protected information and any other evidence adduced.[64]

2.112 How well this regime balances the competing interests depends on how it operates in practice; for example, how effectively a special counsel can challenge the protected information when the ability to take instructions from the applicant is limited.

2.113 In its submission, the Australian Security Industry Association Limited stated:

In general a legislative framework that respects the rights of individuals and provides for a review of Regulator decisions exists within the security industry.

The industry recognises the need for legislative provisions that exist to protect Police criminal intelligence from being revealed at or upon a legislative review process. The industry expects Regulators to have access to and use Regulatory tools to manage criminal intelligence and criminal infiltration…[65]

2.114 The tension between the competing interests in disclosure and non-disclosure of criminal intelligence should be reconciled on an industry-by-industry basis. Where organised crime infiltration could cause significant harm to the industry and/or the community, it might be preferable to maximise the potential for excluding unsuitable people, even at the risk of unfairly denying entry to some suitable people. In that case, the tension would be resolved by favouring the use and protection of criminal intelligence. For example, significant harm may arise where infiltration endangers the community as a whole (such as where an organised crime group infiltrates firearm supply) or endangers other industry participants (such as where an organised crime group engages in violent or coercive practices against competitors). Conversely, in industries where organised crime infiltration would cause less harm, the tension may be resolved by placing less reliance on the use of criminal intelligence that may have to be withheld from people affected by regulatory decisions. Engaging in this balancing exercise will help guard against the normalisation of measures that circumscribe procedural fairness.

Nationally consistent best practice in regulatory responses

2.115 Government agencies should pursue nationally consistent best practice in the regulatory response to organised crime infiltration of an occupation or industry. This is distinct from the pursuit of nationally consistent regulatory responses per se, which may result in the adoption of relatively poor practices for the sake of consistency.

2.116 Nationally consistent best practice is particularly important in relation to organised crime. Organised crime groups often operate on a national or transnational basis.[66] The infiltration of an occupation or industry may therefore occur across multiple jurisdictions, requiring a consistent and coordinated regulatory response. Inconsistent regulatory responses between jurisdictions may result in the displacement of organised crime infiltration from one jurisdiction to another. Having observed the displacement effects of anti-money laundering initiatives, the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Commonwealth Attorney-General’s Department cautioned that organised crime groups will move to those sectors and jurisdictions where there is ‘the least resistance’ (that is, those with weak or non-existent anti-money laundering/counter-terrorism financing regulatory oversight).[67] Victoria Police, the Australian Crime Commission, and the Australian Federal Police warned that the national ramifications of any state-based regulatory response need to be considered by government, in relation to their potential displacement effects.[68]

2.117 Harmonised regulatory responses (where they reflect best practice) assist legitimate business operators and employees, by improving labour and business mobility, allowing skills and experience to be shared between jurisdictions,[69] and removing the costs and difficulties of complying with inconsistent regulatory regimes as part of national/interstate trade.[70] The Australian Collectors & Debt Buyers Association stated that the absence of a nationally consistent licensing system is a significant issue for the debt collection industry because it ‘unnecessarily complicates the regulation of the collections industry and effectively works against the goals of achieving a fully compliant regulation of all participants in the collections industry in Australia’.[71]

2.118 In relation to licensing schemes, the provisions of the mutual recognition scheme may potentially be used by businesses and employees to avoid the financial costs, delays and other burdens arising from nationally inconsistent licensing laws. Under the Mutual Recognition Act 1992 (Cth), a person holding a licence in one jurisdiction is entitled to apply for recognition of that licence in another jurisdiction if equivalent work is licensed in both jurisdictions. Equivalency is based on whether substantially the same activities are performed under each licence; it is not based on whether the probity and other requirements for each licence are substantially the same.[72]

2.119 Organised crime groups may take advantage of the mutual recognition scheme by ‘shopping and hopping’; that is, obtaining a licence in the jurisdiction with the least stringent requirements in relation to probity and suitability, then using the scheme to move to a preferred jurisdiction.[73] The Productivity Commission has found that concerns about shopping and hopping are more apparent in some industries (such as the private security industry) than others.[74] The Australian Collectors & Debt Buyers Association shares these concerns.[75]

2.120 The potential for organised crime groups to abuse the mutual recognition scheme, by seeking the path of least resistance, emphasises the importance of nationally consistent best practice in a regulatory response to organised crime infiltration.

A uniform concept of ‘organised crime’

2.121 A uniform concept of organised crime is necessary for effective regulatory responses to organised crime infiltration. A lack of clarity about the meaning of organised crime and the scope of organised crime activity may hinder the development of a regulatory response—an inordinate amount of time may be spent on definitional issues, or agencies may not have a common understanding of the risks of infiltration or appropriate regulatory responses. It is becoming more common to take a multi-disciplinary approach to enforcement and consider the enforcement actions available among several government agencies.[76] This requires an understanding of the numerous types of activity in which organised crime groups may be engaged in one particular occupation or industry, such as taxation fraud, employment law contraventions, or migration law contraventions.

2.122 At a minimum, Victorian government agencies should seek to establish a uniform concept of organised crime. Ideally, a nationally consistent concept should also be pursued.

2.123 In order for different agencies to collaborate on organised crime issues, they require a uniform concept of organised crime that delineates both the structural features of organised crime and the breadth of activities committed by organised crime groups.

Structural features of organised crime

2.124 There are different definitions of organised crime under Victorian and Commonwealth legislation. Ideally, these definitions should be made as consistent as possible.

2.125 At a high level, definitions of organised crime commonly require that:

• the criminal activities are undertaken for financial or other material gain

• the offences are serious

• the offending is carried out by a group of two or more people, and

• the offending is planned and often ongoing, and is distinct from the offending of groups that are formed for the immediate or opportunistic commission of an offence.[77]

2.126 Some of these features are embodied in the key definitions of organised crime in Victorian and Commonwealth legislation, which provide a starting point for policy makers in clarifying the structural features of organised crime.

2.127 The Major Crime (Investigative Powers) Act 2004 (Vic) (MCIPA) contains the main definition of organised crime in Victorian legislation.[78] The MCIPA provides powers to Victoria Police to investigate and prosecute ‘organised crime offences’. Under section 3AA of the MCIPA, an ‘organised crime offence’ is an indictable offence against the law of Victoria that is punishable by level 5 imprisonment (10 years maximum) or more, involves two or more offenders and:

• involves substantial planning and organisation, forms part of systemic and continuing criminal activity, and has a purpose of obtaining profit, gain, power or influence or of sexual gratification where the victim is a child, or

• two or more of the offenders involved in the offence are, at any time, either declared individuals or declared organisation members.[79]

2.128 Under the Australian Crime Commission Act 2002 (Cth) (ACC Act), a ‘serious and organised crime’ is defined as an offence that:

• involves two or more offenders and substantial planning and organisation

• involves, or is of a kind that ordinarily involves, the use of sophisticated methods and techniques

• is committed, or is of a kind that is ordinarily committed, in conjunction with other offences of a like kind

• is a ‘serious offence’,[80] an offence involving the use of postal or carriage services for sexual activity with a person under 16 years of age or the distribution of child pornography or child abuse material, an offence of a kind prescribed by the regulations, or an offence involving any of the things specified in section 4(1) of the ACC Act,[81] and

• is punishable by imprisonment for a period of three years or more or is a ‘serious offence’ as defined by the Proceeds of Crime Act 2002 (Cth).

2.129 The definitions of organised crime under the MCIPA and the ACC Act were borne in mind by the Commission in preparing this report.

Organised crime activities

2.130 A uniform concept of organised crime should also incorporate the breadth of unlawful activities that constitute organised crime. There is some potential for government agencies to narrowly conceive of organised crime as largely limited to conduct such as the trafficking of illicit commodities (particularly illicit drugs and firearms), and illicit enabling activities such as money laundering.

2.131 While these activities remain a key pursuit for many organised crime groups, the ACC emphasises that organised crime increasingly involves conduct within the mainstream economy, particularly the commission of various types of fraud, such as investment and financial market fraud, taxation fraud, identity fraud, and superannuation fraud.[82]

2.132 Based on the Commission’s consultations and the available public materials, organised crime groups may infiltrate an occupation or industry in order to engage in, or facilitate, numerous forms of unlawful conduct, such as:

• the trafficking of illicit commodities (for example, through infiltration of the trucking and heavy haulage industry)

• unlawful industry-specific practices (for example, unlawful debt collection, commercial fishing, and waste management practices)

• labour exploitation (for example, through the operation of labour hire firms, or entry into specific industries)

• property theft (for example, through the use of second-hand dealers, auto-wreckers/recyclers and scrap metal dealers to distribute stolen goods)

• taxation fraud

• investment fraud

• money laundering (through both the operation of ostensibly legitimate businesses and the use of professional advisors).[83]

2.133 Each occupation or industry will need to be examined individually to determine which forms of conduct may be enabled by infiltration, and which enforcement responses are available. For example, international and interstate experience would suggest that an examination of the waste management industry may reveal that it is vulnerable to infiltration for the purpose of unlawful waste management practices, the trafficking of illicit commodities (for example, by allowing the transportation of drugs in waste management vehicles, and the disposal of drug manufacturing waste), and money laundering.[84] However, this enquiry should be guided by a common understanding of the breadth of activities that may constitute organised crime in order that different agencies can work together to assess the risks of infiltration and determine the appropriate response.

  1. Submission 11 (Australian Security Industry Association Limited).

  2. Submission 9 (Liberty Victoria).

  3. Consultations 2 (Roundtable 1), 4 (Roundtable 3), 6 (Australian Crime Commission), 7 (Australian Federal Police), 8 (Australian Transaction Reports and Analysis Centre and Commonwealth Attorney-General’s Department); Submissions 10 (Australian Tattooists Guild),

    11 (Australian Security Industry Association Limited).

  4. Submission 10 (Australian Tattooists Guild); Consultation 5 (Professional Tattooing Association of Australia).

  5. See, eg, Ronald W McQuaid, ‘Theory of Organizational Partnerships: Partnership Advantages, Disadvantages and Success Factors’ in Stephen P Osborne (ed), The New Public Governance? Emerging Perspectives on the Theory and Practice of Public Governance (Routledge, 2010) 127; Alan Doig and Michael Levi, ‘Inter-agency Work and the UK Public Sector Investigation of Fraud, 1996–2006: Joined-up Rhetoric and Disjointed Reality’ (2009) 19(3) Policing and Society 199.

  6. Consultation 9 (Victoria Police); Submissions 20 (Australian Collectors & Debt Buyers Association), 21 (Institute of Mercantile Agents).

  7. Consultations 1 (Professor Michael Levi), 6 (Australian Crime Commission).

  8. Consultation 9 (Victoria Police).

  9. Ibid.

  10. Ibid. The co-location of staff has been taken to a high level in Scotland with the establishment of the ‘Scottish Crime Campus’, which is a multi-agency facility for addressing serious and organised crime in Scotland. A range of agencies are represented at the Campus, including Police Scotland, the Crown Office and Procurator Fiscal Service (ie the public prosecution service), the National Crime Agency, HM Revenue and Customs, and the Scottish Environment Protection Agency.

  11. Consultation 9 (Victoria Police).

  12. Consultation 6 (Australian Crime Commission).

  13. INTERPOL, National Environmental Security Task Force Manual (February 2014) <>.

  14. Consultation 6 (Australian Crime Commission).

  15. Consultations 2 (Roundtable 1), 4 (Roundtable 3), 9 (Victoria Police); Submissions 18 (Australian Securities and Investments Commission), 22 (Victorian Competition and Efficiency Commission). See also Submissions 11 (Australian Security Industry Association Limited),

    13 (National Heavy Vehicle Regulator), 24 (Victorian Automobile Chamber of Commerce).

  16. Consultations 4 (Roundtable 3), 7 (Australian Federal Police).

  17. Consultation 4 (Roundtable 3).

  18. A C M Spapens, M Peters and D Van Daele (eds), Administrative Approaches to Crime (2015) 553, 554 <>.

  19. See, eg, Sex Work Act 1994 (Vic) s 61Z.

  20. Consultation 4 (Roundtable 3).

  21. See, eg, the provisions in the Privacy and Data Protection Act that allow agencies to seek exemptions to the prohibition on breaching Information Privacy Principles: Privacy and Data Protection Act 2014 (Vic) s 20.

  22. Tattoo Parlours Act 2012 (NSW) s 16.

  23. Ibid s 36.

  24. Privacy and Data Protection Act 2014 (Vic) s 5(a). See generally Submission 12 (Scarlet Alliance, Australian Sex Workers Association).

  25. Consultations 9 (Victoria Police), 7 (Australian Federal Police). See also A C M Spapens, M Peters and D Van Daele (eds), Administrative Approaches to Crime (2015) 480 <>.

  26. Independent Broad-based Anti-corruption Commission, Organised Crime Group Cultivation of Public Sector Employees, Intelligence Report No 1 (2015) 1.

  27. Ibid 11.

  28. Consultation 4 (Roundtable 3).

  29. Consultation 7 (Australian Federal Police).

  30. Submission 18 (Australian Securities and Investments Commission).

  31. Submission 22 (Victorian Competition and Efficiency Commission).

  32. See, eg, Privacy and Data Protection Act 2014 (Vic) ss 29–33.

  33. A C M Spapens, M Peters and D Van Daele (eds), Administrative Approaches to Crime (2015) 489 <>.

  34. Ibid.

  35. Australian Crime Commission, Annual Report 2013–14 (2014) 88.

  36. A C M Spapens, M Peters and D Van Daele (eds), Administrative Approaches to Crime (2015) 231–33 <>.

  37. Ibid 227.

  38. Ibid 233.

  39. Julie Ayling, ‘”Going Dutch”? Comparing Approaches to Preventing Organised Crime in Australia and the Netherlands’ (2014) 1(1)

    The European Review of Organised Crime 78, 93.

  40. Ibid 98.

  41. Submission 4 (Julie Ayling).

  42. Australian Crime Commission, Organised Crime in Australia 2015 (2015) 29; Independent Broad-based Anti-corruption Commission, Organised Crime Group Cultivation of Public Sector Employees, Intelligence Report No 1 (2015) 1.

  43. Independent Broad-based Anti-corruption Commission, Organised Crime Group Cultivation of Public Sector Employees, Intelligence Report No 1 (2015) 3.

  44. Consultation 1 (Professor Michael Levi).

  45. Submission 13 (National Heavy Vehicle Regulator).

  46. Queensland, Organised Crime Commission of Inquiry, Report (October 2015) 531.

  47. Ibid.

  48. Information provided to the Commission by the Corruption and Crime Commission (Western Australia) (4 August 2015).

  49. Submission 5 (Professor Louis de Koker and Kayne Harwood).

  50. Independent Broad-based Anti-corruption Commission, Organised Crime Group Cultivation of Public Sector Employees, Intelligence Report No 1 (2015) 4.

  51. Ibid 8–11.

  52. Ibid 8.

  53. Kioa v West (1985) 159 CLR 550, 629.

  54. See Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38, 99–100.

  55. Evidence Act 2008 (Vic) s 130(4).

  56. Council of Europe, Preventive Legal Measures Against Organised Crime, Best Practice Survey No 9 (2003) 23.

  57. Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38, 78, 100.

  58. Private Security Act 2004 (Vic) s 3.

  59. Ibid s 29A(1).

  60. Ibid s 29A(2)(d).

  61. Ibid s 150C(1).

  62. Ibid s 150D(1).

  63. Ibid ss 150D(3), 150B(4).

  64. Ibid s 150D(2)(a).

  65. Submission 11 (Australian Security Industry Association Limited).

  66. Australian Crime Commission, Organised Crime Groups (2013) <>; Australian Crime Commission, Organised Crime in Australia 2015 (2015) 8.

  67. Consultation 8 (Australian Transaction Reports and Analysis Centre and Commonwealth Attorney-General’s Department).

  68. Consultations 9 (Victoria Police), 6 (Australian Crime Commission), 7 (Australian Federal Police).

  69. Submission 10 (Australian Tattooists Guild).

  70. Consultations 2 (Roundtable 1), 3 (Roundtable 2).

  71. Submission 20 (Australian Collectors & Debt Buyers Association), submission endorsed by Submission 21 (Institute of Mercantile Agents).

  72. Mutual Recognition Act 1992 (Cth) pt 3 div 2, div 4.

  73. Productivity Commission, ‘Mutual Recognition Schemes’ (Research Report, Productivity Commission, September 2015) 134.

  74. Ibid 134–9.

  75. Submission 20 (Australian Collectors & Debt Buyers Association), endorsed by Submission 21 (Institute of Mercantile Agents).

  76. See [ ]–[ ].

  77. See United Nations Convention Against Transnational Organized Crime, opened for signature 12 December 2000, 2225 UNTS 209 (entered into force 29 September 2003) art 2 (definitions of ‘organized criminal group’ and ‘structured group’); Shona Morrison, ‘Approaching Organised Crime: Where Are We Now and Where Are We Going?’ Trends & Issues in Crime and Criminal Justice no. 231 (Australian Institute of Criminology, 2002).

  78. Major Crime (Investigative Powers) Act 2004 (Vic) (MCIPA) s 3AA. The MCIPA definition appears in the same or similar form in other Victorian Acts such as the Summary Offences Act 1966 (Vic) s 49F (consorting with a person found guilty of, or reasonably suspected of having committed, an organised crime offence) and the Sex Work Act 1994 (Vic) s 26(ab)(iii) (referral of allegations and information about organised crime offences to Victoria Police).

  79. ‘Declared individual’ and ‘declared organisation member’ have the same meaning as they have in s 3 of the Criminal Organisations Control Act 2012 (Vic): Major Crime (Investigative Powers) Act 2004 (Vic) s 3. A ‘declared organisation member’ means a member, former member or prospective member of a declared organisation. The Supreme Court may make a declaration that an organisation is a declared organisation for a range of reasons, including that the organisation has engaged in or supported serious criminal activity or that any two or more members, former members or prospective members of the organisation have used the organisation for a criminal purpose. An individual may be declared by the Court to be a declared individual if, for example, the Court is satisfied that the individual is a member of an organisation, that the individual and another member of the organisation are using that organisation for a criminal purpose, and their activities pose a serious threat to public safety and order: Criminal Organisations Control Act 2012 (Vic) ss 3(1), 19.

  80. In this context, a serious offence has the meaning given by the Proceeds of Crime Act 2002 (Cth) s 338: Australian Crime Commission Act 2002 (Cth) s 4(1) (definition of ‘serious offence’).

  81. The definition of serious and organised crime in section 4(1) of the Australian Crime Commission Act 2002 (Cth) refers to offences involving any of the following: theft; fraud; tax evasion; money laundering; currency violations; illegal drug dealings; illegal gambling; obtaining financial benefit by vice engaged in by others; extortion; violence; bribery or corruption of, or by, a Commonwealth, state or territory officer; perverting the course of justice; bankruptcy and company violations; harbouring of criminals; forging of passports; firearms; armament dealings; illegal importation or exportation of fauna into or out of Australia; cybercrime; and matters of the same general nature as one or more of the matters listed above.

  82. Australian Crime Commission, Organised Crime in Australia 2015 (2015) 12–15, 35–6, 56–9.

  83. Consultations 2 (Roundtable 1), 3 (Roundtable 2), 4 (Roundtable 3); ibid 12–15, 23–7, 60–1, 65–7, 72–5.

  84. Information provided to the Commission by the Environment Protection Authority Victoria (3 August 2015).

Voiced by Amazon Polly