Financial Crimes in Australia: Fines and Penalties Stepped Up

In an effort to combat financial crimes, Australian courts have imposed stricter fines and penalties for individuals and companies found guilty of breaches.

Strengthening Corporate and Financial Sector Penalties Act 2019

The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 came into effect on March 13, 2019, introducing new and increased penalties for those who break corporate laws. The act aims to hold corporate offenders accountable for their actions and deter them from engaging in financial crimes.

Increased Penalties

• Maximum prison sentences for serious offenses have been increased to 15 years.
• Civil penalties for individuals and companies have seen significant hikes.

The new provisions apply to contraventions that occurred from March 13, 2019 onwards.

ASIC’s New Powers

Under the new regime, ASIC can pursue harsher civil penalties and criminal sanctions under various legislation, including:

• Corporations Act 2001
• Australian Securities and Investments Commission Act 2001
• National Consumer Credit Protection Act 2009
• Insurance Contracts Act 1984

Civil Penalties for Individuals and Companies

• Maximum civil penalty for individuals: 5,000 penalty units (currently $1.565 million) or three times the benefit obtained and detriment avoided.
• Maximum civil penalty for companies: ranging from 50,000 penalty units (currently $15.65 million), three times the benefit obtained and detriment avoided, or 10% of their annual turnover, capped at 2.5 million penalty units (currently $782.5 million).

Penalty Unit Values

The value of a penalty unit is set by the Crimes Act 1914 and currently stands at:

• $313 for offenses committed on or after July 1, 2023.
• Will be indexed based on the formula in section 4AA of the Crimes Act 1914 from July 1, 2026 onwards.

Fines Imposed by Courts

Fines are imposed by courts in criminal and civil proceedings and are calculated by multiplying the value of one penalty unit by the number of units that the offense or contravention carries. A list of penalty unit values can be found in Table 1 below:

Table 1: Penalty Unit Values for Breaches of Australian Government Laws

Conclusion

The strengthened penalties aim to hold corporate offenders accountable for their actions and deter them from engaging in financial crimes. ASIC is now empowered to pursue harsher civil penalties and criminal sanctions under various laws, ensuring a more effective crackdown on white-collar offenses.