Global Magnitsky movement gains pace Parliament passes reforms to Australias sanction regime
07 December 2021
07 December 2021
Autonomous sanctions are targeted punitive measures that governments impose as a matter of foreign policy, beyond the recommendations of the United Nations Security Council, in response to situations of international concern. They are intended to limit the adverse consequences of the situation, and influence or penalise those responsible for human rights violations or certain acts of corruption. In practice, sanctions are typically economic, financial, or trade related (such as travel bans; restrictions on the sale and transfer of goods and services; restrictions on the use of, or dealing with, certain assets; and other restrictions on commercial activities).
In Australia, autonomous sanctions regimes are imposed under the Autonomous Sanctions Act. To date, Australia's autonomous sanctions have been administered primarily via country-based regimes, rather than in relation to types of conduct of concern. Unlike country-based sanctions, "thematic" sanctions can be imposed in relation to conduct of concern, regardless of where it occurs.
For further background, please refer to our earlier publication, "Global Magnitsky movement: Upcoming reforms to Australia's sanctions laws", in which we discussed the Federal Government's response to "Criminality, corruption and impunity: Should Australia join the Global Magnitsky movement?", prepared by the Joint Standing Committee on Foreign Affairs, Defence and Trade.
On 2 December 2021, the Australian Parliament passed the Autonomous Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Bill 2021. The bill will come into effect the day after receiving royal assent.
The purpose of the bill is to make it clear that sanctions may be either country-specific or thematic, and that thematic sanctions regimes need not be restricted to any particular country. This is consistent with the growing recognition, as discussed in our previous publication, that Australia's existing country-based approach to sanctions requires recalibration in light of the growing frequency of conduct of concern that does not correspond to national borders (malicious cyber activity).
The bill will expand Australia's existing autonomous sanctions framework to expressly enable the Australian government to establish "thematic" sanctions regimes in response to conduct of concern. The categories of conduct to which sanctions will be able to be applied include:
The inclusion of malicious cyber activity is particularly notable, as it means that Australia's thematic sanctions may in time be broader than many other countries including the UK, which have comparable regimes but no specific coverage of cyber activity .
The amendments will also establish a specific decision-making process in relation to listing decisions under thematic sanctions regimes. Before deciding to list a person or entity under a thematic sanctions regime, the Minister for Foreign Affairs, Defence and Trade will be required to consult with the Commonwealth Attorney-General and such other Ministers as the Minister considers appropriate.
There is no change to the existing penalties for breaching sanctions laws under the Autonomous Sanctions Act. The penalties for contravening a sanctions law currently include imprisonment or a fine of the greater of three times the value of an infringing transaction and 2,500 penalty unit for individuals ($555,000) or 10,000 penalty units for corporations ($2,220,000) .
Importantly, contravention of an Australian sanctions law is a strict liability offence for a company. A company has a defence if it can prove that it took reasonable precautions and exercised due diligence to avoid the contravention, meaning that it is critical for companies to proactively manage sanctions risks through an effective sanctions compliance framework. A formal compliance sanctions framework is strongly recommended in order to demonstrate an appropriate level of due diligence. Such a framework should incorporate the following elements:
Authors: James Clarke, Partner; Thomas Storer, Senior Associate; Rohan Hulonce, Associate; and Tanya Raitsina, Director-Ashurst Advisory.