Last week the Foreign Affairs, Defence and Trade References Committee reported on “Australia’s sanctions regime”. The inquiry assessed the operation and effectiveness of Australia’s sanctions framework.
The Committee’s verdict? Australia’s autonomous sanctions regime is inconsistently and selectively applied, underutilised, and negatively impacted by government delays that allow loopholes to be exploited before being closed.
The report is light on specific recommendations for improving Australia’s sanctions regime. It mostly contains aspirational calls to “consider”, “continue” and “consider establishing” things. But it does raise some interesting ideas for increasing the efficacy of Australian sanctions. The Committee wants to close loopholes that allow evasion of sanctions, including to proactively designate persons and entities rather than simply responding to the actions taken by allies. The Committee urges a shift to asset seizure, confiscation and repurposing, rather than a continuation of the current asset freezing approach. The report also helpfully recommends a “wind down period” to allow organisations 90 days to wind down transactions with newly designated entities, and the provision of guidance to third parties on the circumstances in which assets will be “controlled”, to reduce ambiguity.
The report also recommends allowing civil society organisations the right to submit entities and persons for sanctions consideration. This is driven by the view that the decision to impose sanctions – and, importantly, the decision not to – may be driven by political and diplomatic concerns, rather than the severity of a given circumstance. By allowing civil society a mechanism to make submissions regarding the need for autonomous sanctions, say, for example, in reaction to an internationally recognised serious violation of human rights, the government of the day may be put in the uncomfortable position of justifying their continued inaction.
Although the suggestion is somewhat imitative of US, UK and EU rules, they certainly do herald a more expansive use of sanctions by the Australian Government. Those international precedents, and the security relationships Australia has with the countries concerned, suggest that the concepts aired by the Senate Committee will be readily adopted.
Whatever happens, sanctions continue to play an ever-growing role in Australian foreign policy. For businesses engaging with international clients and cross-jurisdictional transactions, the importance of conducting sanctions due diligence activities cannot be understated. Corporate non-compliance could cost you AUD3.13m in fines, quite apart from the public relations nightmare that would hit your business. It is important to embed best practice into your internal systems now, before Australia’s sanctions framework becomes even more complex. Moulis Legal’s regulatory group is ready to assist.
