▷ Australia Moves One Step Closer To Joining The Global Magnitsky Campaign – Review

Linklaters:  The Australian Parliamentary Joint Standing Committee on Foreign Affairs, Defence and Trade has recommended that the Australian Government enact legislation to establish a worldwide human rights sanctions regime. The Committee’s proposed model is informed by Canadian, UK and US models, but has notable unique features.

The inquiry into an Australian human rights sanction regime

Australia is a relatively active sanctions jurisdiction. As well as implementing UN Security Council sanctions measures, Australia maintains an autonomous sanctions regime pursuant to which it imposes additional restrictions in relation to several countries as a matter of foreign policy. Given the international significance of the Australian economy and financial system and high volume of trading in the Australian dollar, compliance with Australian sanctions laws is a concern for many non-Australian companies.

See Allens’ publication, Sanctions Regime in Australia, for further information about Australian sanctions.

Throughout 2020, the Australian Joint Standing Committee on Foreign Affairs, Defence and Trade has been conducting a Parliamentary inquiry into whether Australia should expand Australia’s sanctions framework by implementing a new human rights sanctions regime providing for the imposition of targeted financial sanctions and travel bans against serious human rights abusers, irrespective of where in the world their conduct occurs (often called “Magnitsky sanctions”). Canada, the EU, UK and US have already adopted their own Magnitsky laws.

The current proposal tabled by the Joint Standing Committee

On 7 December 2020, the Committee issued its recommendation that the Australian Government enact legislation to establish an Australian Magnitsky regime. Several of the Committee’s specific recommendations are noteworthy from a comparative perspective.

Standalone act: The Committee recommends enacting a new standalone Australian Magnitsky act, rather than amending existing legislation to provide for ‘thematic regulation’ within Australia’s existing autonomous sanctions framework. Provision for thematic regulation could have opened the door to Australian sanctions programs targeting other transnational issues like cybercrime, drug trafficking and other forms of transnational crime similar to those imposed by the UK and US. For now, that door seems closed.

Targeted conduct: The Committee recommends that an Australian Magnitsky regime provide for the imposition of sanctions against persons involved “serious human rights abuses” and “gross”, “serious” or “systemic” corruption, with guidance on the meaning of these terms to be provided in the preamble to the act. The Committee’s recognition of the symbiosis between corruption and human rights violations accords with the Canadian, EU, UK and US Magnitsky laws, and underscores the interconnectedness of anti-corruption, anti-money laundering, human rights, sanctions and other compliance issues.

Targeted persons: The Committee recommends that Australian Magnitsky sanctions should be able to be applied to family members and associated entities of persons involved in human rights abuses and corruption, as well as to persons directly involved in such misconduct. The Committee’s recommendation does not specify whether this should occur only when a family member or associated entity is specifically designated as a sanctioned person, or whether it might also occur due to the operation of a default rule like the EU, UK and US ‘50% rules’, pursuant to which any entity that is 50% or more owned or controlled by sanctioned persons is also itself sanctioned. Australia’s sanctions regulator has not issued regulatory guidance as to whether it applies a 50% rule, and the adoption of an Australian Magnitsky regime may lead to the clarification of this point.

Procedural safeguards: The Committee observes that an Australian Magnitsky regime “should lead global best practice in ensuring fairness and providing safeguards for individuals” and recommends the establishment of an independent advisory body to receive and consider nominations for sanctions targets and make recommendations to the Minister for Foreign Affairs. The Committee also recommends that potential sanctions targets have a right to reply to a nomination before the Minister imposes sanctions, as well as a right to Ministerial review after the Minister imposes sanctions. These procedural safeguards are not present within Australian’s existing UN and autonomous sanctions regimes and could be extended to those regimes if the Committee’s recommendations are adopted. Notably, while alleged perpetrators have rights to review under the Canadian and UK legislation, the implementation of this independent advisory body would be unique to Australia.

What happens next?

The Australian Government will now consider the Committee recommendations, however its timeline for doing so is unclear. The Parliament is in recess for the Australian summer and will resume sitting in February 2021.

This will occur in a context where other legislative reforms to increase Australian businesses’ extraterritorial anti-corruption and human rights obligations are also under consideration. These include proposed changes to Australia’s foreign bribery laws and State-based modern slavery reporting regimes that are additional to and more rigorous than the existing federal reporting regime.

Authors:

Rachel Nicolson, Partner, Allens
Andrew Wilcock, Senior Associate, Allens
James Hogan, Associate, Allens

▷ Australia Moves One Step Closer To Joining The Global Magnitsky Campaign – Review
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