Huge increases in civil penalties for corporate and financial misconduct are now on the table, with the government seeking to hike penalties tenfold for corporations and more than fivefold for individuals.
Treasurer Josh Frydenberg has announced that the government will look to introduce legislation into parliament this week, increasing penalties for white collar crime that has not changed in over 20 years.
Based on recommendations from the ASIC Enforcement Review Taskforce which follows the government’s Financial System Inquiry, the bill significantly increases maximum penalties for both criminal and civil wrongdoing, while also expanding the range of contraventions subject to civil penalties.
The new maximum criminal penalties will include 10 years imprisonment and/or the greater of $945,000 or three times the benefit gained/loss avoided for individuals, with corporations facing the greater of $9.45 million or three times the benefit gained/loss avoided or 10 per cent of annual turnover.
New civil penalties will see individuals face the greater of $1.05 million or three times the benefit gained/loss avoided, with corporations to face $10.5 million or three times the benefit gained/loss avoided or 10 per cent of annual turnover (capped at $210 million).
“These significantly strengthened sanctions overhaul Australia’s penalties for white collar crime, include increases to penalties that haven’t changed in more than twenty years, bring our penalties closer to those in other leading international jurisdictions and, most importantly, provide greater protection for consumers against financial and corporate sector misconduct,” said Mr Frydenberg.
“Additionally, the government is giving the courts the power to seek additional remedies to strip wrongdoers of profits illegally obtained or losses avoided from contraventions resulting in a civil penalty proceeding.”
As the legislation includes changes to the Corporations Act, its introduction requires the agreement of at least three states or two states and one territory. The government is currently seeking this agreement.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.