Understanding Australian human rights laws & sanctions

Australia’s human rights framework is built on common law and on its constitution which sets out certain universal rights for individuals within Australia and around the world. Human rights legislation in the country varies at the state and Federal levels but the enforcement of human rights law in Australia  is overseen by the Australian Human Rights Commission and the Department of Foreign Affairs and Trade (DFAT) which investigate violations at home and abroad and enforce sanctions against persons that commit human rights abuses. 

Human rights sanctions in Australia are currently under scrutiny. In response to serious human rights breaches in countries such as China and Russia, Australia recently began debating the introduction of targeted sanctions in the style of the US’ Magnitsky Act. The proposed measures would create a new sanctions regime that would target foreign individuals guilty of serious human rights abuses. Given the complexity of human rights laws in Australia, financial institutions must understand their compliance obligations and how to prevent customers that may have sanctions against them from using their services.

Understanding human rights laws in Australia

Australia’s human rights laws are derived from its parliamentary process rather than an abstracted Bill of Rights. As a western, multicultural country with large immigrant populations and internal concerns about the treatment of indigenous people, human rights are a significant public and political concern in Australia. With that in mind, the Australian government seeks to prevent foreign countries and individuals that commit human rights abuses from using its financial system. The Constitution of Australia enshrines certain individual rights at the Federal level but at the state-level human rights regulations vary and are introduced by the Commonwealth Parliament or by State or Territory Parliaments. Some states have introduced codified protections for human rights, including Victoria’s Human Rights Charter (2006), and the Capital Territory’s Human Rights Act (2004), while others draw on established common law. The Constitution of Australia sets out the following rights and freedoms:

• The right to vote (Section 41)
• Protection against the unjust acquisition of property (Section 51)
• The right to trial by jury (Section 80)
• Freedom of trade, commerce and passage between states (Section 92)
• Freedom of religion and worship (Section 116)
• Freedom from discrimination based on state residency (Section 117)

Common law has also played a major role in defining the regulatory approach to Australia’s human rights laws. Several important Federal statutes provide protections for freedom of speech and other types of discrimination, these include: 

• The Racial Discrimination Act 1975
• The Sex Discrimination Act 1984
• The Australian Human Rights Commission Act 1986
• The Disability Discrimination Act 1992
• The Age Discrimination Act 2004

In addition to protecting Australian human rights domestically, Australia is also committed to protecting human rights around the world and has signed the seven major United Nations global human rights treaties: 

• • The International Covenant on Civil and Political Rights
  • The International Covenant on Economic, Social and Cultural Rights
  • The Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment
  • Convention on the Rights of the Child
  • The International Convention on the Elimination of All Forms of Racial Discrimination
  • The Convention on the Elimination of All Forms of Discrimination against Women
  • The Convention on the Rights of Persons with Disabilities

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Australia’s sanctions regime

In order to meet its treaty commitments and prevent international human rights abuses, Australia implements economic sanctions against persons and countries listed on the United Nations Security Council Consolidated List and on its own autonomous sanctions list, maintained by DFAT. In some cases, entries on the lists overlap: North Korea, Iran, Libya, and Syria, for example, are subject to UNSC and autonomous Australian sanctions. 

Australia’s sanctions regime prohibits trade with persons and countries designated on the relevant sanctions lists and Australian firms may be obligated to freeze the assets of sanctioned customers. Accordingly, firms are expected to monitor their customers closely to ensure that they are not listed by either the UNSC or by the Australian government. Australia’s sanctions are enforced by the Australian Sanctions Office (ASO) which operates under the authority of DFAT. 

In some circumstances DFAT may grant permits for firms that wish to engage in activities that would otherwise be sanctioned under Australian law. Firms can apply for a sanctions permit by using DFAT’s online portal. 

Australia’s sanctions penalties: Breaches of Australian sanctions laws are considered serious criminal offences. Individuals that breach sanctions laws may be punished with a fine of up to $555,000 or three times the value of the sanctioned transaction, and may face up to 10 years in prison. 

Similarly, firms that breach sanctions face fines of up to $2.2 million or three times the value of the sanctioned transaction. DFAT points out that firms do not need to have demonstrated intent, knowledge, recklessness, or negligence in order to be found guilty of a sanctions offence.

New Australian sanctions regulations

In December 2020, an Australian Parliamentary committee recommended that Australia enact a new ‘Magnitsky-style’ sanctions regime in order to address human rights sanctions violations by foreign individuals and corporate entities. Like similar regimes enacted by the US and the UK governments, Australia’s proposed targeted sanctions regime is intended to address the mistreatment and assassination of journalists, political figures and members of the media by foreign governments and religious groups in locations around the world. 

The committee suggested that sanctions penalties for violations of the new regime should include asset freezes, travel restrictions, or limitations on access to Australia’s financial systems.

How to comply with human rights laws and sanctions in Australia

Firms in Australia must ensure that they are not committing human rights sanctions breaches by doing business with persons sanctioned under the Australian or UNSC regimes. In practice this means putting appropriate sanctions screening measures in place in order to track designations on both lists quickly and accurately. 

Sanctions screening should be built on a foundation of effective Know Your Customer (KYC) measures, with an emphasis on robust customer identity verification. Accordingly, firms should collect a range of identifying information including customer names, addresses, and dates of birth, and establish the beneficial ownership of customer entities. 

Sanctions screening solutions should be able to account for regional naming conventions, alternate spellings of names, and the use of aliases, and be able remediate false positives and misidentifications quickly. In order to manage the vast amounts of data needed for effective sanctions screening, firms should seek to implement a suitable smart technology solution to provide automated speed and accuracy and to adapt quickly to changes in regulation, such as Australia’s proposed Magnitsky-style regime.