Review of Australian sanctions laws: Report on potential areas for reform released by DFAT

Australia’s ongoing review of its sanctions laws framework has reached a new stage, with the Department of Foreign Affairs and Trade (DFAT) releasing its report identifying areas for potential reform.

The review commenced on 30 January 2023, when DFAT announced it was undertaking a legislative review of Australia’s autonomous sanctions framework and invited submissions to an Issues Paper on reforming Australia's sanctions laws.

The Issues Paper called for submissions in response to the questions raised in it, or any matter relevant to the Terms of Reference.

On 30 October 2024, DFAT published a report confirming that the Australian Government has “reviewed Australia’s sanctions laws to identify areas of reform to ensure sanctions law remained clear, fit for purpose and aligned with contemporary foreign policy objectives”.

Despite initially announcing that the review would focus on Australia’s autonomous sanctions framework, the report confirms that DFAT considered both Australia’s autonomous sanctions and United Nations Security Council sanctions frameworks, including options to enhance consistency across those frameworks.

The review will form the basis for DFAT’s advice to the Government on recommended areas for reform of Australia’s sanctions laws.

In conducting the review, DFAT undertook significant consultation with stakeholders (including across industry, academia, civil society and government) and received 27 submissions in response to the Issues Paper, responding to the seven key issues identified in the Issues Paper.

In summary, the submissions received addressed the following key issues:

1. Streamlining the legal framework to enhance understanding and make the legislation easier to navigate.
    
2. Clarification of key terms in the legislation such as ‘asset’, ‘indirectly’, ‘for the benefit of’ and ‘owned or controlled’. Various submissions recommended including the use of non-exhaustive guidance, consistency with partner jurisdictions, introducing a percentage threshold to guide when a person ‘indirectly’ makes assets available to a designated person and the introduction of new terms including concepts like ‘comingled’ goods and ‘de minimis’.
    
3. Improving the process for permit applications including by increasing transparency, allowing a greater delegation of authority, removing restrictions on when a permit application can be made, specifying the considerations for when a permit may be ‘in the national interest’, and the issuance of general permits for classes of persons to mitigate unintended sanctions consequences and adverse impacts on the domestic economy.
    
4. Introducing a humanitarian exception for autonomous sanctions to support the timely delivery of humanitarian aid.
    
5. Changes to sanctions offences and enforcement including the possibility of introducing civil penalties as a regulatory tool and other regulatory tools, such as administrative penalties.
    
6. Review mechanism for sanctions designations and declarations replacing the automatic expiry of autonomous sanctions listings every three years and the establishment of an independent advisory body to advise the Foreign Minister on sanctions decisions.
    
7. Changes to the regulatory functions of the Australian Sanctions Office including engaging the injunction powers under the Regulatory Powers (Standard Provisions) Act 2014.

A range of other issues were also commented on by stakeholders and in submissions, including the desirability of aligning obligations under Australia’s sanctions laws with anti-money laundering and counter-terrorism financing legislation.

The submissions received by DFAT have been published here, and DFAT’s report on the review of Australia’s sanctions laws is published here.

It remains to be seen which of these matters will form the basis of proposed reforms.

The next phase of the reform process is underway, which involves Government consideration of proposed reforms from the review. Following this, the subsequent phases will likely involve:

• drafting legislative and regulatory amendments to implement reforms;
   
• release of exposure draft legislation for public consultation; and
   
• passage of legislative reforms through Parliament.