Autonomous Sanctions Act 2011: Breaches and implications

In this article, we discuss the Autonomous Sanctions Act 2011 (Cth) and liability for criminal offences to be committed, using Russia as a case study. Our team at HopgoodGanim delivers exceptional outcomes for  financial crime and corporate investigations, advising on corporate anti-money laundering and proceeds of crime litigation.

Sanction laws form a part of Australia’s AML legislative framework. 

The Autonomous Sanctions Act 2011 (Cth) ( Sanctions Act ) is used by Australia to enforce the United Nations’ Security Council sanctions. Sanctions restrict or prohibit making a supply, import, providing a service or engaging in commercial activity and dealing with a designated person or entity. 

The Sanctions Act creates strict liability for a serious criminal offence, with penalties of up to 10 years imprisonment and substantial fines.¹ 

Before its invasion of Ukraine, Russia was already subject to sanctions by Australia ² and further economic sanctions against Russia took effect from 28 March 2022, including additional restrictions on the trade of certain goods and services with Russia, Crimea, Sevastopol and the (separatist) Donetsk and Luhansk regions of Ukraine. 

The current sanctions now prohibit activities involving direct or indirect export to Russia of the following:

• items suited for use in oil exploration or production projects in Russia;
• oil exploration and production in waters deeper than 150 metres;
• oil exploration and production in the offshore area of north of the Arctic Circle;
• projects that have the potential to produce oil from resources located in shale formations by way of hydraulic fracturing;
• arms or related material, – including military and paramilitary weapons, ammunition, military vehicles and equipment, and any related spare parts and accessories for any of those things;
• aluminium ores, including bauxite, alumina, and related products;

There are now sanctions on the imports, purchase, or transport of:

• arms or related material;
• oil, refined petroleum products, natural gas, coal and other energy products.

There are also sanctions on certain commercial activities, such as a prohibition on dealing with any financial instrument issued by, or to provide loans or credit to:

• specified publicly owned or controlled Russian Banks;
• specified Russian companies predominately engaged in activities relating to military equipment or services;
• specified publicly owned or controlled Russian companies involved in the sale of transport of crude oil or petroleum products;
• majority-owned subsidiaries or entities acting as agents for any of the above.

To complement these sanctions, certain services are also now prohibited:

• any service which assists with, or is provided in relation to the supply, sale of transfer of goods listed under ‘restrictions on the export or supply of certain goods' above, except the items suited for use in certain categories of oil exploration or oil production projects;
• financial assistance or a financial service which assists with, or is provided in relation to the import, purchase or transport of goods listed under ‘restrictions on the import, purchase or transport of certain goods' above;
• an investment service which assists with, or is provided in relation to the activities listed under ‘restrictions on certain commercial activities' above;
• a service to Russia, or to a person for use in Russia, which assists with, or is provided in relation to a military activity or the manufacture, maintenance, or use of arms or related matériel;
• certain services to Russia, or to a person or entity for use in Russia, that are necessary for certain types of oil exploration or production projects in Russia, including drilling or well‐testing services.³ 

Companies and individuals trading with parties potentially involved in any sanctioned activities or assets or entities now need to be confident they are not unwittingly being used as part of an affected supply chain. ⁴ 

Where breaches of the Sanctions Act and, in turn, the Code, amount to ‘serious offences,’ a Proceeds of Crime Authority may commence civil proceedings under the Proceeds of Crime Act 2002 (Cth) ( POCA ), which specifically targets the proceeds of money laundering. POCA to seek forfeiture orders for the entire value of assets involved in the transaction.

Another aspect of sanctions involves assets owned or controlled by ‘sanctioned’ persons and entities.

The Consolidated List⁵ ( List ) maintained by the Australian Sanctions Office identifies all persons and entities who are subject to targeted sanctions in Australia. The List can include foreigners in Australia as well as Australian citizens and residents here and abroad. For instance, Russian oligarchs on the List include, Alisher Usmanov, Gennady Timchenko, Vagit Alekperov and Arkady Lisin.

A party dealing with an asset that is owned or controlled by a Listed person or entity must freeze it and inform the AFP as soon as possible pursuant to regulation 23 and 24 of the Autonomous Sanctions Regulations 2011( Sanctions Regulations ). ‘Asset’ is broadly defined in section 4 of the Sanctions Act and includes funds that have been deposited into Australia to purchase real estate on by, or on behalf of, the person or entity on the List. 

Making an asset available to the person or entity on the List is a contravention of regulation 15 of the Sanctions Regulations, which attracts the penalties in section 16 of the Sanctions Act and, in turn the Code and because the contravention constitutes a ‘serious offence’ - the POCA may also be enlivened.

Special series: AML and counter-terrorism financing laws

This article is part of our content series, 'The money laundering deck: AML and counter-terrorism financing laws'. The series uses Russia as a case study to provide an analogy for how businesses can be impacted by AML and counter-terrorism financing laws while operating in Australia. Read the related articles in the series here:

• Trade-based money laundering: Russian sanctions
• Anti-money laundering agencies and enforcement
• Autonomous Sanctions Act 2011: Breaches and implications (this page)
• Register of Foreign Ownership of Australian Assets - Australian Register
• Anti-money laundering and sanctions law: Case studies

1.  A maximum fine of $555,000 for an individual, or a fine of $2.2 million or 3 times the value of the transaction for a body corporate in breach of the sanction laws, whichever is greater and/or up to 10 years imprisonment pursuant to section 16 of the Sanctions Act.
2. They were first imposed in 2014, because Russia invade Crimea in 2014, and extended in 2015 and 2022.
3.  9https://www.dfat.gov.au/international-relations/security/sanctions/sanctions-regimes/russia-sanctions-regime
4. https://www.dfat.gov.au/international-relations/security/sanctions/sanctions-regimes/russia-sanctions-regime#:~:text=Why%20are%20sanctions%20imposed%3F,extended%20in%202015%20and%202022.   
5.  https://www.dfat.gov.au/sites/default/files/regulation8_consolidated.xls. The Australian Sanctions Office (ASO) maintains the list and updates it regularly. You can subscribe to their mailing list to ensure you are reviewing the current List.