Who goes there? ABF to tighten the ‘fit and proper’ regime further

12 July 2022

A version of this article was first published by The DCN in July 2022.

Customs & Trade law expert Andrew Hudson discusses the tightening of the ‘fit and proper’ regime at licensed places.

As readers would be aware, several parties in the Australian supply chain are licensed by the Australian Border Force (ABF). That includes licensed customs brokers and operators of licensed warehouses and depots (including duty-free stores). Their continued presence in the supply chain is reliant, in part, by the way that licensing regime is administered by the ABF.

More recent and proposed changes to the licensing regime for licensed places

Additional conditions imposed on operators of licensed premises in 2021 were summarised in Australian Customs Notice 2021-23. Concerns over the operations of a licensed depot operator led to the cancellation of that depot licence as outlined in the Spring edition of the ABF’s Goods Compliance Update. However, further action has now been foreshadowed by the ABF with a further tightening of the ‘fit and proper’ regime dictating who can work in licensed places. These ABF has explained the rationale for these changes as being the result of investigations which have disclosed that serious organised crime groups have placed themselves in every part of the international supply chain to facilitate imports of illegal and smuggled goods. As a result, all of those working in licensed customs depots and warehouses, (which hold a privileged role of trust in the supply chain), should be subject to further scrutiny.

Who is subject to the ‘fit and proper’ regime

The intent of the proposed changes is to ensure that a person who is not deemed as ‘fit and proper’ does not participate in any of the operations of the licensed places. ‘Participation by a person in the operations of a licensed place’ is not limited to persons physically present at the place and includes any person who participates in the operation of a licensed place from a remote location. The ABF has identified the following persons who would be included in this category to be any person who;

  • has the power to direct (directly or indirectly) whether the power is exercised or not, any other person in any of the operations of the licensed place;
  • issues instructions or expresses wishes (whether based on a legal right or otherwise) that others are accustomed to following, or compelled to follow, in relation to any of the operations of the licensed place; or
  • the ABF is satisfied participates in any of the operations of the licensed place in any manner whatsoever and whether in the day-to-day operations of the licensed place whether intermittingly or otherwise.

For those purposes, ‘person’ includes a body politic or body corporate as well as an individual and includes any officer or member of a body politic or body corporate that participates in any of the operations of the licensed place and any person who has the power to direct, directly or indirectly, any such body politic or body corporate.

Where a person will not be ‘fit and proper’

In determining whether a relevant person is ‘fit and proper’ to engage in the operations of a licensed place, the new conditions will mean that the ABF may have regard to

  • whether the person has been convicted of an offence against a Commonwealth, state or territory law;
  • whether the person has been refused a transport security identification card; or
  • if the person is not an Australian citizen, whether the person has breached any condition of their visa to reside in Australia.

Further, the licence holder will also be obliged to report to the ABF any person who they become aware is an unlawful non-citizen and ensure that they do not engage in any of the operations of the licensed place.

Reporting of a person who is not ‘fit and proper’

The relevant new conditions will also require a licence holder to advise the ABF within certain time periods if the licence holder becomes aware that any of the persons participating in the operations of the licensed place may not be ‘fit and proper’. For example, that could include persons who are working without a visa or working in a breach of their visa.

Assessment as to whether certain persons are ‘fit and proper’

The information provided by the ABF has indicated that the following obligations will apply to those involved at licensed places, to be included in new licence conditions.

Licence holders and persons in positions of management of control

All such persons who have previously completed a ‘Consent to Personal Information Form’ (Form B301) will not need to complete a new Form B301. For new licence applications and new ‘fit and proper’ tests for directors, company officers and shareholders of a company, for partners of a partnership and employees involved in the management or control of a licensed place, those parties only need to submit the existing Form 301.

All others who participate in the operations of the licensed place

The ABF has created a new ‘consent form’ (which looks different to the existing Form B301) for completion by those participating in the operations of a licensed place, other than those who have already provided a Form B301. The licence holder is required to provide those parties with the new Consent Form to be completed and provided along with 100 points of identity documentation. The ABF can then further require the licence holder to obtain a national police check or provide the ABF with the completed consent form and identity documentation. The intention is that licence holders obtain the new consent form and identity information to ensure all those present at a licensed place and who are participating in the operations of a licensed place properly display an identification badge.

Significance of the changes to the ‘fit and proper’ test

If those persons participating in the operations of a licensed place do not provide the new consent and identification information, the licence holder is required to remove them from participating in the operations of a licensed place. Failure to do so will represent a breach of licence conditions, which could lead to suspension or revocation of the licence.

Another significant change is the requirement that licence holders ensure that non-citizens are complying with the conditions of their visa with the associated obligation to remove an unlawful non-citizen from the operations of the licensed place. Clearly, the ABF is concerned about the presence of such unlawful non-citizens.

These proposed changes will increase the due diligence which a licence holder must undertake in relation to those participating in the operations of a licensed place (other than those in a position of management or control). This may require new “human relations” policies including requiring identification requirements and questions on past conduct, as well as checks with relevant agencies and the inclusion of new conditions permitting termination of involvement for parties who fail the ‘fit and proper’ requirements.

The proposed changes to the regime are subject to comment by affected parties but given the significant issues which have operated as the background to the changes, it would be expected that the changes will be adopted with little amendment. However, at the least, we would hope that there will be some defences to breaches of the condition, such as where the licence holder has done all that was reasonably possible and that there is no obligation on a licence holder to go beyond that which is provided by the person in the licensed premises. Hopefully, the ABF will also identify the confidentiality obligations the licence holder will have as to holding the information which is provided.

As always, we will keep you informed of developments.

For advice on all aspects of Australian and international trade and customs obligations, please contact our Customs & Trade team.

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