The corporate watchdog has put white-collar criminals on notice with a raft of tough new proposed penalties, including potential maximum jail terms of fifteen years.
In addition to the possibility of harsher jail sentences, companies could face a capped fine of $525 million per civil violation, where violations could be three times the benefit gained or ten per cent of annual turnover.
Currently, executives convicted on criminal charges face a maximum of five years' prison and/or a $42,000 fine, with a fine for corporations of just $210,000.
The tougher sanctions, passed in the Senate last night after the Coalition agreed to Labor amendments, is a long-awaited victory for the Australian Securities & Investments Commission (ASIC) which pushed for tougher penalties under former chairman Greg Medcraft.
ASIC deputy chairman Daniel Crennan QC told The World Today the proposed penalties, which now need to be approved by the House of Representatives, will be sending a chill wind through boardrooms — especially in the wake of the banking royal commission.
"Those that don't fear ASIC will be making an error. We are now entitled to pursue extremely long custodial sentences," Mr Crennan said.
"If wrongdoers persist in their wrongdoing which has been uncovered in great detail in the royal commission process, if they persist in engaging in this wrongdoing, they will be facing long custodial sentences and very high, crippling civil penalties."
Mr Crennan — dubbed ASIC's special prosecutor — said the tougher penalties are "game-changing" for ASIC, especially with maximum fines applying per contravention.
"If you're dealing with a large institution, such as a bank, for example, they may contravene the law 10,000 times — so this gets into astronomical figures," Mr Crennan said.
Penalties won't apply to royal commission-related breaches
The new penalties, once approved, will not be restrospective — meaning they will not apply to breaches that emerged at the royal commission.
Mr Crennan confirmed he would be avoiding special deals with companies, such as enforceable undertaking, that were criticised during the royal commission.
"Enforceable undertakings will become a less part of our regulatory toolkit," Mr Crennan said.
"As the royal commission recognises, enforceable undertakings do have a place but the volume of enforceable undertakings, if I could put it that way, is likely to diminish significantly."
Mr Crennan was careful not to criticise his current or former regulators for preferring enforceable undertakings to prosecutions.
"I'm not going to say that they used too many or too few, but they were operating in a very different regulatory environment."
