1.1 The purpose of this practice statement is to explain how the Australian Financial Security Authority (AFSA) makes a decision whether or not to refer for prosecution a possible offence under section 271 of the Bankruptcy Act 1966 (rash and hazardous gambling1 leading to insolvency).
1.2 This policy does not represent a rigid set of rules designed to apply to all situations regardless of the individual circumstances. Instead, it is intended to provide AFSA Officers and AFSA's stakeholders with flexible guidelines that will allow them to approach each case on its merits.
1.3 This policy deals only with decisions by AFSA regarding the referral of possible offences and does not deal at all with any decisions made by the Commonwealth Director of Public Prosecutions (CDPP) regarding whether or not to prosecute.
1 Note that section 271 also applies to speculations – that conduct is not considered in this policy statement which is limited to offences related to gambling.
2.1 AFSA will not refer a case for prosecution where it appears that the debtor could be classified as having been a 'problem gambler' and had not engaged in any associated criminal activity to finance their gambling habit.
2.2 AFSA will consider referring a case to the CDPP only where it involves:
- clear criminality
- complex offences
- ongoing allegations of repeat offending despite warnings to the contrary.
2.3 This policy reflects the principle that the public interest is not generally served by prosecuting minor incursions or by prosecuting persons who are suffering from a particular vulnerability or disadvantage. The purpose of section 271 is to punish “…conduct which a person can be expected to anticipate seriously risks insolvency…” where the character of the gambling was 'reckless' and 'without due consideration or regard for consequences'. AFSA does not regard cases involving 'problem gambling' only as having these characteristics.
2.4 An example of a case involving 'clear criminality' would be where the person gambled with the intention of depriving creditors of access to their money and property. For example, there may be evidence that, upon realising that insolvency was inevitable, the person liquidated their assets and gambled with the proceeds deliberately to prevent creditors being paid.
2.5 An example of a case involving 'complex offences' would be where the gambling is accompanied by other offences, such as obtaining money by deception or concealing assets from the trustee.
2.6 An example of a case involving prior warnings is likely to arise where a person has previously been bankrupt, there was evidence of a possible offence under section 271 and a warning letter was issued. If the person subsequently becomes bankrupt again and there is evidence of an offence under section 271, that offence may be considered for investigation and referral for prosecution.
2.7 It should be noted that the mere raising by an alleged offender of a defence that they have a 'gambling problem' in order to avoid prosecution will not necessarily oblige AFSA to refrain from referring the allegation to the CDPP for determination. Supportive evidence confirming the debtor/bankrupt suffers from such a 'problem' will be required.
2.8 Furthermore, should relevant long-term offending and repeat allegations be alleged, AFSA would expect to see evidence of self-help having been undertaken by the debtor/bankrupt, otherwise the matter would proceed
to investigation with prosecution action being recommended.
3.1 AFSA Regulation and Enforcement has primary responsibility for investigating and referring alleged bankruptcy and related offences to the CDPP. AFSA considers gambling offences under section 271 to be unique offences and, consequently, takes a very rigorous approach to selecting and referring cases to the CDPP under this section.
3.2 Any questions about how this policy is applied in a particular case can be directed to AFSA Regulation and Enforcement at fraud.enquiries [at] afsa.gov.au or via 1300 364 785.