Buried deep in the news about a tax bill of close to $6 million being served on three Victorian ‘racing identities’ was an even more important story: the Commonwealth, state and territory governments are close to agreeing on a new national scheme to target Australia’s ‘unexplained wealth’. This scheme will add to existing Commonwealth and state laws, importantly, promote further unity of effort against serious and organised crime.

That’s good news. It’s taken over five years to get to this point, which suggests that the Commonwealth and at least a number of state governments have come to an agreement about proceed-sharing and addressed concerns over ‘jurisdictional sovereignty’.

To put this effort in context, the negotiations among the states, territories and the Commonwealth started when Kevin Rudd was prime minister the first time around. Success will be of great credit to current Justice Minister Michael Keenan and the ministers and officials who’ve worked with him.

Unexplained wealth laws are a legal innovation that overcome some limitations of the current and ongoing ‘proceeds of crime’ and ‘unpaid tax’ methods used to confiscate illegitimate assets.

Under traditional proceeds of crime laws, the prosecution has to prove that the wealth of a convicted criminal was derived from crime. Unexplained wealth laws don’t require proof of a direct link between the unexplained wealth to a specific crime.

It’s also superior to using tax law because the police can go after the full amount, not just the taxable component and relevant fines (although this remains a useful tool too).

With unexplained wealth laws, the onus is placed on the holder of any assets in Australia to prove that their assets and cash were gained legitimately using the ‘balance of probabilities’ test. Under Commonwealth law, this means that you need to show how you paid for your houses and cars, or earned the cash in your accounts. If you can’t, then a court may require you to forfeit a sum that represents the difference between the explained and unexplained portions of those assets.

There’s a buffer of $100,000 in this, which means the average-Joe worker who takes a few cash jobs on the side shouldn’t get caught in that net—although the tax office will still be interested.

This system of confiscating unexplained wealth requires what every legitimate earner in Australia should be able to do easily.

If implemented to the fullest extent, a national unexplained wealth scheme would allow a single civil court action against an individual. That action might be led by the Commonwealth or a state or territory, but it would involve the active cooperation of all relevant jurisdictions. This would remove the need to launch multiple court cases against one person, make it possible to include assets stashed across jurisdictions, and remove the distinction between state and federal jurisdiction. The ability to launch criminal cases would also remain.

As a result, legal proceedings should become easier and faster to mount and, hopefully, Australia should see more illegitimate money put to productive use (but remember—Commonwealth law has yet to be tested in court).

One limitation is the continued restriction of such laws to Australian jurisdiction. As Australia’s international organised crime links increase, this new law and system won’t be directly applicable to overseas wealth. That provides an opportunity for criminals—and importantly, an opportunity for Australian diplomacy—to convince others of the value of adopting similar laws in their own countries.

That limitation aside, this multi-jurisdictional agreement will seriously promote the efforts of our nation’s law enforcement and regulatory agencies to counter serious and organised crime by improving their tools to choke the financial lifeblood out of organised criminals. As I’ve argued recently, providing law enforcement agencies with tools like unexplained wealth are important innovations that are worth pursuing—even if it’s over a marathon, rather than the Cox Plate distance.