In the ever changing and increasingly stringent nature of regulatory compliance and enforcement, the establishment of the new Department of Home Affairs (the Department) heralds a new epoch in protecting and managing Australia’s borders. This will also have risk and related implications for local, national and global corporations seeking to meet their global mobility needs.
With the demand for temporary and permanent entry visas now resulting in the Department getting over 30,000 visa applications each day, corporate Australia continues to grapple with an increasingly robust regulatory immigration landscape. Thus reflecting the Government’s focus on protecting Australian jobs while managing Australia’s borders at a time of heightened border security and law enforcement concerns.
The Australian Border Force (which is the operational enforcement arm of the Department) has significant powers and within this new environment, current operational risk management models are inadequate and most are not embedded in strong business practices that reflect operational risk exposure to ensure regulatory compliance. Directors need to consider the requirements for better standards of governance and risk oversight, and management of operational risk. Adopting a broader enterprise risk management approach where risk is embedded into the strategic and business planning decision-making processes within the organisation should be part of the overall enterprise risk management.
Implications of the proposed Integrity and Modern Slavery Bills
The Migration and Other Legislation Amendment (Enhanced Integrity) Bill 2017 (the Integrity Bill) is currently before the Senate. Once passed, it will amend the Migration Act 1958 (the Act), the Income Tax Assessment Act 1936 (the Income Tax Assessment Act) and the Taxation Administration Act 1953 (the Taxation Administration Act) to support the integrity of the temporary and permanent employer sponsored skilled visa programmes.
Once passed, it will allow the Minister of Immigration and Border Protection, who is also the Minister for Home Affairs, to publish information in regard to an approved sponsor (or from an approved sponsor) who fails to satisfy a sponsorship obligation in prescribed circumstances.
The Integrity Bill will facilitate further data sharing between the Secretary of the Department and the Commissioner of the Australian Taxation Office for the purpose of compliance and enforcement operations.
In addition, the Modern Slavery Bill 2018 (Cth) has been referred to the Senate Legal and Constitutional Affairs Legislation Committee. The Bill, if passed, will introduce a modern slavery reporting requirement (extending to an entity’s supply chain) designed to strengthen Australia’s response to modern slavery which impacts on both Australians and overseas workers in Australia.
Directors’ personal liability
With an increase in the personal liability directors and executive officers are subject to, we expect the level of regulatory scrutiny and enforcement activity to continue. Boards must ensure that executive management decides and controls operational management by identifying traditional, current and emerging risks to ensure effective governance and compliance.
The risk management process includes identifying risks - what, how and why risks can arise, undertaking a range of priorities which aim to control and mitigate risks and implement effective plans and strategies to deal with the level, consequence and likelihood of the risk.
Continuous communication and consultation, review and monitoring are essential to ensure compliance and avoid financial penalties and reputational damage in cases of breach.
The Australia Border Force’s significant powers and reach include responsibility for compliance and regulation including:
- Sponsorship monitoring and compliance with sponsorship obligations
- Compliance assessment
- Surveillance operations
- Targeted enforcement operations.
As businesses continue to navigate the raft of regulatory changes, the level of regulatory scrutiny and enforcement activity continues to increase substantially. This is evident from the number of actions brought by regulatory and enforcement bodies including the Department, Fair Work Ombudsman, the Australian Taxation Office and the scale of penalties and fines imposed in respect of breaches.
With the increasing sharing of data across government agencies and systems to support this data sharing, directors have an increased responsibility to continue to develop and drive a culture of compliance.
Five questions directors need to ask
- What is your risk appetite and what is your risk-differentiation framework , and is it part of an Enterprise Risk Management Framework?
- How do you manage risk and how effective is your engagement?
- What is your Compliance Model – including compliance strategy?
- What is your operational risk management matrix and the inputs and outputs of risk management tools?
- How do you assess the health of your risk management systems, your risk ratings and your confidence levels?
Compliance risk management approaches must be part of overall enterprise risk management which includes the likelihood, consequence, information confidence and costs. Developing and maximising risk management strategies are an integral and vital part of day to day business operations and the cost of doing business.
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