What you need to know
- The Australian Government is proposing a major restructure and modernisation of Australia’s autonomous sanctions regime.
- The proposed reforms follow a comprehensive 2024 review of the sanctions framework – the first since the Autonomous Sanctions Act 2011 (Cth) and Autonomous Sanctions Regulations 2011 (Cth) were introduced.
- DFAT has published an exposure draft Autonomous Sanctions Bill for consultation. The reforms in the draft Bill are largely concerned with simplifying and clarifying Australia’s sanctions regime.
What you need to do
- Businesses should monitor these reforms closely for implications regarding their existing sanctions compliance process and procedures.
- During the consultation and reform process, businesses must continue complying with the current sanctions legislation until the new framework commences (subject to any transitional arrangements that are implemented).
- Businesses should seek legal advice to help assess whether they have in place processes and procedures that may allow reliance on the "reasonable precautions and due diligence" defence in the event of an otherwise strict liability contravention of Australia's current or revised sanctions laws.
The new legislative package
Australia’s current autonomous sanctions framework operates across a three-tier legislative structure comprising the Autonomous Sanctions Act 2011 (Cth) (AS Act), the Autonomous Sanctions Regulations 2011 (Cth) (AS Regulations) and approximately 20 supporting legislative instruments setting out sanctions measures and listings. The framework has been criticised for its significant complexity, particularly as businesses have struggled to navigate the introduction of new sanctions in response to evolving geopolitical circumstances in recent years.
The proposed reforms seek to simplify this structure, clarify how sanctions obligations operate and improve the framework’s flexibility, while preserving the Government’s ability to respond to emerging international developments.
Key structural change: three tiers to two
The most significant structural change is the consolidation of the Australian autonomous sanctions regime from three tiers (Act, Regulations, and Rules) into two – comprising a new Autonomous Sanctions Act and a consolidated legislative instrument, the Autonomous Sanctions Rules (AS Rules).
The exposure draft Autonomous Sanctions Bill (AS Bill) proposes to transfer all offence provisions, Ministerial powers and delegated instrument-making powers currently contained in the AS Regulations into the primary legislation, the AS Act. This would reduce the need to navigate between the AS Act and Regulations to identify applicable obligations. The AS Rules would set out operational requirements and sanctions measures, and consolidate listings of designated persons and entities currently spread across approximately 20 separate legislative instruments into a single source of truth. This streamlined structure is intended to give businesses a clearer legislative source for identifying applicable prohibitions.
Currently, only an exposure draft of the AS Bill (and not the AS Rules) has been released for consultation as the Bill contains the most significant reforms. DFAT has stated that work on the remaining elements of the reform package is continuing in parallel.
Sanctions framework and measures
The new AS Act would continue the two pillars of sanctions – geographically specific sanctions and thematic sanctions (for example, serious human rights abuses, corruption, serious cyber incidents, and weapons proliferation). Under these pillars, the five existing 'targets' would also remain – individuals, entities, countries / parts of countries, governments and vessels.
The existing AS Act contains 10 geographically specific frameworks and six thematic frameworks. The new sanctions framework would replicate these.
The seven existing sanctions measures will also continue under the reformed framework, with certain reformulations:
- targeted financial sanctions (which will remain largely unchanged, but would introduce new definitions for key concepts, as explained further below. These sanctions can apply under either the thematic or geographic framework to persons or entities);
- travel bans (largely unchanged – travel bans can apply under either framework);
- sanctioned export (reformulated from 'sanctioned supply' in the current AS Act – these can only be imposed against the whole or part of a country under the corresponding geographic framework);
- sanctioned import (largely unchanged – sanctioned imports can only be imposed against the whole or part of a country under the corresponding geographic framework);
- sanctioned economic activity (a new term for the existing commercial activity measure – these sanctions would allow the Minister to implement targeted sanctions against specified economic, military, and defence-related activities that are not covered by other sanctions measures);
- sanctioned services (largely unchanged – sanctioned services can only be imposed against the whole or part of a country under the corresponding geographically specific framework); and
- vessel sanctions (these are not yet drafted in the draft exposure Bill, but are confirmed by DFAT to remain. As in the current framework, the Minister would have the ability to declare a vessel as sanctioned and provide directions to a sanctioned vessel preventing it from staying in, or entering, Australian waters or ports).
Financial sanctions: newly defined concepts
Provisions of the existing AS Act relating to targeted financial sanctions leave some key concepts undefined. For example, unlike the position under sanctions regimes of many other nations, the current regime does not have a threshold for when a financially sanctioned party is considered to have sufficient control over a company, such that they benefit from an asset being provided to that company. Section 10 of the AS Bill proposes to address this by defining effective control, under which a company would be considered effectively controlled by a sanctioned person or entity if that person or entity, alone or together with other financially sanctioned persons or entities:
- owns 50% or more of a company;
- holds a majority of voting rights;
- can appoint or remove a majority of the governing board; or
- can make or influence financial or operating policies.
The definition of financially restricted asset (section 29) will also be amended to make it clearer when it is an offence to deal with, or provide an asset to, a financially sanctioned person or entity.
The effective control threshold is intended to align with the Corporations Act 2001 (Cth) and approaches taken in the UK and US. For example, where a minority shareholder exercises operational control – that is, it has the capacity to practically influence the principal entity's financial and operating policies – DFAT will treat this as satisfying the effective control test.
This differs from the 25% beneficial ownership threshold under Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime. The distinction arises because the two regimes serve different purposes: the AML/CTF regime leads to greater scrutiny and due diligence obligations, whereas the sanctions regime leads to a prohibition on dealing.
The 'triviality' concept
The AS Bill proposes a new concept of triviality which recognises that not every minor interaction with a financially sanctioned person or entity should constitute a sanctions offence. The precise legal form of the triviality concept is still being developed and the relevant provisions have not yet been drafted, but examples of providing a coffee or a pen have been given. Importantly, it is clear that the concept would not apply to monetary assets – providing any monetary asset to a sanctioned person or entity would remain prohibited regardless of value.
Transport prohibition
The AS Bill also introduces a dedicated prohibition to clarify that transporting a sanctioned good is an offence as the conduct may still provide economic support to a sanctioned target. The proposed transport prohibition will apply to the movement of sanctioned goods within or across a sanctioned country.
Indirect dealings with sanctioned persons
Under the current framework, persons are prohibited from directly or indirectly making assets available to, or for the benefit of, a sanctioned person or entity, and controlled assets must be frozen. The reforms seek to clarify these prohibitions, and propose a causal test for assessing indirect dealings. If an Australian person or company influences where an asset ends up, and it ultimately reaches a sanctioned party, the prohibition may apply. However, where an intermediary acts independently (for example, through an onward sale on the open market), the chain of causation may be broken. The reforms also confirm these prohibitions extend to assets made available to an entity that is effectively controlled by a sanctioned person or entity.
Standing exemptions
Currently, there are no automatic exceptions to sanctions prohibitions – any entity wishing to carry out otherwise prohibited conduct must apply to the Minister for a permit, or the Minister may issue general permits.
The reforms introduce a number of standing exemptions that would apply automatically – without the need to apply for a permit. For example:
- Legal services: Sanctioned persons would be able to obtain legal advice or representation under Australian law, and lawyers would be able to provide those services without needing a permit. This is a significant simplification compared to the current permit-based approach.
- Humanitarian assistance: To support the provision of legitimate humanitarian assistance, this exemption would enshrine a humanitarian exemption for all sanctions measures, reflecting UN Security Council Resolution 2664 (2022).
- Personal, domestic and non-commercial use: The reforms seek to balance restrictions on support for, and economic engagement with, sanctioned countries against the need for people to continue their ordinary daily activities. Ordinary personal, domestic and non-commercial activities would be permitted without being caught by sanctions, while restrictions on economic engagement would be maintained. There would be no monetary cap; eligibility would depend on the purpose of the activity, not its value.
The Minister would also be able to establish broader exemptions (equivalent to 'general licences' in other jurisdictions) through the AS Rules.
Permits, reviews, and revocations
Permits remain available under the proposed new framework where otherwise prohibited conduct is considered to be in the national interest. The national interest test would remain flexible rather than being exhaustively defined in legislation. The Minister would retain the power to issue permits, impose conditions, and delegate permit-issuing powers to senior officials.
The AS Bill would also introduce a clearer process for the revocation of sanctions. Where the reasons for a sanction no longer exist, the Minister would be required to revoke it. After an initial revocation application, a further application within 12 months could be considered at the Minister’s discretion, including where new information is provided. The AS Bill also proposes a new offence for contravening a condition of a sanctions permit (section 55).
Information sharing
The proposed information-management powers would be brought into line with Commonwealth-standard information-sharing provisions. Part 5 of the AS Bill would allow the Secretary to request or compel the provision of information necessary to administer the Act and clarify the authorisations for the collection, use and disclosure of relevant information. The AS Bill would also clarify what types of information can be shared under the new framework (section 9), and who is able to use and disclose that information (section 9). While the proposed changes appear extensive in scope, they align with standard Commonwealth powers and are intended to facilitate more effective information sharing between government agencies, law enforcement bodies, courts, and international partners for the purposes of administration, coordination and enforcement.
Transitional arrangements
Existing decisions, sanctions, permits, applications, revocation requests, information-sharing requests, and compliance matters are intended to be recognised under the proposed new framework. The Consequential and Transitional Provisions Bill, which has not yet been released, is designed to minimise disruption and administrative burden when moving to the new regime.
Next steps
The exposure draft of the AS Bill is open for public consultation until 16 October 2026. DFAT has indicated that written feedback is welcome and can be directed to sanctionsconsultation@dfat.gov.au. Once the full bills package is introduced to Parliament, there may be additional opportunities to provide input. Ashurst Perkins Coie would be pleased to assist in preparing submissions.
Pending the outcome of the consultation process and any further revisions that may follow, the new framework is expected to commence by 1 October 2027, ahead of the expiry of the current AS Regulations.
Businesses and other stakeholders should take this opportunity to review the proposed reforms, and assess the implications for their operations and compliance programmes.
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Authors: James Clarke, Partner; Dario Aloe, Senior Associate; Jasmine Xu, Lawyer and Sancia Bingham, Lawyer.
