Crime confiscation rocks banks

AT least one Perth bank is conducting a review of its rights as a lender, in the wake of new laws allowing authorities to seize the assets of criminals came into force.

A spokesman for Citibank said the bank was examining its position regarding the new laws but would not comment on whether any borrowers had been threatened by the State’s authorities under WA’s Criminal Property Confiscation Act.

In two high-profile cases, WA police and the DPP have moved to seize properties worth $1.5 million owned by alleged drug dealer Chicote Marker and his girlfriend, as well as assets worth an estimated $2.5 million owned by another man charged with drug offences, Paul Musarri.

The new laws, considered among the toughest in the world, grant the WA Director of Public Prosecutions the power to vest property to the State free of any encumbrances such as a mortgage under a number of circumstances.

The law is aimed at curtailing the activities of drug dealers.

Although there are some provisions for lenders rights, the WA Law Society said the protection for lenders, whether they are a major bank or a family member, is unclear.

“There are some concerns about whether persons who hold interests in properties by way of a mortgage or charge or some degree of documentation have their interests protected,” a Law Society spokesman said.

But the law’s arrival had caused barely a ripple among Perth’s banking circles, with Citibank the only one to confirm it was conducting a review.

“Currently we are reviewing this and ascertaining if there is any impact regarding the legislation,” a Citibank spokesman said.

BankWest said it was seeking legal advice but did not expect the law to impact on its operations

“It is an Act we have to work with,” a spokesman said.

But some banks contacted by Business News this week expressed disbelief that the WA laws could be so sweeping – relying on the general proposition that a property title cannot be transferred if there is a registered charge.

“You can’t sell a property without a mortgage being discharged,” said a Challenge Bank spokesman.

Most banks, including Challenge, and other lending organisations remained confident that their lending procedures were strict enough to weed out criminals before an application was accepted

WA Home Loans managing director Tim Holmes had his lawyers examining the situation but said that customers had a number of hurdles to jump including showing proof of deposit before an application would even be considered.

Mr Holmes said he had been advised that the intent of the law was to capture lenders which had deliberately or negligently turned a blind eye to the criminal activities of borrowers.

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