Australian Government Passes New Hate Crime Legislation: What Businesses Should Know

New hate crime legislation has important implications that Australian businesses should be aware of and reflects a continued emphasis on corporate responsibility in relation to who companies interact with across their supply and value chains. Following the December 2025 Bondi attack, the Commonwealth government fast tracked passing of the Combatting Antisemitism, Hate and Extremism (Criminal and Migration Laws) Act 2026 (Cth) (the Act), which took effect on 22 January 2026. Among other legislative changes, the Act inserts a new Part 5.3B (Divisions 114A to 114C) into the Criminal Code Act 1995 (Cth)(Criminal Code) targeting "prohibited hate groups" (being organisations specified in regulations by the Governor-General)¹ and those who direct, fund or support them.

New criminal offences relating to prohibited hate groups

The implications of these legislative changes are significant for both individuals and corporations. The new Division 114B of the Criminal Code sets out several new criminal offences with respect to prohibited hate groups, with maximum penalties ranging from 7 to 15 years' imprisonment. As will be discussed further below, higher maximum penalties apply when the offender "knows" that an "organisation"² is a prohibited hate group, while lower maximum penalties apply when the offender was "reckless" as to whether the organisation is a prohibited hate group.

Pursuant to Division 114B, it is now an offence to:

• direct the activities of a prohibited hate group (section 114B.1);
• be a member of a prohibited hate group (section 114B.2);
• recruit a person to join or participate in the activities of a prohibited hate group (section 114B.3);
• provide training to or receive training from (or train with) a prohibited hate group (section 114B.4);
• receive funds from, make funds available to or collect funds for a prohibited hate group (section 114B.5); and
• provide support or resources to a prohibited hate group (section 114B.6).

While the penalties for committing the above offences are framed in terms of imprisonment, the regime also applies to bodies corporate, and the Crimes Act 1914 (Cth) provides a statutory mechanism for a court to impose a pecuniary penalty up to approximately $1.5 million (for offences with a maximum penalty of 15 years' imprisonment, based on current penalty units).

Recklessness standard

Most notably, the majority of these new offence provisions include a "recklessness" standard, meaning that a person or corporation may commit an offence when it was "reckless" as to whether an organisation is a prohibited hate group. "Recklessness" is defined in section 5.4 of the Criminal Code, which provides that a person is reckless with respect to a circumstance if they are aware of a substantial risk that the circumstance exists or will exist, and having regard to the circumstances, it is unjustifiable to take the risk.

For instance, under new sub-section 114B.5(2), a person or corporation will commit an offence if they:

1. intentionally:
   1. receive funds³ from, or makes funds available to, an organisation (whether directly or indirectly) intending the receipt or provision of the funds to assist the organisation to engage in conduct described in paragraph 114A.4(1)(a);⁴ or
   2. receives funds from, or makes funds available to, an organisation (whether directly or indirectly) intending the receipt or provision of the funds to assist the organisation to expand or to continue to exist; or
   3. collects funds for, or on behalf of, an organisation (whether directly or indirectly); and
2. the organisation is a prohibited hate group; and
3. the person is reckless as to whether the organisation is a prohibited hate group.

Implications for businesses

The introduction of Part 5.3B into the Criminal Code adds a material new dimension to corporate criminal risk. While the regime does not impose new standalone compliance obligations, it adds new considerations to corporate decision-making where funds, resources or other forms of support may reach third parties.

In particular, the inclusion of recklessness as a fault element means that credible red flags about counterparties, suppliers, subsidiaries or contractors cannot be ignored without risking criminal exposure. A corporation may be exposed where it is aware of a substantial risk that an organisation is a prohibited hate group and nevertheless proceeds in circumstances where doing so is unjustifiable. In practical terms, this elevates the importance of risk-based due diligence and escalation in three critical areas:

1. Supply chain and procurement

Supply chains and procurement arrangements are an obvious risk factor under the Division 114B offences. For instance, pursuant to section 114B.5(2) (getting funds to, from or for a prohibited hate group), if a company or third-party counterparty funnels funds or other resources to an organisation and there were warning signs indicating that the organisation may be a prohibited hate group, a company will not be able to rely on "we didn't know" as a complete answer. Recklessness focuses on what risks were apparent at the time and whether the company proceeded despite those risks.

Depending on how a corporate group is structured, liability may extend beyond the immediate contracting entity. In particular, exposure may arise through:

• Part 2.5 of the Criminal Code, where conduct or fault of individuals is attributed to the corporation because of authorisation, tolerance or corporate culture (discussed further below);
• Agency principles, where a subsidiary or contractor is acting within the scope of authority conferred by the parent company; or
• Accessorial liability, where parent-level decisions or approvals aid or procure the offending conduct.

In practice, this means that procurement decisions, approvals and ongoing supplier relationships will be expected to be supported by a clear record showing how relevant risks were identified, assessed and managed.

2. Corporate culture as evidence

Part 5.3B places renewed emphasis on corporate culture as a mechanism for attributing criminal liability.

Under section 12.3 of the Criminal Code, the fault element of an offence (including recklessness) may be attributed to a corporation where:

• the board or a high managerial agent authorised or permitted the conduct;
• a corporate culture existed that directed, encouraged, tolerated or led to non‑compliance; or
• the corporation failed to create and maintain a culture that required compliance with the law.

In this context, a lack of effective screening, escalation or remediation processes—particularly for high‑risk payments, grants, sponsorships or donations—in theory could be relied on by prosecutors as evidence of a culture that tolerates unjustified risk‑taking. This makes documented controls critical. What matters is whether the organisation can demonstrate that risks are actively identified and escalated.

3. AML/CTF requirements

While the Act does not create a new statutory KYC regime or amend existing Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation, the new Division 114B offences should be considered as part of the upfront and ongoing due diligence measures undertaken by entities subject to the AML/CTF regime, including banks, payment providers, fintechs and other financial intermediaries.

Firms operating AML/CTF frameworks will need to consider how their KYC processes and transaction monitoring programs should be designed to respond to the risk that their services may be used to make funds available to, or be received from, prohibited groups. This may include sanctions‑style screening to cover the list of prohibited hate groups specified by regulation under the new Division 114A of the Criminal Code. Where screening produces a credible match, that information is likely to constitute a substantial risk for the purposes of the recklessness analysis.

In practice, this means that screening results or "hits" (that is, matches or potential matches) against a prohibited hate group list:

• should be built into enhanced due diligence triggers;
• may require transaction holds or escalation to senior compliance staff, including to consider whether a suspicious matter report should be filed with AUSTRAC; and
• may result in relationship exit events, particularly where risk cannot be mitigated.

The cost of non-compliance

As noted above, the offences in Division 114B carry maximum penalties ranging from 7 to 15 years' imprisonment and corporations may also face significant financial penalties.

Beyond formal penalties, the collateral consequences of a conviction may be significant, and include:

• Reputational and commercial risk: A conviction under Division 114B would be significant and may trigger adverse media scrutiny and overall increased regulatory and counterparty attention. There is also a risk that any associated fine will not be insured and that a conviction may adversely affect future insurance coverage.
• Government procurement risk: Under the Commonwealth Procurement Rules, entities conducting a procurement must consider potential suppliers' ethical conduct and probity when assessing value for money and may set conditions for participation or exclude a tenderer on integrity grounds (e.g., false declarations or significant performance deficiencies). In practice, a conviction for funding or supporting a prohibited hate group may be regarded as a serious probity and integrity concern, creating a discretionary risk of exclusion from tender processes and, depending on contract terms and value‑for‑money assessments, removal from panels, refusal to award or renew contracts, or termination.

Recommended actions for businesses

To mitigate the risk of a finding of recklessness, businesses should consider taking the following steps:

1. Audit procurement and counterparty screening

• Update screening processes to include organisations specified by regulation under Division 114A as prohibited hate groups and implement alerts to monitor amendments to the regulations.
• Establish clear escalation and decisionmaking processes when screening identifies a potential match.

2. Review training and decision-making protocols

• Train managers in Procurement, Finance/Treasury, CSR/Sponsorships, and Donations/Grants on the recklessness standard (provide practical guidance on what may constitute a substantial risk, e.g. adverse media, regulator notices, public listings, or known affiliations).
• Require contemporaneous documentation of why a decision was taken to proceed, particularly where risk was identified but either resolved or appropriate mitigation steps implemented.

3. Strengthen executive and board-level oversight and culture

• Ensure senior leaders are briefed on the new Division 114B offences regime and its implications.
• Embed clear reporting lines for high‑risk counterparties and transactions.
• Actively document the organisation's culture of compliance through policies, approvals, audits and remediation steps, so that the business can demonstrate that it does not tolerate unjustified risk‑taking in relation to prohibited hate groups.

Conclusion

The new Part 5.3B of the Criminal Code adds to the questions businesses must ask before dealing with third parties: are there credible warning signs that this organisation could be a prohibited hate group and, if so, have we dealt with them? While the legislative changes do not add new reporting duties, it does make it an offence to proceed where a substantial, unjustifiable risk is known and ignored. A proactive response by businesses is therefore important: extend screening to the prohibited‑hate‑group list, escalate and pause when a potential match appears, record why decisions were made, and ensure senior leaders have oversight. Done consistently, these steps reduce the chance of a recklessness finding which will help protect the business from the reputational and commercial consequences that may follow from an allegation that a business has inappropriately engaged with or supported a prohibited hate group.

Footnotes

1. Section 114A.2 of the Criminal Code defines "prohibited hate group" as "an organisation that is specified by the regulations for the purposes of this definition (see sections 114A.4 to 114A.8)."

2. Section 114A.2 of the Criminal Code defines "organisation" as "a body corporate or an unincorporated body, whether or not the body: (a) is based outside Australia; or (b) consists of persons who are not Australian citizens; or (c) is part of a larger organisation."

3. "Funds" has been broadly defined in section 114A.2 to mean "(a) property and assets of every kind, whether tangible or intangible, movable or immovable, however acquired; and (b) legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such property or assets, including, but not limited to, bank credits, travellers cheques, bank cheques, money orders, shares, securities, bonds, debt instruments, draft and letters of credit." As the explanatory memorandum for the Act states, "[t]his is a broad definition of funds intended to provide wide coverage of funding activities, ensuring a person cannot escape liability on a technicality."

4. Paragraph 114A.4(1)(a) provides that "the organsiation has engaged in, prepared or planned to engage in, or assisted the engagement in, conduct constituting a hate crime". "Hate crime" is lengthily defined in section 114A.3 and includes (among various other conduct) conduct "that involves publicly inciting hatred of another person (the target) or a group of persons (the target group) because of the race or national or ethnic origin of the target or target group".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.