New Zealand’s policy makers continue to put Australia’s to shame.
While the second tranche of anti-money laundering (AML) regulations capturing real estate agents, accountants, lawyers, and other non-financial businesses have remained in limbo in Australia since we first agreed to implement them in 2003, and have since been delayed indefinitely by the Australian Government, New Zealand has announced that it will implement such rules by mid-2017. From Interest.co.nz:
Justice Minister Amy Adams has confirmed the Government has accelerated plans to bring in a second round of Anti-Money Laundering (AML) rules that would bring real estate agents, solicitors and lawyers into the compliance regime that already includes banks, stock brokers and fund managers…
Prime Minister John Key said on May 9 the second round of reforms would be accelerated in the wake of the publicity around the Panama Papers detailing the role of trust lawyers in setting up vehicles for overseas beneficiaries to protect assets, and after fresh calls for the AML rules to be extended so lawyers and real estate agents are forced to check whether funds being transferred and invested are legitimate.
Key repeated again late on Monday that the reforms would be accelerated after fresh reports showing corrupt Kazakhstan and Brazilian politicians have used New Zealand trusts to hide assets…
Adams said she could not be definitive when proposals for the second round of AML reforms would be put forward, but the general aim was to have it in place by mid 2017.
Well done New Zealand.
I will remind readers that the Paris-based Financial Action Task Force (FATF) last year released a scathing report highlighting that Australian residential property is a haven for international money laundering, particularly from China, and recommended that Australia implement counter-measures to ensure that real estate agents, lawyers and accountants facilitating real estate transactions are captured by the regulatory net.
FATF’s findings were then backed-up by the Australian Transaction Reports and Analysis Centre (AUSTRAC), which warned that “laundering of illicit funds through real estate is an established money laundering method in Australia”.
As noted last year by Nathan Lynch, Head Regulatory Analyst for Australia & New Zealand at Thomson Reuters:
AUSTRAC’s surveillance efforts are… being frustrated by the fact that money launderers will often use unregulated entities as a “first point of contact” to help disguise their source of funds. If a criminal makes a suspicious cash deposit into a real estate agent or lawyer’s trust account, for example, the suspicious transaction is not required to be reported to AUSTRAC. Reporting entities, such as banks, are required to report transactions of this type within three business days of forming a suspicion. Lawyers are only required to report threshold transactions under the legacy Financial Transaction Reports Act 1988, not suspicious matters, while real estate agents have no reporting obligations.
Separately, Lynch noted that Australia’s “politicians have been conspicuously evasive on their bipartisan commitment to follow through with a second tranche [of the AML legislation]… politicians are happy to turn a blind eye”.
And just last month, the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 was released, which among other things called for the extension of AML to non-financial gatekeepers like real estate agents, lawyers and accountants.
Once New Zealand strengthens its AML rules, it will place greater international pressure on Australia’s authorities to follow suit, given Australia would become the South Pacific’s sole money laundering paradise.
Australia’s authorities will no longer be able to plead ignorant and continue ignoring the dirty money flooding into our homes.
