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 continues to push ahead with implementing the rules.
Late last week, the New Zealand Justice Department launched consultation on the second AML tranche ahead of implementing the new regime by mid-2017:
In June this year, the Prime Minister announced the Government will accelerate Phase Two of the AML/CFT regime. This will extend it to many lawyers, accountants, real estate agents, conveyancers, some additional gambling service providers and some high-value goods dealers…
Under Phase Two, affected businesses will have to put AML/CFT measures in place, such as carrying out risk assessments, confirming customers’ identities so they know who they are dealing with, and reporting suspicious transactions to the Police’s Financial Intelligence Unit. There also may be minor changes to aspects of the current AML/CFT regime, which may affect sectors already subject to it, as well as Phase Two sectors.
“We know from domestic and international evidence that these sectors are at high risk of being misused by criminals,” Mr Chhana says. “Our aim is to design a regime that balances risks and benefits…
“The Government intends to introduce a Bill to Parliament later this year, and have it passed by July 2017. After that, businesses will need a period of time to prepare for the changes, but it’s expected the extended Act will come into force as soon as practically feasible.”
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 in May this year, 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 haven.
Australia’s authorities will no longer be able to plead ignorant and continue ignoring the dirty money flooding into our homes.
