Earlier this year, the Paris-based Financial Action Task Force (FATF) on money laundering warned that Australian residential property is a haven for international money laundering, particularly from China. The Australian Transaction Reports and Analysis Centre (AUSTRAC) also warned that “laundering of illicit funds through real estate is an established money laundering method in Australia”.
With these facts in mind, it is interesting to read this morning that the UK Conservative Government is taken action to stop foreigners from buying homes with “plundered or laundered cash” as part a global effort to defeat corruption. From Euro News:
Britain on Tuesday said it would clamp down on the use of “dirty money” to buy up expensive properties, promising to expose the owners of anonymous foreign shell companies hiding cash in London’s buoyant housing market.
Prime Minister David Cameron, speaking in Singapore on a regional trade visit, said the promise was part of anti-corruption efforts to ensure that Britain did not become a “safe haven for corrupt money from around the world”.
“We know that some high-value properties – particularly in London – are being bought by people overseas through anonymous shell companies, some of them with plundered or laundered cash,” Cameron said. “There is no place for dirty money in Britain”…
Around 122 billion pounds of property in England and Wales is owned via offshore companies, Cameron said, announcing that a central registry of land and properties owned by foreign firms would be set up in the coming months, giving details of who owns around 100,000 property titles.
“We need to stop corrupt officials or organised criminals using anonymous shell companies to invest their ill-gotten gains in London property, without being tracked down,” he said.
One wonders how long the Australian Government can continue to ignore this issue.
Australia’s draft rules on anti-money laundering (AML) affecting real estate were released in 2007, but have been all but ignored by the federal government ever since. In the meantime, dodgy foreign money – mostly from China – has been allowed to price young Australians out of home ownership, assisted of course by egregious tax policies, the immigration ponzi, and planning bottlenecks.
Tightening Australia’s anti-money laundering rules also makes perfect macro-economic sense, since it would take the heat out of housing, lower financial stability risks, and allow the RBA to lower interest rates further than would otherwise be possible, putting downward pressure on the dollar. As noted by Michael West last month:
…record low rates, record high property prices, record household debt to income levels (150 per cent plus) and banks lending at 95 per cent loan-to-valuation ratios is potentially catastrophic – especially in the event that unemployment rises. So why is the government dithering on AML?
It’s time for the Government to stop its willful neglect and put the clamp on corrupt money gushing into Australia’s homes.