Xenoponzi protects property money laundering

By Leith van Onselen

Senator Nick Xenophon has called for Australia’s money laundering laws to be strengthened, claiming that the nation’s casinos and poker machines are being used as a “high-speed washing and drying service”. From The AFR:

…a Chinese-Australian businessman allegedly washed $850 million through Melbourne’s Crown Casino.

Senator Nick Xenophon told The Australian Financial Review while this case involved a large sum of money there were other instances of money laundering that flew under the regulator’s radar because they involved smaller amounts.

He highlighted the need for anti-money laundering reform, including by lowering the reporting threshold to $1000 from the current $10,000 and monitoring poker machines for large turnovers, not just winnings.

“Around Australia today money laundering is taking place using pokie machines. If you’ve just done a crystal meth deal, you could launder proceeds of that through the pokies, because the reporting requirements are so anaemic,” he said.

“It’s about the casinos and pokies being used to provide a high-speed washing and drying service.”

Here’s an idea, Nick. Rather than worrying about casinos – where anti-money laundering (AML) rules are already in effect for large cash transactions – how about your turn your attention to Australian real estate, which is a haven for laundered funds and currently has no rules in place to prevent it?

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”.

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.

Yet despite these warnings, the second tranche of 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.

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”.

C’mon Nick. Do the right thing and pressure your parliamentary colleagues to implement the AML second tranche to stop young Australians from being priced out of home ownership by illegal foreign raiders.

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Comments

  1. Even StevenMEMBER

    In limbo since 2003. And supposedly we’re a first world country. No corruption to see here…

    • What a nice Ponzi scheme Mr Gu has going. Will be fun to see what happens when prices go the other way and his guaranteed return turns into a hole in the ground soon buried under 6 feet of dirt

      • There are a billion Chinese on earth. It is hardly surprising that quite a few of them are bent or outright criminals. The key to surviving (IMO) is to make your country and city unattractive to bent Chinese. Sadly we seem to do the opposite.

  2. I finally got around to reading David Graeber’s “Debt the First 5000 years”. In it he talks about the use of “debt pawns”, people who literally owe their life to someone else and are traded for various objects, or other humans, ie these pawns are treated as a tradable monetary instrument (the “human” economy”. as he calls it) Typically the village chieftain will set up gambling houses, cockfighting and other games to ensure a steady stream of new debt pawns. This has occurred in various cultures from antiquity to modernity.

    It then occurred to me that exactly the same process could be used to exploit various visa schemes here. It doesn’t take too much imagination to foresee a scenario where organised crime uses Chinese nationals who owe a debt, being sent to Australia under various visa schemes (the new education visa seems tailor made for this) to live as place holders for the money laundering. Everything is in an individual’s name, they live here, for all intents and purposes under their own free will, but any capital gain stays with the crime syndicate. In other words, they need somebody with a pulse and signature to act as the front. Who know what really goes on in China behind the scenes.

    Makes an interesting variation on the old English sentence of “being transported to Australia”… The Australian public are being played for fools here by the criminal gangs.

    • This is already happening in the sex industry, young girls being brought over here from Asia with promises of visas but get forced into prostitution and basically become prisoners to the people who brought them over. It goes largely unreported because they are illegals and the girls cannot report to police.

    • 4 or 5 people/mules for exactly that form of money laundering arrested in Perth just the other week, All Chinese living in Perth. Estimate they laundered 10’s of millions of dollars, and thats likely the tip of the iceberg, Of course the mules are the ones caught that get driven from bank to bank to make the deposits. The main mule who got done last week in Perth claimed to be a fitness trainer (euphemism for sex worker i expect), and she claimed to believe all the payments she made where legit business payments. Because that happens every day you know, some stranger picks you up in a car and drives you to 20 bank branches in a day to deposit money.

  3. Xenophon got sprung in the illegal rental subletting of dwellings to migrant guestworkers in Adelaide. (June AFR).

    http://www.theaustralian.com.au/federal-election-2016/federal-election-2016-nick-xenophons-claim-over-tenant-limit/news-story/e822fc544fbbd02f880fcfe10c15beae

    So his pious holy than thou platitudes ring pretty hollow.
    There are 2.4 million migrant temporary visa migrant guestworkers in Australia.

    The vast majority are here to work illegally.
    They are low skill low education low non-aspirational economic guestworkers, employed in blackmarket, underground and vice work.
    It’s a $104 billion cash in hand industry.
    They remit over $36 billion overseas of this largely untaxed illegal income. They only bring in $7 billion in fake student or working holiday or tourist visa income so a massive $29 billion loss to Australia yearly, -2% of GDP.

    They occupy at least 360,000 ex Australian dwellings, mostly sublet bunk and matress share with the owner declaring a fake nominal rental and the rest cash in hand. The migrant guestworker sublet bunk and matress share market alone is $25 billion cash laundering.