Global regulator blacklists Straya over money laundering

By Leith van Onselen

In 2015, the global anti-money laundering (AML) regulator – the Paris-based Financial Action Taskforce (FATF) – released its mutual evaluation report which found Australian homes are a haven for laundered funds, particularly from China, and urged the Australian Government to implement the second tranche of AML legislation covering real estate gate keepers, which has been stuck in limbo for a decade.

Then in March this year, Transparency International ranked Australia as having the weakest anti-money laundering laws in the Anglosphere, failing all 10 priority areas.

Over the weekend, Michael West reported that Australia has been placed on a watch list by FATF for failing to comply with money laundering and terrorism financing reforms:

Canberra has been dragging the chain for nine years while the powerful lawyers, accountants and real estate lobby groups keep successive governments mired in a consultation process…

Besides tightening the screws on launderers and financiers of terrorism, the importance of these laws are that they could take steam out of the property market and address, albeit only in part, the crisis in affordability for first home buyers…

When asked how Australia’s compliance with international standards was coming along, the communications officer for the Financial Action Task Force (FATF), Alexandra Wijmenga-Daniel, told michaelwest.com.au:

“Following its mutual evaluation, Australia was placed on enhanced follow-up and is reporting back to the FATF on an annual basis concerning the progress it has made to address the deficiencies identified in its mutual evaluation report”…

The FATF expects countries to have satisfactorily addressed most, if not all, of their technical compliance deficiencies by the end of the 3rd year after their mutual evaluation report has been adopted. Australia would be expected to have reached this stage by June 2018″…

In the classroom of international compliance, this is the equivalent of nose-in-the-corner-at-the-back-of-the-classroom status. “Enhanced follow-up” and “deficiencies”.

The reason the process has meandered on for so long is clearly because the stakeholders involved: the accountants, lawyers and real estate lobbies, don’t want it to happen.

And now government is in a bind. If it stems the flow of Chinese capital it might prick the property bubble…

This process of sham consultations and stonewalling has dragged on far too long. It’s almost as if the Australia Government prefers to cooperate as a launderer of corruption and dirty money than deal with the negative effects on young first home buyers.

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Comments

  1. When the national economy model is constructed around unproductive capital inflows – asking too many questions on where they come from is a bit like the drug addict asking the drug dealer if they are AS ISO 9001 compliant.

  2. Is there any hard evidence of laundered money coming into Australian Real Estate. I know its obviously happening but is there and stories around of direct links of where the money is coming from in China and what its been used to buy here?

  3. >”Transparency International ranked Australia as having the weakest anti-money laundering laws”
    Actually, we do not have anti-money laundering laws when it comes to property – we have pro money laundering laws.
    Realtors and their lawyers and accountants are specifically exempt from money laundering laws. This can only be described as a pro money laundering clause in the law.

    It was specifically added by special interests to ease Chinese cash purchases of Aussie real estate.

  4. As always, no one at a local level is holding the political class to account so it is left to the international community to fill this role. I am hoping there is some type of penalty that can be applied to ensure our politicians can wriggle their way out of this.

  5. reusachtigeMEMBER

    Meh, no one cares. The money is going towards booming house prices which is good for everyone via the well documented dribble down effect!

    • Dribble down? Feels more like a super happy lucky good time golden shower. Not that I’d know of course. But it certainly leaves a distinct smell..

      • SoMPLSBoyMEMBER

        For those disadvantaged by the rampant corruption / enablement of OC monies to the eastern seaboard of Straya, we can but only salute the infamous ‘troughman’ from Sydney who has become our metaphoric symbol for law abiding citizenry unable to stem the torrid flow of hot ‘money’ from afar.
        https://en.wikipedia.org/wiki/Troughman

  6. FIRB has applications for property from foreign buyers down 60% for this financial year. The Chinese slow down is already biting despite Australia being a haven for money laundering. If they pass the second tranche of AML legislation mid next year that will be well after the train has left the station and too little too late.

  7. ErmingtonPlumbingMEMBER

    ” It’s almost as if the Australia Government prefers to cooperate as a launderer of corruption and dirty money than deal with the negative effects on young first home buyers.”

    Does anyone think the plight of local, young or old, home first home buyers is any different in the Bahamas​, Cayman islands or any of the other “Plutocrats Safe havens” ?
    Our leaders are of the same cloth.

    • Nice one V, time to put this onto QR code stickers and plaster them all over ‘Auction’ and ‘For Sale’ signs

  8. J BauerMEMBER

    Surely this has to impact Australia’s rating, Moody’s and s&p should be commenting on this.

  9. Correction UC: The FATF is an inter-governmental body tasked with promulgating best practice (through the adoption of the 40 + 9 Recommendations) in fighting money laundering and terrorism financing at a national level. It is not a regulator!
    Secondly, this is old news and I’m not sure it adds anything to the discussion.
    Every country is subjected to a follow up on the Mutual Evaluation.
    However, the wilful negligence of the Australian government/s (as they have all successively buried their heads in the sand) is astonishing and those responsible for the impending result must be held to account.

  10. Don’t they realise that the money is coming from Chinese Australian mums and dads trying to get ahead with taxable incomes of less than 80k? Hasn’t Malcolm explained to them?