ANZ: Australia “place of choice” for property money laundering

By Leith van Onselen

After Australia was last month placed on a watch list by the global regulator – the Financial Action Taskforce (FATF) – for failing to comply with money laundering and terrorism financing reforms, ANZ Bank has blamed a lack of political will by successive Australian governments for failing to extend anti-money laundering (AML) laws to cover real estate gate keepers like realtors, lawyers and accountants. From The ABC:

Australia’s hot property market is an attractive haven for criminals, with estimates that billions of dollars of dirty money is being laundered through residential property.

Australia’s anti-money laundering law does not cover real estate agents, lawyers and accountants, despite promises when the law was enacted in 2006 that the legislation would be widened.

ANZ’s head of financial crime, Guy Boyd, is scathing of the failure of subsequent governments to extend the legislation.

“There’s been probably a lack of political will and that’s probably been driven by some very vocal opposition from those industry sectors,” Mr Boyd told the Business in an interview…

International bodies like the Financial Action Task Force and Transparency International have slammed Australia’s lack of action on forcing lawyers, real estate agents and accountants to report suspicious transactions.

Mr Boyd said the lack of regulation makes Australia an attractive target for money launderers.

“I think Australian real estate is obviously an attractive destination for capital, both legitimate and illegitimate,” he said.

“I wouldn’t know if it I would call it a haven but certainly it is a place of choice for illegitimate money.”

Absolutely spot on. Transparency International recently ranked Australia as having the weakest anti-money laundering laws in the Anglosphere, failing all 10 priority areas. This follows the Paris-based Financial Action Taskforce’s 2015 evaluation that Australian homes are a haven for laundered funds, particularly from China, as well as similar warnings from Austrac.

Legislation to implement the second tranche of anti-money laundering (AML) legislation covering real estate gate keepers has been gathering dust for a decade.

The end result is that realtors, lawyers, accountants and other real estate gate keepers are currently exempted from AML requirements. And this exemption has provided an easy avenue for foreign buyers to launder funds through Australian property.

Perversely, if somebody wants to set up an account to place a $100 bet at Sportsbet, or invest $1,000 into a managed fund, then they must provide sufficient identification under the AML Act. But if they want to launder millions of dollars through an Australian home, few questions are asked. It makes absolutely no sense.

The Australian Government is currently undertaking yet another consultation on implementing the second tranche of AML legislation, and has promised to finalise the new rules by the end of this year. However, the Government set similar deadlines 2008, 2010, 2012 and 2014, all of which failed to deliver legislation.

As noted by ANZ above, lobbying pressure from industry rent-seekers is largely to blame for the lack of political action. Just consider “Highrise” Harry Triguboff’s comments today in The AFR regarding Chinese buyers:

“The problem with Australians is they are very slow. They ask their lawyer, they ask their financial adviser, they ask their family, they ask everybody. The Chinese don’t ask anybody, they come off the plane, buy their unit and go.”

We couldn’t have proper checks, could we? Because that would slow down sales.

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.

[email protected]

Comments

  1. ” But if they want to launder millions of dollars through an Australian home, few questions are asked. It makes absolutely no sense.”
    Read “Game of Mates” – then it will make sense. Realtors and their lawyers are specifically excluded from money laundering laws for a reason – they paid politicians for the privilege.

    Money laundering laws also slow down the sales process – Hi-rise Harry in today’s AFR:
    ” “The problem with Australians is they are very slow. They ask their lawyer, they ask their financial adviser, they ask their family, they ask everybody. The Chinese don’t ask anybody, they come off the plane, buy their unit and go.” “

  2. >It’s almost as if the Australia Government prefers to cooperate as a launderer of corruption and dirty money
    well, doh! Of course they do. A percentage of this dirty money ends up in state government pockets from property duties and taxes.

    The crime related to the money probably took place in China, anyway, a country Australia has no extradition treaty with anyway. That’s why mainland Chinese bought $24 billion in Ausse real-estate last year alone.

    • The ABC article implies that the government is finally thinking about doing something about this. Well done MacroBusiness.

      Worth writing to your local member to let them know you won’t be satisified with any lip-service, we want draconian AML laws.

  3. Funny how lawyers project themselves as the paragons of law unless of course it doesn’t benefit them.

    • Some advice I was once given: if you want to help yourself to other people’s possessions and you’re intelligent, become a lawyer, if you’re not intelligent, become a politician.

      • proofreadersMEMBER

        +1 And I bet that was the best advice you have ever been given and that anybody else could receive.

      • I didn’t take the advice. It turns out I have a large degree of empathy which makes me incapable of harming an innocent person.

        And I have come to terms with the fact I will be poorer for that reason.

      • No Joel, you’ll be richer for that reason, just not in a material sense. And you don’t need to be rich, most waste it on material crap that ends on the verge 6 mths later or a 100k car instead of 30k. Not needed to enjoy life.

      • My parents always tell me that back in Yugoslavia the intelligent ones would go on to study chemistry, physics, engineering, medicine etc… the dimwits would all end up studying Law or go into politics. Probably why things ended the way they did.

  4. On the ABC segment lawyers were complaining about additional red tape lol… Isn’t that what they are paid to do? Deal with red tape?

    Then the funny part was when they said introduction of new laws could impact properrty prices haha. It’s such a sacred cow the EPA doesn’t report toxic sites and AML legislation is not enacted for fear of price drops.

    • There is a reason why I guess lawyers are classed as high risk clients when dealing with KYC and AML procedures. Lieing scoundrels they are.

  5. proofreadersMEMBER

    “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.”

    The government knows what is in its best interests and those of property specufestor politicians.

    • They are slow. Slow to realise what low life crims they’ve become, even if it’s by proxy but that’s no excuse anymore.

  6. “The problem with Australians is they are very slow. They ask their lawyer, they ask their financial adviser, they ask their family, they ask everybody. The Chinese don’t ask anybody, they come off the plane, buy their unit and go.”

    Wow, sorry for taking time to think before committing to 30 years of loan repayments…

    • J BauerMEMBER

      She’ll be fine. Shes probably in the process of front running on a new land release.

  7. many articles about this being an issue these past 3 years. Why are we still the target ?

  8. J BauerMEMBER

    This is great issue for One Nationto pick up, play on the Aussie sense of doing the right thing (or at least judging others for not doing the right thing). Unfortunately they don’t seem to have any strategy.

  9. That’s funny because I would’ve said I don’t think Australia is and who knows if people from China are actually money laundering or just spending their savings or profits or whatever but I guess if anyone would have a clue it would be the banks which help process their deals? I guess ANZ has some experience here and can spot a money launderer from a mile away maybe they have identikits or algorithms made by Interpol people or just know from past experience?

  10. Is there any financial penalty or consequences for our banks on global markets ? Do they pay higher fees; or face exclusion from the big boys table ? Or some other penalty that would / could force them to lobby govt to enact the AML ?

    • Generally it seems you’re OK, as a bank, so long as you don’t try to stiff Uncle Sam: Pay the IRS, don’t send money to Iran, and stay away from drug money.

      As HSBC and a whole lotta other EU banks found out, their lack of lobbying power in the USA means they pay big fines. The US can threaten to remove their dollar clearing privileges, if they cause trouble (by appealing), and since the dollar is the world’s reserve currency, that can shut you down, pronto.

      Most countries are more concerned about money that was made by a crime locally, or by terrorism or drugs than by some overseas commercial crime.

      In other words, should Australian realtors really care if someone dumping $2million in cash on a house in Sydney got the money by bribing local officials to allow him to pollute the Yangzhee River?

  11. Umm I don’t get it, to buy real estate, you need money. Either you bring it in via the banking system of which AUSTRAC would know or you bring it with you physically which border control would be on to you. I’m all for KYC for RE but please don’t think this will let you score a bargain in RE. That’s just wishful thinking.

    • say it ain’t so Joe. Of course this will massively disrupt the market. Even blind Freddy can you tell you that property works on the incremental bid owing to the opaque nature of the market clearing mechanism. So that Chinese fella/lady bidding a 15-25% premium above reserve with their laundered cash is the tide that automatically lifts all boats.
      Remove the laundered cash bidder and you get a market closer to the fundamentals, that is sans laundered bids. In this instance I’d advocate at least a 20-30% correction.

    • Austrac only know if it’s reported to them, they get the info from banks etc. That’s why there is opposition to extending the reporting. I also read somewhere that Austrac also has access to other info on transfers etc, but cannot act on it.

  12. “There’s been probably a lack of political will…”. This is obvious bullshit. It’s nothing to do with laziness or lack of willpower, quite the opposite in fact. Our corrupt politicians have actively and energetically colluded with criminals to prevent the legislation passing so that both crims and politicians can continue to make bank. They’ve been incredibly diligent in their efforts to appear to be doing something (industry reviews, consultation, forming endless committees etc) while actually doing nothing. It’s masterful stuff.

    Meanwhile, of course, the rest of us are bent over and reamed without benefit of lube, or even a reacharound, as we struggle to pay our mortgages, rents or whatever. The basic human need for shelter in Australia has been sacrificed for the financial benefit of corrupt politicians, sleazy lawyers and foreign crime lords.

    • IMHO this and record high immigration are the two main reasons why we have house prices where they are – and it will continue to climb 15% pa while this racket is allowed to continue. Thanks to MB for highlighting these major laundering issues. I have thought about this a lot since reading it here last time it was brought up.

      I believe it is having a major knock-on effect throughout our entire cities, pushing out the average joe looking to buy a nice house with backyard, which pushes renters out further, which pushes renters to share houses and finally forcing the lowest on the totem pole into emergency accommodation and then homeless onto the streets.

      Even if the RBA did put rates up next month this mess will still continue thanks to these no doubt cash-only purchases. Surely someone could purchase Australian real estate with cryptocurrency that never sees an Australian bank account and not cause any action to be taken against them. It has to be flagged by a member of the public before it gets looked into?? Unbelievable…

  13. reusachtigeMEMBER

    Look, I just don’t think it’s anyone’s business where foreigners get their money from!