US cracks down on realty dirty money as Straya washes furiously

By Leith van Onselen

In March this year, Transparency International ranked Australia as having the weakest anti-money laundering (AML) laws in the Anglosphere, failing all 10 priority areas. By comparison, the US failed nine out of 10 priority areas, ranking second worst in the Anglosphere.

However, unlike Australia, the US are taking action to tighten their AML laws, according to CNBC:

The Treasury Department said that 30 percent of high-end real estate deals that were subject under a new watchdog program involved people who had been targeted by the government for “suspicious activity” and potential money laundering.

Treasury this week expanded and extended a program targeting luxury real estate deals in New York, Miami, Los Angeles and other big markets to prevent the use of real estate for money-laundering by overseas buyers. The program was designed to prevent buyers from using shell company’s or LLC’s to hide the identities of the real buyers.

…the program was extended in February and is now being expanded to close loopholes. It also added the city and county of Honolulu.

Real estate experts say the expanded program could put pressure on high-end real estate markets…

The most important part of this week’s rule was closing a massive loophole involving wire transfers. Brokers say that ever since the rules were first imposed in 2016, buyers could easily avoid them by using wire transfers. Now, wire transfers will also be subject to the rule — closing the loophole.

Now compare this reform program to Australia, where money launderers continue to roam free.

In 2015, the global regulator of money laundering – 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. In June this year, FATF also placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.

Legislation to implement the second tranche of AML legislation covering real estate gate keepers has been gathering dust in Canberra for a decade.

Accordingly, 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.

Sure, 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.

Moreover, The AFR reported last month that any reforms would likely exclude real estate agents, thus leaving the door ajar for laundering through property [my emphasis]:

George Brandis, federal attorney-general, is expected to make an “imminent” announcement about boosting powers and resources of Austrac, the government agency that combats money laundering, according to a department spokesman.

But it is expected to fall short of extending existing laws to cover real estate agents

Under existing law, real estate agents and other businesses involved in buying and selling real estate do not need to identify where the money comes from or who is paying.

The law does not require real estate agents, lawyers, accountants or any other person involved in the deal to identify the beneficial owner of the deal. A beneficial owner enjoys the benefits of ownership though title is in another name, such as a company…

Real estate agents report unprecedented numbers of overseas’ buyers of residential and commercial property in Melbourne and Sydney paying cash…

An estimated 70 per cent of Chinese buyers pay in cash, according to Transparency International, an international non-government organisation targeting corruption.

By failing to ratify the second tranche AML rules, as promised more than a decade ago, the Australia’s Government remains tacitly complicit with the dirty foreign money flooding into Australia’s homes and robbing young Australians of a housing future.

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Comments

  1. reusachtigeMEMBER

    That country is going down the sh1tter! Once upon a time it was the protector of profits. Now it does everything it can to destroy them. This and trying to stop cheap workers coming over the border. Oh, and stifling innovation with climate change propaganda. It’s a lost nation now!

  2. Jake GittesMEMBER

    “the Australian Government is currently undertaking yet another consultation” in order to ensure it does not upset vested interests who will shriek and cause political consequences if prices are affected. Australian govts do not really govern, they reflect the most powerful interests groups.

  3. Anyone who facilitates money transfers/sales/handling of money of any significant size needs to be regulated with AML rules in place. I find it unfathomable in this current age that we are still looking to exempt real estate agents. Unbelievable!

  4. Channelling The Patrician: the Sham continues.
    What is so hard about requirements to establish identity to facilitate transfer and registration of title?
    We don’t need AML laws to achieve that.

  5. There’s about 35,000 real estate businesses in Straya and their activities can be considered the pulmonary artery for the nation’s economy. AML exemptions for the RE team and associates won’t be touched as ‘it’ is all we have apart from commodity extraction.
    By contrast, there are just over 6000 pubs, bars and hotels.

    • said ‘real estate businesses’ spend their time breaking every law that exists. aml, intimidation, bribery, outright theft etc. the treatment of tenants is disgraceful, and god help you if you cannot lawyer up at the slightest.

      there comes a point where you recognise that the ‘real estate businesses’ are a proto mafia state.

      • Proto-mafia?! Seems pretty bloody “Erectus” to me… and hey! What about them land-registry privatisations… bet your life that some sweet, sweet shenanigans will happen in due course.

      • Ino is right, the Australian RE sector could give the mafia a master class on how to take over a whole society, government, regulators, law enforcement agencies, the economy, popular culture, everything, and make it dance to their every whim.

      • On the treatment of tenants: I’ll be in VCAT next week to recover my bond and a further amount which was unlawfully deducted from my bank account. The bond issue is the owner trying to stitch us up. The deduction is due to the property manager being useless. Feeling pretty confident of getting it all back.

      • I reiterate
        “If you aren’t in Real Estate you are a failure to yourself and a disappointment to your family”

        On the identity thing and the US. I’m still trying to establish a Hong kong Bank Account for a HK company. The ownership of the company is a100% Australian company with TFN’s and ABN’s. All earnings are ‘Look Through” under the ATO rules. All the Directors of the Aus company have TFN’s. it’s still a nightmare!! All this is around the US Legislation. The HK Banks are s..t scared of it.
        Yet RE agents here are exempt? Strewth!

  6. I wonder if they have privatised Land and Property intentionally so they don’t have to seriously link it with citizenship details….how bloody convenient (corrupt)….desperate!

  7. Throw every single 1 of these Real Estate Agent bastards who knowingly help launder money in Jail, starting with these 2 pinheads.
    http://i.dailymail.co.uk/i/pix/2017/09/09/12/44113CE200000578-4867622-But_it_was_the_three_bedroom_home_that_really_stole_the_show_sel-a-99_1504957129472.jpg

    Body language says it all really…

    http://www.dailymail.co.uk/news/article-4867622/Melbourne-agent-takes-property-auction-level.html

    Mr Nasheet is no stranger to the limelight either, having made headlines earlier in the year after applying to the Guinness World Records to recognise his remarkable time of 15 minutes as the fastest time to sell a house.

    Why would it take longer than 15 mins when it’s illegal funds? Hot money needs a fast home. 😀

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