Report confirms Straya is property money laundering safe haven

By Leith van Onselen

The past few years, several reputable international authorities have derided Australia’s failure to implement anti-money laundering (AML) rules for real estate – something the federal government promised to do more than a decade ago.

For example, 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 March last year, Transparency International ranked Australia as having the weakest anti-money laundering (AML) laws in the Anglosphere, failing all 10 priority areas.

In June, FATF placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.

And in December, the OECD Working Group on Bribery in International Business Transactions urged Australia to implement the second tranche of AML legislation covering real estate, noting that the entire ecosystem for the buying and selling property using cross-border fund flows is beyond the reach of regulators.

Now, the Tax Justice Network has released its Financial Secrecy Index for 2018, which joins the conga-line shaming Australia for failing to police the international dirty money flooding into the housing market:

Australia has been assessed with a secrecy score of 51 out of a potential 100, which places it in the lower mid-range of the secrecy scale…

Despite its relatively low ranking on the Financial Secrecy Index, a number of cases demonstrate that Australia undoubtedly hosts significant quantities of illicit funds from outside the country.

In June 2015, Global Witness worked with a number of media outlets to expose evidence of how Australian lawyers have been allegedly involved in facilitating bribery and money laundering of funds out of Papua New Guinea (PNG).

Also in June 2015, the media reported on allegations of senior Malaysian Government officials and businessmen involved in bribery laundering money through the purchase of Australian property.2 The purchase of Australian properties was conducted via shell companies in the British Virgin Islands and Singapore.

In September 2016 it was revealed the son of General James Hoth Mai Nguoth, who served as the Sudan People’s Liberation Army’s (SPLA) chief of staff from May 2009 until being dismissed and replaced by General Paul Malong Awan in April 2014, bought a property in Melbourne worth $1.5 million. Even as a senior official in the SPLA, General Hoth Mai’s salary was never more than about US$45,000 per year.

Yeo Jiawei, who was convicted in Singapore of money laundering and obstructing justice as part of the Malaysian 1MDB scandal, used a Seychelles-based company for a series of purchases in Australia.4 In 2017 it was reported that Yeo’s court case in Singapore uncovered substantial purchases of property in Australia worth AUS $6m.

One reason for the failure to stop illicit funds finding a safe haven in Australia are weaknesses in Australia’s anti-money laundering laws. In 2007 the Federal Government released draft legislation to extend anti-money laundering provisions to real estate agents in relation to the buying and selling of property, dealers in precious metals and stones, lawyers, accountants, notaries and company service providers. Yet this legislation was never implemented…

In 2016 the Attorney General’s Department launched a consultation about including designated non-financial professionals into Australia’s AML/CTF laws. However, the results of the consultation have not yet resulted in any legislative action.

Again, legislation to implement the second tranche of anti-money laundering (AML) legislation covering real estate gate keepers has been gathering dust in Canberra for more than 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.

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

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

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Unconventional Economist
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Comments

  1. “Australian Govt is tacitly complicit…….”? Interesting words…tacitly complicit. After >10 years its not tacitly.

    • They are explicitly complicit. The AML legislation explicitly exempts realtors, their lawyers and accountants from AML charges.

      The corrupt strategy is by design, it is not an oversight.

      The only pissed off people are the Chinese government who bribed Julie Bishop via her Glorious Foundation to sign an extradition treaty with China, but she reneged at the last minute last year, probably from pressure from other sources.

      The CCP will have their revenge on her, I guess.

    • Forrest GumpMEMBER

      Yep Spot on.

      When LNP won the election they announced “Australia is Open for Business”
      They weren’t joking. The invite was and remains open to laundered money into our banks via CBA and into our real estate.

      The entire system whereby real estate industry is exempt from any form of checks and balances is to mitigate AML totally bullshit.

      How can agents and lawyers say that they should be exempt? if the check out chick at Coles or the guy pulling beers behind a bar can be held responsible for selling a pack of fags or a pot of beer to someone underage or drunk, why the fuck should a lawyer or bullshit agent be excused for a bigger crime of which they are actively complicit?

  2. Looks like it will sort itself out.
    The collapse of Wanda and the pending collapse of Forise, developers of 2 of the biggest high rise in Straya (not presold, investor driven) will be putting ripples on that puddle.
    to the Chinese these buildings were as a symbol of Straya as the Statue of Liberty was to the immigrants to the USA.
    cept it is now ended.
    38% of Strayan re was sold to chinese interests last year.
    that is all over now too.[wonder what is in the Op Shop files about that?}

  3. Our banks launder money on a grand scale. Why not real estate agents?
    These are clear requirements of a 3rd world economy.

  4. Even if they wanted, whom would remove the life support (well, one of)?

    More important question is how do they get away (without international pressure) for so long.

  5. Wow so the Australian government does support terrorists, criminals and drug dealers by providing them a way to launder their money? Incredible they have not been caught up with some aiding and abetting laws?

  6. Buying a property, in itself, is not money laundering because there has to be a ducumented trail of exchange and settlement. Unless you use a dummy buyer with non existent identity, any trasaction over $10 grand has to be reported to Austrac. The ultimate cleaning machine is still a casino or a money losing retailer where cash receipts can be fabricated.

    • Wrong: The AML legislation explicitly exempts realtors, their lawyers and accountants from AML charges.

      Casinos do need to ask questions.

  7. I would call my local MP, a Federal Govt minister to complain but given that last election a number of her campaign signs were in real estate agent office windows and even on the side of busy roads with the real estate companies names at the foot of them in large letters, I doubt I will bother.

    • I asked my local MP Julia Banks about it. Her office replied that the review recommended a cost/benefit analysis and that “Accurately determining the costs and benefits is critical to ensuring that regulations balance the efficient conduct of business with criminal justice objectives of the AML/CTF regime.
      The cost-benefit analysis report is under consideration by the Government.”
      Make of it what you will. Probably not much money laundering around Box Hill.

      • The MP flicking her fingers at her staff “Make them go away” flick flick of fingers “you know what to do…”

  8. The continued exemption and legal impunity for those that benefit from these preposterous rules demonstrates how the Strayan gov’t is subservient to the ‘Open for Business’ interests that run the joint and who have shifty-eyed accomplices up and down Collins and Pitt St and Northbourne Ave in the Italian suit version of the Adidas track suit and Nike shoes.

    I prefer and recommend to use the entire legislative phrase:
    Anti Money Laundering and Counter Terrorism Financing (AML/CTF)
    The oft bandied phrase ‘money laundering’ is far too innocuous sounding and practically in the same ‘league’ as mate’s rates, cash only, and negative gearing and capital gains ‘relief’. Similarly, part of the allure of the transaction is the salacious and romantic notion that the participant is more than just bending the ‘she’ll be right’ Strayan rule book and getting one over on the ‘system’.

    That banks, realtors, legal pros cannot be held to account for activities that can have not just monetary implications but very real and dangerous CTF outcomes, reflects just how pathetic we ALL are and not just the rats who benefit at the expense of a nation’s people. It’s entirely because it’s ‘real estate’ that this corruption is allowed to continue as reeling in or criticizing the current peak of Strayan values (bricks/mortar) might cause some personal growth pain if values fall.

    Until this preposterous loophole is closed, we’ll keep destroying our self and global respect and will eventually debase and destroy the framework that set this nation apart in its founding.

    Let this issue rise to prominence and let it be the test for our collective character.