Exclusive: Federal government shelves property money laundering reform

By Leith van Onselen

Over 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.

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.

And last month, the Tax Justice Network released its Financial Secrecy Index for 2018, which joined the conga-line shaming Australia for failing to police the international dirty money flooding into the housing market.

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.

In November 2016, the Turnbull Government issued a consultation paper seeking feedback on implementing the AML second tranche. The period for public submissions ended on 31 January 2017, followed by a series of round-tables with industry stakeholders. The Government had promised to finalise the new rules by the end of 2017 – a period that has now lapsed.

Early last month, an MB Reader requested that their federal MP, Kelly O’Dwyer, provide an update on the AML second tranche. Yesterday, they received Ms O’Dwyer’s response, which is presented below:

Thank you very much for your email. I really appreciate your further correspondence regarding anti-money laundering controls.

As you are aware, a statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 was completed and tabled by the then Minister for Justice in April 2016. At the time of tabling the report, the Minister indicated that the Government would consider and implement the recommendations of the review in phases. A project plan with indicative timing was published on the Attorney-General’s Department website.

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 passed Parliament and received Royal Assent on 13 December 2017. This Act includes amendments to:

  • regulate the digital currency exchange sector
  • clarify obligations relating to correspondent banking
  • de-regulate the cash-in-transit sector, insurance intermediaries and general insurance providers
  • strengthen AUSTRAC’s investigation and enforcement powers
  • broaden the search and seizure powers of police and customs officers regarding cross border movement of physical currency and bearer negotiable instruments.

As you mentioned, a cost-benefit analysis of regulating ‘Tranche 2 entities’ (eg. real estate professionals, accountants, lawyers, trust and company service providers, high value dealers) was completed in 2017 and is being considered by the Government. I have shared your concerns and feedback regarding this to the Minister for Law Enforcement and Cybersecurity, the Hon Angus Taylor MP, for his consideration.

The second phase is a large scale project to reform the AML/CTF Act, expected to be progressed over 2018-2019. The phase 2 reforms will involve:

  • significantly streamlining and simplifying the AML/CTF Act, AML/CTF Rules and associated Guidance material
  • addressing the remaining recommendations of the statutory review

If ever I can assist you please do not hesitate to let me know.

Thank you again for your email. I look forward to staying in touch.

Yours sincerely,

Kelly

The Hon Kelly O’Dwyer MP
Federal Member for Higgins
Minister for Revenue and Financial Services
Minister for Women
Minister Assisting the Prime Minister for the Public Service

The federal government conducted similar consultations on the AML second tranche in 2008, 2010, 2012 and 2014, all of which failed to deliver legislation as promised. And now it has failed yet again to meet its own deadline.

Clearly, the Australian Government has little genuine interest in policing this issue, and is tacitly complicit with the dirty foreign money flooding into Australia’s homes and robbing young Australians of a housing future.

[email protected]

Comments

  1. reusachtigeMEMBER

    This is the right decision because the electorate don’t care where the money comes from when their property is bought from them at top $$$ by a Chinamen. It’s the best way to help increase the next mega way out there property boom. No one who is anyone would argue against it. Good stuff indeed.

    • Kormanator_T800

      And good on Julie Bishop not signing that naughty extradition treaty with China last year!

      We would not want to send Chinese money launderers home to face the music, it might hurt high end house prices!

      In unrelated news, Joe Hockey sold his mansion last weekend for a lucky $8.8 million.

  2. Kormanator_T800

    This is nothing less than state capture by the property lobby.

    Government of the property lobby, for the property lobby by the property lobby.

  3. Ronin8317MEMBER

    Her title should be Minister for Revenue and Financial Services and Real Estate. Isn’t the real estate lobby asking for one anyway? In fact, they should add ‘and Real Estate to the title of all government ministers.

    • haroldusMEMBER

      I like it.

      Here is the complete list (exclusive of parliamentary secretaries)

      Real Estate Prime Minister
      The Hon Malcolm Turnbull MP

      Deputy Real Estate Prime Minister
      Minister for Infrastructure and Transport
      The Hon Michael McCormack MP

      Minister for Foreign Affairs and Real Estate
      The Hon Julie Bishop MP

      Minister for Trade, Tourism and Investment and Real Estate
      The Hon Steven Ciobo MP

      Minister for Finance and Real Estate
      Special Minister of State and Real Estate
      Senator the Hon Mathias Cormann

      Real Estate Treasurer
      The Hon Scott Morrison MP

      Minister for Women and Real Estate
      Minister for Revenue and Financial Services and Real Estate
      Minister Assisting the Prime Minister for the Public Service and Real Estate
      The Hon Kelly O’Dwyer MP

      Minister for Defence and Real Estate
      Senator the Hon Marise Payne

      Minister for Defence Industry and Real Estate
      (Leader of the House)
      The Hon Christopher Pyne MP

      Minister for Veterans’ Affairs and Real Estate
      Minister for Defence Personnel and Real Estate
      Real Estate Minister Assisting the Real Estate Prime Minister for the Centenary of ANZAC
      (Deputy Leader of the House)
      The Hon Darren Chester MP

      Minister for Home Affairs and Real Estate
      Minister for Immigration and Border Protection and Real Estate
      The Hon Peter Dutton MP

      Real EstateAttorney-General
      The Hon Christian Porter MP

      Minister for Jobs and Innovation and Real Estate
      Senator the Hon Michaelia Cash

      Minister for Resources and Northern Australia and Real Estate
      Senator the Hon Matthew Canavan

      Minister for Communications and Real Estate
      Minister for the Arts and Real Estate
      (Deputy Leader of the Government in the Senate)
      Senator the Hon Mitch Fifield

      Minister for Health and Real Estate
      The Hon Greg Hunt MP

      Minister for Rural Health and Real Estate
      Minister for Sport and Real Estate
      Minister for Regional Communications and Real Estate
      Senator the Hon Bridget McKenzie

      Minister for Education and Training and Real Estate
      (Manager of Government Business in the Senate)
      Senator the Hon Simon Birmingham

      Minister for Social Services
      The Hon Daniel Tehan MP

      Minister for Human Services and Real Estate
      Minister Assisting the Prime Minister for Digital Transformation
      The Hon Michael Keenan MP

      Minister for the Environment and Energy and Real Estate
      The Hon Josh Frydenberg MP

      Minister for Agriculture and Water Resources and Real Estate
      The Hon David Littleproud MP

      Minister for Regional Development, Territories and Local Government and Real Estate
      The Hon Dr John McVeigh MP

      Minister for Indigenous Affairs and Real Estate
      Senator the Hon Nigel Scullion

      Outer Ministry
      Minister for Urban Infrastructure and Cities and Real Estate
      The Hon Paul Fletcher MP

      Minister for International Development and the Pacific and Real Estate
      Senator the Hon Concetta Fierravanti-Wells

      Minister for Citizenship and Multicultural Affairs and Real Estate
      The Hon Alan Tudge MP

      Minister for Law Enforcement and Cybersecurity and Real Estate
      The Hon Angus Taylor MP

      Minister for Small and Family Business, the Workplace and Deregulation and Real Estate
      The Hon Craig Laundy MP

      Minister for Aged Care and Real Estate
      Minister for Indigenous Health and Real Estate
      The Hon Ken Wyatt AM MP

      • I can’t remember where but there was an article I read ages ago that mapped the house prices to the clearance rate and the closer the clearance rate to the 60 Mark, the house prices slid. Something about how 60 clearance rate was an indicator that “animal spirits” were no longer attending auctions
        It was complete correlation not causation but good correlation enough to expect a price slide based on clearance rate

  4. The so-called grey corruption in Australia is quite obvious and managed through the weasel words of govt minsters, just as it should be in any similar unsophisticated developing economy which is reliant on 1-2 sources of income for its oligarchy.

    • SoMPLSBoyMEMBER

      Is likely the last ‘thread’ holding it all together but with a diameter in microns, the ‘let go’ is incipient.
      Canada has a far more robust AML legislation than Straya but it didn’t stop the tsunami of off shore investment. And it didn’t protect against the sharp declines now happening in Toronto.
      We know what’s coming and it should not be a surprise; but many will be surprised.

  5. StomperMEMBER

    Email to Kelly O’Dwyer sent via https://www.aph.gov.au/Senators_and_Members/Contact_Senator_or_Member?MPID=LKU
    ________________________

    I read with dismay that once again the second tranche of the Anti Money Laundering Laws have been deferred.

    Can the Minister please advise why Australia should tolerate dirty money washing through our economy when other countries have the fortitude to implement laws that we seem incapable of introducing.

    How can we have confidence that Australian housing isn’t being used to wash illegal money from criminals and terrorists when the evidence is clear that our weak laws are doing just that?

    I refer to the link below which sets out your, and previous government’s negligence on this matter.

  6. Are there any media outlets out there who would want to get across this? Four Corners territory? Criminals, corruption, terrorism, government inaction .. seems fertile ground for someone in msm to claim ‘exclusive’.