Chinese drug money mass laundered in Aussie property

Via Banking Day:

Nathan Lynch of Thomson Reuters Regulatory Intelligence

The revelations about Chinese asset recovery agents operating covertly in Australia will put pressure on the Department of Home Affairs to introduce law reforms ahead of the May general election. The government is sitting on “Phase 1.5” legislation that will prepare Australia for the introduction of the long-awaited Tranche 2 AML/CTF laws. 

This transitional legislation is understood to have been shelved late last year amid a gridlocked federal parliament.

The federal government will be under pressure to be seen to act, however, before the arrival of the Financial Action Task Force (FATF) for an assessment visit later this year. The international standard setter will want to see evidence Australia has acted upon the weaknesses set out in its 2015 mutual evaluation report. Chief among these was the failure to regulate lawyers, accountants and real estate agents.

Late last year the AFP’s Criminal Assets Confiscation Taskforce seized more than A$15 million in real estate, jewellery, wine and assets that are suspected to have been bought with the proceeds of crimes perpetrated in China, including investment fraud.

AML practitioners said it was unsurprising that the assets in the AFP’s recent seizures all sit outside the Australian AML regime. The seizures demonstrated the importance of extending the country’s AML regime to include “tranche two” entities, they said.

Neil Jeans, an AML consultant with Initialism, said the role of designated non-financial businesses and professions (DNFBPs) in complex money laundering schemes had been well understood and accepted in Australia for two decades.

“The regulation and supervision of DNFBPs is a fundamental requirement of the FATF, which sets the international standards for AML/CTF,” he said.

“Australia, despite warnings from the FATF and government reports highlighting the failure to bring lawyers, accountants and real estate agents into the AML/CTF regime, has been slow to act. This represents a significant hole in Australia’s AML/CTF regime, which we know domestic and international criminals are exploiting.”

The Tranche 2 laws have been on the drawing board in Australia for more than 12 years, despite having bipartisan support. The federal government had committed to pass laws to capture DNFBPs by 2018, following the critical report from the FATF in 2015. Australia had fallen well behind in its international obligations to protect the country’s economy from criminal abuse, the report said.

The “phase 1.5” stepping-stone legislation has been drafted jointly by the Department of Home Affairs, the Attorney-General’s Department (AGD) and with input from the Australian Transaction Reports and Analysis Centre (AUSTRAC).

A Home Affairs spokesman said there was no fixed timetable for the Phase 1.5 laws, which will be tabled “subject to the parliamentary schedule”.

The next stage will be to work on “the process of simplifying and streamlining Australia’s AML/CTF regime and to improve compliance with the international standards set by the FATF.”

“The government is considering options to extend AML/CTF regulation to ‘tranche 2’ entities, such as lawyers, accountants and real estate agents,” the spokesman said.

This reform would be crucial for Australia to have any hope of turning back the tide of dirty money, said Bill Majcher, an AML expert and former undercover agent based in Hong Kong. “Lawyers, realtors, and immigration agents are, in my view, the most engaged parties facilitating these dirty money channels,” he said.

“Drug gangs in China know there are many people in China who want to get their money out of the country. So, they take their yuan in China and swap it over for ownership of houses in Australia.

“The houses have been purchased with the cash generated from drug sales in Australia by Chinese-linked drug dealers. Typically, some offshore corporate entity owns the real estate assets, so the shares in the corporation change hands but on the property title the corporate owner stays the same,” Majcher said.

Project Dragon, reported by Mark Willacy, aired  last night on 4 Corners on ABC

This article first appeared on Thomson Reuters Regulatory Intelligence.

Australia’s only economic hope is to keep the laundering going!

Houses and Holes


      • boomengineeringMEMBER

        Well have to kick the missus arse for being a bad detective.In any case Enmore isn’t as bad as Newtown.

      • I’ll try to get loaded in by 9.

        This is is the epicentre of the inner west cafe strip, so entirely safe at these early hours.

        It’s only when it gets later that the groups that used to go to the cross now come to newtown.

        Also if you are into that sort of thing, Cow and Moon gelato is virtually across the road.

  1. Hmmm… Australia’s major political parties were hacked just months out from a federal election. Prime Minister Scott Morrison said authorities found the political party breaches while investigating a cyber attack on the Federal Parliament’s computer network. “Our security agencies have detected this activity and acted decisively to confront it. They are securing these systems and protecting users,” Morrison said…

    Drug monies are the least of our problems…

    • Ya’ know… it’s interesting but back when Obama came around – the salesdroids from ${BigCloudProvider} came sniffing about to talk to us about the “DDOS protection” we might need because Obama was going to be around… and ya’ know – world was full of black hats… For 6 months “protection” they were willing to relieve us of about $400,000 (IIRC)…

      Anywhoo – manglement wasn’t too keen on the pricetag… and wouldn’t you know it – a few days later they had their mind made up for them as a nice tap was served to us in the form of a text-book DDOS which lasted uh… about 30 minutes.

      We never had one to take us out in the 20 years before that – and never had one since…

      Anyway – a significant smell of poo came out of the manglement headquarters, and a ‘protection’ contract was signed with ${BigCloudProvider}…

    • Yeah. When you look at this it really shows the FED’s nothing is safe. They do know, but push on with cloud based services. So MyHealth is safe though…not. No matter what they say thete is no safe digital record … hello CC’s and everything else. AWS has about 70% of global cloud storage and how safe is it? I bet it’s been hacked already. In many cases you don’t know for years. I was developing IOT devices, but got out due to this worry. I can see lots of legal action coming.

  2. Their failure to act for so many years means they are either direct beneficiaries (tick) or it is so bad they are scared the economy will crash (tick)

  3. They’ve been doing exactly the same thing in Vancouver, Canada: Smuggle fentanyl into country, sell for cash on the streets, launder cash into real estate or casinos, transfer ownership of RE holding company to China, and repeat. Never mind the thousands of overdose deaths, law abiding Canadians and Aussie being priced forever out of owning a home for their families, the important thing is that we all bow down to the idol of multicultural vibrancy…

      • The sheeple are busy with the important stuff, like watching Married At First Sight and also reading about it on The Age online where barely a day passes without another article about this abomination of a show.

  4. It is well known that almost all of our federal politicians are heavily invested in real estate, and that their decisions will be affected by their desire to see the price of property rise. It’s human nature. Not necessarily direct corruption, just massive and unethical conflict of interest.

    Beyond that, it’s quite evident that some of our politicians are trousering wads of cash supplied by the money laundering criminals as payment for preventing the implementation of any laws that will hinder their activities. Legislation that has been drafted and is good to go doesn’t gather dust for more than a decade due to lack of interest. That only happens because of an active campaign to make it not happen.

    Everybody involved is laughing at us thanks to our politicians. The international AML authorities are laughing in disbelief at the incredible corruption of our politicians and our society, and the criminals are laughing all the way to the bank.

  5. Four Corners … Australian Broadcasting Corporation

    Project Dragon – Four Corners

    Project Dragon

    As China has transformed itself into an economic powerhouse, billions of dollars have been illegally spirited out of the country. A large amount has made its way here to Australia.

    Chinese authorities want the money back, and they’ve sent a clear message to anyone who has broken their rules – we will find you and your money.

    Now China has opened up a new front in its war on those accused of financial crimes. On Monday Four Corners will reveal the new tactics being used by Chinese authorities to take back money they believe has been stashed illegally in Australia.

    42mins 44secs

    Mon 18 Feb 2019, 8:30pm

    • My big take was that china is angry at out AML laws, considering their ramping up of capital controls, we may see some sort of ultimatum or trade retaliation. All china needs to do is decide that Aus uni degree will result in loss of social credit score points and bingo.

      • No more Chinese “students” corrupting our educational institutions, our housing market, our government and pretty much everything?

        I’m liking the sounds of this Chinese social credit score system more every day.

        And see the article on MB today about how our coal suddenly is struggling to get into China. If that isn’t trade retaliation I dunno what is.

  6. Finally the penny drops!
    How many times did I tell you guys that there were no Chinese smugglers with suitcases full of Aussie dollars flying into Sydney to buy RE.
    There are however plenty of drugs (ICE in particular) coming into Australia disguised as all manner of things from food stuff to kids toys that are quickly exchanged for cash through the usual drug sales channels.In all likelihood it’s this money that was being channeled into Sydney RE repatriating these ill gotten gains to China would cause all sorts of issues not the least of which is the Chinese Police cracking down on Drug exporters. Btw they (the Chinese) have a permanent solution to the problem that they’re very likely to apply especially if they haven’t been appropriately rewarded for looking the other way.

    • From an historical perspective the Chinese are doing to us with Ice what the British East India Company did to them with Opium.
      The best way to cruel their pitch would be to decriminalise , but regulate drug use and take the profit out of the equation.

      • Yeah because there’s no black market for dodgey fags…and taking ice is pretty much the same as having a smoke.

    • Nathan LynchMEMBER

      Correct Fisho. These crime syndicates (many operating out of labs in Southern China) are effectively giving us illicit substances in return for our best real estate. The syndicates are vertically integrated, running drugs and cuckoo smurfing funds in parallel. The Chinese capital controls create a huge demand for underground loans in China that Mainlanders use to purchase Aussie real estate (and all secured by kneecaps).

      The whole debacle makes the glass beads the Lenape American Indians got in return for Manhattan Island look like quite a good deal. The fact that we’ve knowingly allowed this to continue for 12 years, in a supposedly intelligent and well-governed country, is incredible.

      • I think it very naive to assume that my law-enforcement betters and Political masters need the game explained to them by little old me.
        They all know full well what’s happening, why is it being ignored? Good question but I’m afraid it’s one that’s way above my pay
        Mind you I do get a laugh out of all the exotic explanations that go to incredible lengths to not state the obvious, I guess the old Upton Sinclair quote
        “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
        best describes Aussie Political, Legal and Journalistic blindness.

  7. Just so wrong that we have done absolutely nothing about it for 12 years – yet all along we have all known about this. Bankers commit fraud and the likes and don’t get punished. Politicians sit on their hands while money laundering is taking place… and nothing happens. In fact, nothing ever happens.

    • yeh….almost as if Harry T’s office has been controlling policy from both sides of our globalist-politicians.