For years MB has lobbied the federal government to enact the second tranche of anti-money laundering (AML) legislation covering real estate gatekeepers. These laws were promised more than a decade ago and the federal government’s failure to implement has left Australia with the weakest AML laws in the world and has made Australian property a haven for laundered funds, especially from China.
Finally, Labor has signalled that action to combat money laundering and financial crime will be a key focus of its 2019 election campaign. Shadow treasurer, Chris Bowen, has committed Labor to implementing the second tranche of AML rules and criticised the Coalition’s lack of sufficient action on the issue, as well as its decision to reduce funding for the Australian Securities & Investments Commission (ASIC) and the Australian Federal Police.
Nathan Lynch – the Asia-Pacific Bureau Chief, Financial Crime and Risk at Thomson Reuters – explains in further detail:
Chris Bowen, the shadow treasurer, has made it clear that financial regulation and anti-money laundering policy will feature heavily in Labor’s 2019 election campaign. On Friday, Bowen gave Thomson Reuters Regulatory Intelligence an exclusive insight into the financial crime platform that Labor will take to voters.
Crucially, the shadow treasurer has committed to push ahead with the “tranche two” AML/CTF laws for real estate agents, lawyers and accountants if Labor wins the next election. A Shorten government would also reverse funding cuts to the Australian Federal Police (AFP) and the Australian Securities and Investments Commission (ASIC) to help tackle serious and cross-border financial crime…
Bowen said the government had “completely dropped the ball” on money laundering reform… He pointed out that the Coalition had baulked on its promised AML/CTF Act reforms since coming to power in the September 2013 election…
“According to the government’s own work plan, real estate agents should already be covered by our money laundering laws. The Liberals have done nothing to progress this,” Bowen told Regulatory Intelligence, after viewing and reading the reports…
“Only Labor can be trusted to take money laundering financial crime seriously.”
Bowen’s comments were supported by industry experts, who said the government had missed an opportunity to get legislation through in a policy area that has bipartisan support.
“The current government has had ample opportunity to act on deficiencies in the current AML/CTF regime, including those identified by the FATF. This is particularly concerning as the FATF are coming back later in 2019 to assess Australia’s progress in addressing the gaps in the AML/CTF regime they identified in 2015,” Jeans said…
Australia’s financial crime laws have become a pre-election policy minefield, following revelations about “dirty money” in the Project Dragon investigations on ABC’s Four Corners and Regulatory Intelligence last week…
The Project Dragon investigations showed that Australia’s failure to crack down on laundering through real estate agents, lawyers and accountants had attracted a tsunami of flight capital to the country’s shores.
China’s unprecedented moves to engage bounty hunters reflect the scale of the problem, as well as Beijing’s frustration…
Bill Majcher, a civil recovery agent based in Hong Kong, said real estate agents, lawyers and accountants had become central to the major laundering activities in Australia. The former undercover agent for the Canadian Mounties said it was well known that illicit funds flowed to the path of least regulatory resistance.
The Chinese MPS is concerned that tens of billions of dollars have poured into Australia from China over the past decade, as corrupt officials sought to park their funds in a safe jurisdiction, Majcher said.
“Australia is a very attractive destination for Chinese kleptoctrats,” he said…
Nathan Lynch said the Tranche 2 reforms had been delayed for more than 12 years, leaving Australia well behind the rest of the Asia-Pacific region.
“We’ve dropped the ball on this crucial policy issue, there’s no doubt about it. Malaysia, Singapore Hong Kong and New Zealand have all taken action. This makes Australia a highly attractive destination for the proceeds of crime.
“Chinese oligarchs and organised crime groups are extremely fond of the privacy, lack of scrutiny and legal certainty that Australian real estate offers,” Lynch said…
“Criminal money is fluid, opportunistic and innovative. It flows very quickly to the path of least resistance. Australia’s problem right now is that we’ve opened a sluice gate to allow that money to flow into our residential and commercial property markets. This can create a lot of systemic risk in the broader economy if it’s allowed to run for too long.
“Most Aussies, especially first homebuyers, would be furious to learn that they’re competing for houses with people who are trying to wash the proceeds of illicit drug sales, fraud or corruption,” Lynch said.
In 2015, the Paris-based Financial Action Taskforce’s (FATF) mutual evaluation report found Australian homes are a haven for laundered funds, particularly from China, and demanded we implement the tranche two AML rules. Then in June 2017, FATF placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.
In September 2019, FATF is scheduled to conduct another evaluation of Australia’s AML laws, which is certain to lead to further censure, damage Australia’s international reputation, and potentially result in Australian companies facing enhanced due diligence abroad.
Put simply, Labor must act.
