Laundered Chinese money gushes into Australian property

Earlier this year, billionaire Huang Xiangmo’s permanent residency was cancelled for reasons including character grounds.

Today, The AFR has published a detailed investigative report on how Huang Xiangmo laundered money through Australian real estate to buy political influence:

Huang Xiangmo, the Chinese billionaire at the centre of a NSW corruption inquiry and tax office investigation, used a Sydney property deal to funnel $11 million to a notorious political fixer…

The money was transferred just a month after it became public that ASIO had warned the major political parties about accepting donations from Mr Huang and followed a year of intense scrutiny around his efforts to ensure Canberra took a more favourable line towards Beijing…

“On the surface it has many of the hallmarks of money laundering,” [Mr Fehon, the forensic investigator from McGrathNicol] said…

This follow’s Monday’s AFR report on a large money laundering racket by Chinese:

A Sydney real estate agent has admitted the ultimate buyer of four trophy homes was not a 32-year-old Chinese-born Australian, Zhang Bo, as shown on the title deeds…

Mr Zhang owns six properties in Sydney’s Mosman worth $37 million, but lives in none of them… Only one of the six houses held in his name appeared to be permanently occupied…

The agent who sold four of these harbourside houses, Richard Simeon, confirmed all were bought by different people, even though three of them are held through one company and all are linked to Mr Zhang…

Five of the six properties were settled without the need for a mortgage…

When asked on Sunday to provide context around his earlier comments, Mr Simeon said he had sold a huge number of properties to Chinese families in recent years. “I don’t know which people they are,” he said before hanging up once again.

Remember, the 2015 Mutual Evaluation report from the Financial Action Taskforce (FATF) stated that Australian property was a prime destination for Chinese laundered funds, and urged Australia to bring real estate gatekeepers within the anti-money laundering (AML) regulatory net:

Australia remains at significant risk of an inflow of illicit funds from persons in foreign countries who find Australia a suitable place to hold and invest funds, including real estate…

China; Hong Kong, China; Macao, China; Singapore and the United Arab Emirates were seen as major source, destination, and/or transit jurisdictions for proceeds of crime laundered into and out of Australia. Large amounts are suspected to be laundered out of China into the Australian real estate market. China and other countries within the Asia Pacific region were also seen as likely sources of corruption proceeds that are laundered in Australia…

AML/CTF policies need to better address ML risks associated with… laundering in the real estate sector, particularly through bringing all DNFBPs within the AML/CTF regime.

Indeed, Australia has the weakest real estate AML rules in the world, therefore, has left the door wide open for illegal money to gush through Australian homes:

This corrupt system is not only inflating the cost of housing, but also poisoning our political institutions as well.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments

  1. His Crown casino gambling turn over in one year was 180 MILLION DOLLARS. Mega big $$ laundering for mega players in China.

    • Strange Economics

      This “Quiet Australian” and generous political donor was the only foreign donor ever rejected by Dutton for citizenship. Lucky he has local agents to keep the business going.

      What happened to the foreign property ownership laws? – clearly the tactic of finding a local citizen to put the property in the name of applies.
      And 800 million gambled is 730 million now tax free income.(after Crowns 10% cut). He must have doubled up his 100$ on black for days….

    • Looking back, China’s arrest of Crown casino executives is the ONLY reason why Huang Xiangmo is in trouble. If Chinese ‘high roller’ money will continues to flow into Crown, Packer will make a few phone calls and Huang Xiangmo will become a “protected person”.

      • There is some truth here
        All this is coming out only after Packer sold out of Crown.

        Now James is out, Crown has lost a lot of the political protection built up over many many years by the late Kerry Packer.
        Poor James, i think it all got a bit much for him towards the end. China and Macao were his downfall.

    • The $100,000 he paid Gladys Liu is small change.

      That’s the great thing with Aussie politicians, they aren’t only corrupt, they are SO CHEAP to bribe.

  2. “This corrupt system… “
    … is an open invitation to the crooks around the globe to bring their proceedings safely here.
    China is simply the biggest beneficiary owing to the law of large numbers.
    This corrupt system here is the crux of the problem.

    • lost count how many times I said that current laws are open invitation to all international drug cartels and corrupted politicians to bring their money here.

      edit – and the only reason why Oz is not signing extradition treaty with China. We don’t seem to care about human rights if they stand in the way to sell dirt to China.

  3. Real estate is protected by all and sundry in Australia. Anything that supports this parasitic industry is given green lights everywhere

    • Agreed. I wrote a comment on the SMH which referred to the Australian real estate market being the safe haven for offshore criminal money just today and it was rejected by the moderators. Just another little slice of truth a bit unpalatable for polite society.

      • In your next comment you shoulda written: yellow men good, orange man bad!

        Try it and see how that goes. Should sail through moderation

    • And the link from someone’s comment on your link story
      https://betterdwelling.com/how-a-little-money-laundering-can-have-a-big-impact-on-real-estate-prices/

      “If you are money laundering, that’s not the case. The objective is to move as much cash, as fast as possible. This often involves large assets, and the bigger the price – the better. Especially if there’s a recurring payment component. Both the seller and the money laundering buyer want the highest acceptable price Sellers often feel somewhere between a genius and a lottery winner when they find this buyer. Competition between interests align, and there’s minimal friction preventing prices from going higher. The seller assumes their master negotiation skills prevailed. The money laundering buyer gets to move more money than they were asking for. The buyer seems “irrational,” but that’s just the market. Real estate agents without a clue, begin to rationalize and normalize this behavior. There’s no more land is a popular explanation.”

      Our real estate agents would go through hell and back to make sure their golden tickets keep getting clipped….

      • SoMPLSBoyMEMBER

        +2. How many Jaycos and Land (cruisers/rovers) and floats down the Rhine have been funded by this wicked activity?
        We’ve no compunction on the sellout to OC’ers.

    • More than that. Source of funds need to be established or you’ll have sham locals fronting it.

    • Not going to happen unless we elect a nationalist leader. Hoping mark latham will take over ON

    • These recommendations make too much sense, which is why the government will never implement anything like it.

    • Too late. As the story notes, every wannabe laundry customer knows a business associate who has a cousin whose neighbour’s kid is attending USyd and for a few thousand will daigou for them, acting as owner of record. The only way to stop this is the same way Beijing does: family certificates allowing purchase of only 1 free-stander and 1 unit per family (not per person, infant, and dog) in popular regions.

  4. Jumping jack flash

    Woohoo the economy is saved!

    We should all make this money feel very welcome here in our fine country. After all, every dollar of precious laundered money is one dollar less that some poor Aussie rube has to take on in debt.
    Plus it makes our inherently nonproductive houses silos of productivity! No more pushing around ever-growing, insanely huge mountains of debt between each other in some crazy debt ponzi to create extra money for the economy to grow, no sir! We get our money from China, and it is laundered!

    “Five of the six properties were settled without the need for a mortgage…”

    What a guy! Nothing sus about that since EVERYONE else needs to scrape together a gargantuan mortgage to even be able to afford a fraction of one of these houses.

  5. What happened to all the blowhards in the media that wrote people’s concern over foreign investment off as ‘the Yellow Menace 2’? They seem pretty quiet these days.

  6. I asked the ALP candidate for Chisholm, Jennifer Yang about this before the last election and she confidently told me that there was no money laundering because money laundering was illegal.

    • Brilliant 🙂 It’s hard to argue against that logic.
      Similar to her counterpart Gladys Liu (“I cannot recall… If I can’t recall, I can’t be an active member of that council can I?”)

  7. It’s not money laundering if the people who do it are associated with a government, any government. I’m pretty sure if we were in the 1930’s the real estate crowd would have been taking Nazi money that party members were moving out of the country, and rationalizing it.