Coalition green-lights money laundering visas

The Morrison Government has tightened some business and investment visas, but curiously left the ‘golden ticket’ Significant Investor Visa (SIV) commonly used for money laundering untouched:

Business migrants will face tougher requirements under changes to investment visas that have so far drawn in at least $12 billion from mostly Chinese nationals.

The existing nine different business and investment visas will be cut back to four with various thresholds of required investment adjusted…

The Business Innovation visa, which allows migrants to operate a new or existing business in Australia, will remain but applicants will now be required to hold business assets of $1.25 million, up from $800,000.

It will now also require the business to have an annual turnover of $750,000, up from $500,000 to better “prove their business acumen”…

The Premium Investor visa, which required migrants to invest at least $15 million in Australian investments and then apply for permanent residency, will be closed to new applicants in July next year.

The Significant Business History and Venture Capital Entrepreneur visas will also be closed to new applicants from July 1 next year…

Some visas will have easier thresholds, such as the entrepreneur visa applicants whose existing $200,000 funding threshold will be scrapped…

The so-called “golden ticket” Significant Investor Visa (SIV), which requires at least $5 million in Australian investments in exchange for a permanent visa, will remain in place under the latest changes.

Last financial year 135 SIVs were granted out of an overall pool of more than 4420 business and investment visas on offer. Of the 135 SIVs granted, just under 90 per cent were to Chinese.

The Productivity Commission (PC) called for the SIV program to be axed altogether, arguing that SIVs provide minimal if any net economic benefits and likely help fuel fraud and money laundering:

Because there are no English-language requirements for the Significant Investor Visa and Premium Investor Visa, and no upper age limits, it is likely that these immigrants will generate less favourable social impacts than other immigrants. Further, compared to other visa streams, investor visas are prone to misuse and fraud. Concerns about visa fraud played a part in the Canadian Government’s decision in 2014 to scrap its investor visa scheme…

There is a risk that SIV and PIV might be used as a pathway for investing ‘dirty money’ in Australia, an issue that has been raised for other similar schemes (Sumption and Hooper 2014)…

Overall, the case for retaining the Significant Investor Visa and Premium Investor Visa streams is weak and the Government should abolish these visas.

It’s easy to see why. These ‘Golden Ticket Visas’ are touted widely to wealthy investors seeking multiple residencies and tax regimes:

For these reasons, the United Kingdom in 2018 abolished their version of SIVs because they were being used for money laundering purposes and were not providing public benefits:

Ministers are halting a “gold-plated” visa scheme offering foreign investors a fast-track to settling in the UK, as part of a crackdown on financial crime…

“We will not tolerate people who do not play by the rules and seek to abuse the system,” said Immigration Minister Caroline Nokes, announcing the suspension would come into effect at midnight on Friday.

…the Migration Advisory Committee said the scheme brought little economic benefit for British citizens…

A recent report in The AFR also noted that migration agents have concocted “non-genuine” applications for wealthy Chinese investors:

Fund managers and migration agents are concocting “non-genuine” applications for Australian visas targeted at wealthy Chinese investors, in behaviour that has been flagged to the government as it reviews the contentious $12 billion “golden ticket” program.

The Western Australian government’s Small Business Development Corporation (SBDC) said it had “identified and reported a number of integrity risks” associated with the suite of visas available to potential migrants under the Australian government’s business innovation and investment program…

The agency said “flaws or weakness” in the overall scheme were “at risk of being exploited by agents and applicants” and urged Home Affairs to overhaul the program to ensure Australia attracted the “right type of applicants”.

Through the SIV, the Australian Government has created a program where citizenship is for sale to anyone with enough money to pay. There are few questions asked. There few background checks on the applicants or the sources of their money. There is no requirement to speak English. And there is no requirement for the applicants to work or contribute to Australian society.

The fact that these visa holders are also taking the place of Australian citizens desperate to return home is an outright disgrace and shows the corruption flowing through the Morrison Government.

Unconventional Economist
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Comments

  1. Hernando da Silva

    Through the SIV, the Australian Government has created a program where citizenship is for sale to anyone with enough money to pay.

    You don’t even need most of the money. Here’s how the rort works:
    1. Borrow $5 million in China
    2. Bring it into Australia, get SIV Visa.
    3. Business invests in plant from China, false invoiced for around $4.5 million
    4. Money paid back to lender via false invoice.

    • You don’t even need to invest it. There are finance firms who have set up funds where you can just park $5m. No active business requirements!!

      • There is no need to build factories or houses or anything. Buying a load of paper will do the trick

        • Actually, for SIV there is no ability to invest in factories etc. It has to be in the prescribed shares and units.

          • GunnamattaMEMBER

            You are 100% correctamundo…..

            I am an idiot for having thought there was still scope for someone to ‘invest’ into actually constructing something, with a view to making something, or doing something, that someone somewhere would pay for

            here is a chart of the SIV compliance requirements

            from here

            https://www.austrade.gov.au/ArticleDocuments/5786/SIV_PIV_Complying_Investment_framework.pdf.aspx

            …so as I read it the SIV compliant ‘investment’ is solely about adding to the funds managed by a range of banks, providing some venture capital, and bond, equity, derivatives and real estate prices

          • …so as I read it the SIV compliant ‘investment’ is solely about adding to the funds managed by a range of banks, providing some venture capital, and bond, equity, derivatives and real estate prices.

            Yep. The new investment criteria was put in place by Andrew Robb – predominantly at the behest of Moelis who are big in the space. In a totally unrelated event, Robb later became a Board member at Moelis.

    • And just to help everyone feel better…..

      Australian banks will do the lending for anyone borrowing that $5 million and there is a significant industry – featuring lawyers, accountants, bankers and ‘wealth’ and asset managers who are there to ensure that the funds invested in Australia are

      1. Compliant with SI visa reqirements
      2 Accessible at any point the investor should like, and
      3 represents super good collateral to underpin any further borrowing needs

    • Strange Economics

      Step 5 – Buy waterfront mansion. Gotta keep property prices going. Thats 144 mansions sold last year…
      Property is an investment right?

  2. Do you have any evidence to support the assertion that the majority of these successful SIV individuals are laundering money?
    I’m sure there is some percentage of ill gotten gains being exported to hide it from Chinese taxation and legal questions about the origin of said wealth, however from my own experience I’d say the majority of these visas are legitimately issued to fairly wealthy individuals who just want options in case the SHTF.
    Some individuals that I know are actually doing a sort of reverse Transfer pricing setup (as in realizing greater gains in Australia than they should) thereby reducing taxable income in China and putting more of their wealth outside the reach of Chinese officialdom. How is this bad for Australia? even if it is a sort of money Laundering
    I’m genuinely curious

    • Shades of MessinaMEMBER

      If they are investing into local businesses that generate jobs and/or export revenue then it’s a great outcome.

      If all they are doing is parking cash (dirty or otherwise) in Australia then who benefits apart from the ticket clippers ?. It’s a rhetorical question.

      Australia is literally swimming in cash, it’s the last thing we need.

      • For the most part those that I know own factories in China and are importing items (sometimes at below actual cost)
        Is this beneficial to Australia, maybe maybe not. Australia is generally not short of goods imported from China.
        I do know of one person that is genuinely exporting Aussie made stuff back to China, but he is mainly doing it because the shipping containers need to return to China to be refilled, making the Australia to China section practically free. One of the items that he was exporting is Australian wines, he would buy excess from local vineyards and basically dump it through a 7/11 sort of franchise in China. There was no real brand development going on he was just focused on delivering good quality 50 odd RMB wine.

        • Shades of MessinaMEMBER

          I thought the SIV was supposedly set up to facilitate the inwards migration of heavy hitters who can aid in Australia’s economic development. Your examples are probably marginal at best !.

          Still if that’s the official policy and mechanism then no fault of those who choose it.

          • Most are “heavy hitters” as opposed to miracle workers, so they focus on achieving the possible (incrementally better) rather than focusing on the impossible.
            There are a lot of Aussies who dream big while at the same time dreaming the unrealizable. I’ll take incrementally better and sustainable (for solid business reasons) in place of stupid over reaching any day of the week. That’s where the real benefits of experience and knowledge establishing successful businesses shines through.
            However to be fair you asked only about exports I know another that is involved in a very big Solar project in Australia, all the funding , planning, manufacture and system design is coming from China. It requires deep pockets along with expertise and the depth of funding and trust that makes a project like this possible.

        • Shades of MessinaMEMBER

          Appreciate the commentary, thanks for sharing.

          It’s the reason I like the comments in MB so much.

  3. I wonder if there is a significant nexus between money laundering via this type of visa and other dodgy behaviour such as wage theft. Where there’s smoke there’s fire.

    • We’ve certainly seen plenty of examples of recent immigrants rorting government programs like child care subsidies and the Vocational Education and Training system. Australia is a magnet for foreign criminals.

  4. With every one of these “investment” visas comes the right to buy established, second-hand Australian residential real estate – no questions asked.
    Something that Australians, as investors in many countries overseas (the Middle Kingdom for example), are not allowed to do.

    • Mr SquiggleMEMBER

      That’s what I picked up too. It’s classic coalition spin. The headlines talk about closing off 4 visa classes to get the One nation voters on side, but the detail shows they are doubling the entrants under the other classes and lowering the hurdle requirements for entry.

  5. Through the SIV, the Australian Government has created a program where citizenship is for sale to anyone with enough money to pay. There are few questions asked. There few background checks on the applicants or the sources of their money.

    This part is not quite right. All the investments have to comply with AML and Austrac is very active in the space. Plus the Feds have no interest in actual criminals coming here.

    • AML and Austrac do not apply to property purchases/money laundering. There is a nice article in the AFR today on how one of the main lobbyists against AML is a partner in a law firm that has facilitated tax evasion here through property.
      Avoidance of putting through legislation for agreed international AMLs is a major scandal of Oz politics and is the underlying inducement for much property / laundering speculation by foreigners in Oz. See Michael West for details.