Fifteen years ago, the Australian Government agreed to implement the Tranche 2 global AML rules for lawyers, accountants and real estate agents in a bid to prevent laundering of illicit funds, especially into Australian property.
However, these reforms have been continually postponed amid fierce lobbying by shadowy “vested interests” negatively impacted by the reforms. This has led to Australia having the weakest AML rules in the world pertaining to lawyers, accountants and real estate agents:
Australia a safe haven for money laundering.
Australia’s intransigence has seen a conga-line of international authorities – including the Paris-based Financial Action Taskforce (FATF) and Transparency International – deride Australia’s failure to act.
Even CEO of AUSTRAC – the Australian Government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system – called for industry participants to be brought into the anti-money laundering (AML) regulatory net.
With this background in mind, it was good to read the Senate Economics References Committee’s latest report into foreign investment, which recommended implementing the Tranche 2 AML laws:
Internationally, AML/CTF frameworks are integral to the fight against organised crime and curbing the flow of illicit capital. But Australia’s AML/CTF framework is woefully deficient.
The gaping hole in Australia’s AML/CTF framework is the failure to include real estate agents, accountants and lawyers — the ‘gatekeepers’ — as providers of designated services and require these professions to report to AUSTRAC. Australia is now one of only six countries in the world not to have included the gatekeepers within the scope of AML/CTF laws, alongside the US and China, and Mongolia, Madagascar, and Mauritius.
As a result, Australia has become a hot-spot for illicit capital, and money laundering through real estate in particular. The Financial Action Task Force (FAT-F) is the world’s standard setting body for anti-money laundering and counter-terrorism financing. Their 2015 Mutual Evaluation Report stated:
“Australia is seen as an attractive destination for foreign proceeds, particularly corruption-related proceeds flowing into real estate, from the Asia-Pacific region”.
Other international bodies have highlighted the inadequacy of Australia’s AML/CTF framework…
So lax is Australia’s AML/CTF framework that, as the inquiry heard, the action taken by the AFP to seize assets in relation to the Musselroe Bay development only occurs following a tip-off from Chinese authorities. We’re literally dependent on the host country’s police telling us if their citizens are using Australian real estate to wash hot money…
Recommendation:
The Australian Government introduce legislation that would include real estate agents, accountants and lawyers as designated services under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
Sadly, the corrupt Morrison Government rejected the Inquiry’s recommendations in its dissenting report:
Coalition senators do not agree with the recommendations of the majority report…
Australia’s foreign investment framework is open, transparent, non-discriminatory and welcoming. Australia has one of the most liberal foreign investment regimes in our region, as foreign investment is not prohibited by any sector, or from any country…
Accordingly, Australia will remain a money laundering safe haven, with property the go to choice for illicit foreign funds.
