Austrac: Money laundering inflating property values

Advertisement

The CEO of AUSTRAC – the Australian Government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system – has again warned that Australian property is being used to launder illicit funds:

Austrac has warned that laundering the proceeds of crime through property purchases can drive up prices and keep legitimate buyers out of the market…

[It] warned of “widespread or concentrated real estate purchases with the proceeds of crime, driving property prices up and pricing legitimate buyers out of the market”.

“Serious and organised crime groups can use real estate as an investment or as a lifestyle benefit to integrate the proceeds of crime into the legitimate economy,” the report said…

“The sale and purchase of real estate presents particular appeal to money launderers looking to conceal large sums of money in few transactions, or who use corporate vehicles and trusts to disguise beneficial ownership.

It feels like Groundhog Day. 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:

Advertisement

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, which has continually fallen on deaf ears within the federal government.

Accordingly, Australia has been cemented as a money laundering safe haven, with property the go to choice for illicit foreign funds.

Advertisement

Nothing will change because our corrupt politico-housing complex.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.