In 2006, Australia signed a global agreement with the Financial Action Taskforce (FATF) to implement ‘tranche 2’ global anti-money laundering (AML) rules pertaining to non-financial assets (including property). The rules were to apply to real estate gatekeepers like realtors, accountants and lawyers.
After stakeholder consultations in 2008, 2010, 2012, 2014, and 2017, the AML rules were continuously postponed because of industry backlash over ‘compliance costs’ and ‘regulatory burden’.
The end result is that Australia now has one of the loosest AML regimes in the world and our property has become a magnet for dirty foreign money.
Last year, the head of Transparency International Australia, Serena Lillywhite, told the Senate committee examining money laundering that “Australia has become the destination of choice for illicit financial flows … which too often end up in the property market” before asking “how much evidence of money laundering in Australia will it take before the law is changed and enforcement ramped up?”.
The very next day, similar testimony was presented by financial crimes regulator Austrac, the Australian Criminal Intelligence Commission, and the Australian Federal Police, which told the Senate committee that billions of dollars were being laundered through Australia’s suburbs.
With this background in mind, it is disturbing to read another report about money laundering by foreign criminals:
The suspected money laundering syndicate, known as the “Chen Organisation”, counts as its customers a relative of Chinese President Xi Jinping, along with Asian triads and bikies, according to briefings from officials…
“State actors and citizens from some nations are using our countries at the expense of our sovereignty and economies,” [Australian Federal Police (AFP) Commissioner Reece Kershaw] said. “Unfortunately, federal crime in Australia is increasing. Contributing to this increase is the long shadow of organised crime and state aggression”…
“They maintain global financial flows by exploiting illicit and legitimate industries across our countries,” the police chief said…
Money-moving businesses linked to the Chen Organisation include a company based in a nondescript house in Melbourne’s eastern suburbs. The business has been investigated by state and federal agencies since 2016 over allegations it transferred hundreds of millions of dollars in suspect wealth for figures linked to organised crime…
The big question for the Albanese Labor Government is: will it finally implement the Tranche 2 global AML rules as promised by Australia 16 years ago? Or will it continue to allow Australian to remain a magnet for dirty money?
The money laundering farce has dragged on for far too long. It is time for action, Albo.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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