MacroBusiness has vigorously advocated for Australia to adopt international regulations to combat money laundering into real estate.
Australia agreed in 2003 to introduce global ‘Tranche 2’ anti-money laundering (AML) regulations pertaining to real estate gatekeepers, which include accountants, lawyers, and real estate agents.
Federal governments from both sides of the aisle repeatedly delayed the implementation of these regulations in response to strong opposition from the very industries that would be impacted.
These delays have resulted in Australia having the most lax money laundering regulations in the world:
As a result, Australian housing has become the go-to conduit for laundering dirty money.
The global AML regulator, the Paris-based Financial Action Taskforce (FATF), issued a warning in 2015 that large sums of money were being laundered through Australian residential housing, primarily from China.
The FATF urged Australia to implement AML regulations to bring real estate gatekeepers under regulatory scrutiny, which fell on deaf ears.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) concurred with the FATF’s findings, stating that “laundering of illicit funds through real estate is an established money laundering method in Australia”.
It is estimated that literally billions of dollars have been laundered through Australian homes over the past two decades, primarily by Chinese nationals.
The circus has arrived in town again, with the Albanese government undergoing another industry consultation process on the Tranche 2 AML laws.
Implementation of these rules could result in more than 100,000 real estate gatekeepers being subject to AML regulation, which has caused another round of pushback from the impacted industries:
“Real estate agents, accountants and lawyers are ready to go to war with the Albanese government over a planned expansion of dirty money laws, strongly resisting moves to extend reporting obligations they say threaten client confidentiality”, reported the AFR on Wednesday.
“The Real Estate Institute of Australia has told the government residential leasing should not be included, suggesting the changes only apply to high-risk real estate transactions”.
“The institute told the Attorney-General’s Department laws similar to those in New Zealand cost businesses between $30,000 and $100,000 per year, with the expense passed on to consumers”.
“It asked for a stand-alone cost-benefit analysis about inclusion in the so-called “tranche 2” laws”.
“They have been the subject of intense political lobbying for years. Individuals and professions would be required to report suspicious transactions to authorities, part of an extension that has been fiercely resisted by industry lobby groups”…
“The Law Council of Australia last month released research showing the profession was already working to mitigate the risk of money laundering and existing controls were sufficient”.
Transparency International Australia CEO, Clancy Moore, countered by arguing that the current lack of AML rules makes Australia “an attractive destination for criminals to stash the proceeds of drug dealing, trafficking, and other crimes”.
“Lawyers, real-estate agents and accountants either knowingly or unknowingly enable money laundering and provide services that can be exploited to hide the true ownership of a company or asset, which is also a common red flag for tax evasion and corruption cases”, he said.
Vested interests defeated similar stakeholder consultations in 2008, 2010, 2012, 2014, and 2017.
Expect them to win again and delay the Tranche 2 AML rules into the ‘never never’.
In turn, Australian property will remain a global magnet and shelter for dirty laundered money, particularly from China.