In the realm of global rankings, there are few areas where we have been striving for top honors over the past 20 years. However, when it comes to money laundering and terrorist financing, we are among the leaders. Alongside the United States, Haiti, China, and Madagascar, we are one of the few countries that do not include real estate agents, lawyers, and accountants in anti-money laundering laws.
As a result, Australian real estate has become a major target for global money laundering activities, especially those originating from China. According to the Financial Action Task Force (FATF), the global institution responsible for enhancing anti-money laundering standards, Australia has opened its doors wide in several key areas for global money laundering.
As one of the founding countries of the FATF in 1989, we find ourselves in an awkward position – Australia is one of the few countries that do not comply with these measures. This situation may be about to change.
Australian Attorney General Mark Dreyfus outlined new measures aimed at bringing Australia in line with most developed countries during a speech at the National Press Club. This work has been ongoing for quite some time.
Back in 2007, Australia drafted reform proposals, but they never became law due to lobbying efforts by real estate agents, lawyers, and accountants. Throughout this process, the Australian federal government conducted various reviews and made commitments, but to no avail.
Dreyfus hopes to implement several new regulations for real estate agents, accountants, and lawyers to combat money laundering. The severity of the issue is evident when considering that property prices have more than doubled since then, with some cities even tripling in value. It is unclear how much of this is the result of local criminal groups or global forces laundering large sums of money.
However, due to our failure to pass Tranche II legislation, combined with generous tax incentives for property investors and the lack of taxation on profits from owner-occupied homes, Australia’s real estate has become fertile ground for those seeking to legitimize ill-gotten gains.
The amount of cash needing to be laundered is staggering. Brendan Thomas, head of the Australian Transaction Reports and Analysis Centre, stated that criminals still prefer traditional channels such as cash, banks, luxury goods, real estate, and casinos to launder their wealth through the Australian economy.
Attorney General Dreyfus emphasized the importance of not only apprehending and prosecuting criminals but also preventing these crimes from occurring in the first place. He highlighted cases where Chinese citizens purchased over 3,000 hectares of Tasmanian farmland with proceeds from crime, with local accountants advising on how to best circumvent bank trigger mechanisms and fund entry alerts.
Despite resistance from professional bodies representing these groups, they may ultimately be forced to comply after 16 years of international pressure to strengthen investigation and prevention measures. The global task force specifically noted that Australia has failed to extend anti-money laundering and counter-terrorism financing systems to so-called second entities – lawyers, accountants, and real estate agents.
The legal profession argues that such laws may violate client confidentiality clauses. However, after years of resisting enhanced scrutiny and prevention, these three groups may finally be compelled to surrender.
In conclusion, the issue of money laundering in Australia is a serious one that requires immediate attention and action. The government’s proposed reforms are a step in the right direction towards aligning with global standards and combating illicit financial activities. It is crucial for all stakeholders to work together to ensure the integrity of Australia’s financial system and protect the community from the harmful effects of money laundering.