OCTOBER 2018 … REAL ESTATE AGENTS, LAWYERS AND ACCOUNTANTS TO AVOID MONEY LAUNDERING LAWS

 

OCTOBER 2018 … here is the proof!

At which time Australia had been promising to introduce comprehensive “tranche 2” laws since 2006 … but instead the Department of Home Affairs confirmed that Australia would instead pass “phase 1.5” laws as a transitional step …

Why? How convenient for the Real Estate Gatekeepers and their Cohort …

The Scomo Government in preparing the Anti-Money Laundering & CTF Act confirmed the introduction was subject to Parliamentary schedule …

It then confirmed the laws would not include the long-awaited coverage of lawyers, accountants and real estate agents.   

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Real estate agents, lawyers and accountants to avoid money laundering laws

Oct 9, 2018

 

Real estate agents, lawyers and accountants have won a reprieve from tough new anti-money laundering measures with the federal government delaying a planned crackdown on the professions.

*The government had aimed to pass laws to cover these sectors before the end of this year, following a highly critical report from the international Financial Action Task Force (FATF) which warned three years ago that Australia’s real estate sector was at significant risk for money laundering.

*Australia has been promising to introduce comprehensive “tranche 2” laws, with the support of both major political parties, since 2006 – but the Department of Home Affairs confirmed that Australia will instead pass “phase 1.5” laws as a transitional step.

Home Affairs Minister Peter Dutton and Nicole Rose, AUSTRAC CEO, announcing they had reached a settlement with the CBA of $700 million in a money-laundering case in June. Justin McManus

 

The laws will clarify aspects of Australia’s money laundering offences which caused problems during the regulator’s recent cases against Tabcorp and the Commonwealth Bank.

“The government is currently preparing a bill to amend the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (AML/CTF Act),” a spokesperson from the Department of Home Affairs said. “Timing for introduction is subject to the parliamentary schedule.”

Considering options

The new legislation is expected to include changes to the “tipping-off” rules and other secrecy provisions to allow more sharing of information between the government and private sector, including with foreign partners.

The bill will also simplify reporting requirements for cross-border movements of cash or bearer negotiable instruments.

*But the government confirmed the laws will not include the long-awaited coverage of lawyers, accountants and real estate agents.

“The government is considering options to extend AML/CTF regulation to ‘tranche 2’ entities such as lawyers, accountants, and real estate agents,” the spokesperson said.

Real estate agents will avoid new anti-money laundering laws Cole Bennetts

 

*The OECD Working Group on Bribery in International Business Transactions again warned late last year that Australia needed to take urgent steps to address the hole in our financial system, after New Zealand moved to cover the sectors.

*A statutory review of Australia’s anti-money laundering regime in 2016 also identified 84 areas where urgent reform was needed.

$36b cost

*The Australian Criminal Intelligence Commission (ACIC) estimates organised crime costs the Australian community $36 billion each year and “the most common professions exploited by organised crime include lawyers, accountants, financial and tax advisers, registered migration agents, stockbrokers, real estate agents and customs brokers,” their report said.

The UK, Canada, Singapore, Hong Kong, Malaysia are among others to also introduce laws to cover the sectors.

**Anti-money laundering experts have warned that failing to crack down on the illicit flow of funds, including “hot money” from China, has added significantly to Australia’s housing affordability problem.

Financial crime analyst at Thomson Reuters Nathan Lynch said the failure to extend the regime left Australia exposed.

New Zealand took evasive action last year to close down these loopholes. They’ve now regulated lawyers and accountants. Real estate agents will come on board by the end of the year. They went from lagging well behind Australia to leading the way,” he said.

“The unregulated nature of Australian real estate has made it extremely attractive to park criminal funds.”

 

SOURCE:  https://www.afr.com/business/banking-and-finance/real-estate-agents-lawyers-and-accountants-to-avoid-money-laundering-laws-20181008-h16dcd

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Labor proposes crackdown on ‘dirty money’ laundered through Australian real estate

 

ISN’T this good?  Finally it’s out there!!

Through the efforts of FATF, Transparency International, the OECD and reports from Michael West and the Unconventional Economist … shared by CAAN …

IS it the case they have finally acknowledged it is happening because too much of a good thing was being too hard to hide any longer?

Something as noticeable as this … you can’t keep fobbing it off … people see it happening … they say OMG!

IS it the case those in positions of influence have got what they have from doing nothing about money laundering … so are now prepared to see the current interest unfold, and do whatever it may to this sector of the black economy?

 

And there’s more to be said …

CAAN has more to share!

 

Labor proposes crackdown on ‘dirty money’ laundered through Australian real estate

BY BUSINESS REPORTER SUE LANNIN

MONDAY 25 FEBRUARY 2019
A Hills Hoist clothesline with hundred dollar bills on it
PHOTO

AUSTRAC says the laundering of illicit funds through real estate is an established method in Australia.

ABC NEWS: ALISTAIR KROIE

 

*Real estate agents, lawyers and accountants will be forced to report dirty money that is used to buy property if Labor wins the upcoming federal election.

Shadow Treasurer Chris Bowen pledged to extend anti-money laundering (AML) laws to professionals including real estate agents, solicitors and accountants.

The ABC’s Four Corners program last week revealed that Chinese law enforcement agencies employed former police detectives in Australia to covertly track down the proceeds of crime, which may have been illegally transferred to Australia by corrupt Chinese officials or employees of Chinese state-owned enterprises, often by buying homes.

Criminals use real estate to ‘clean’ the money they make from crime by using the proceeds to buy legitimate assets such as houses.

Australia has long been seen as a target for hot money, with real estate agents, lawyers and accountants the weak link because they do not have to report suspicious transactions.

 

Last year, the Federal Government delayed a long-planned extension of the AML laws to non-financial businesses and professions, which would force them to report dodgy deals to financial crimes regulator AUSTRAC.

(CAAN:  * October 2018 Scomo Govt exempted the Real Estate Gatekeepers)

Mr Bowen said the Government had “dropped the ball” on toughening the laws.

“According to the Government’s own work plan, real estate agents should already be covered by our money laundering laws — but the Liberals have done nothing to progress this.

A spokesperson from the Department of Home Affairs said the Government is committed to strengthening anti-money laundering laws and making sure that any changes do not place “undue burden on industry”.

However, * a new bill amending the law does not include the extension of the legislation to real estate agents, lawyers or accountants.

In 2017, the Government commissioned a cost-benefit analysis to look at extending the laws to these groups.

Mr Bowen also said Labor would reverse budget cuts to the Australian Securities and Investments Commission and the Australian Federal Police.

“Only Labor can be trusted to take money laundering financial crime seriously,” Mr Bowen said.

The Federal Government has increased ASIC’s funding after last year’s surprise cut.

International pressure to act on real estate money laundering

Australia has been slammed at home and overseas for failing to extend the AML laws, with New Zealand already passing legislation to stop criminals using real estate agents, solicitors and accountants to launder money.

AUSTRAC said in a 2015 report that the laundering of illicit funds through real estate was “an established money laundering method in Australia”.

It said about $1 billion in suspicious transactions came from Chinese investors into Australian property in 2015-2016.

 

In late 2017, the OECD Working Group on Bribery said that Australia needed to “address the risk that the Australian real estate sector could be used to launder the proceeds of foreign bribery“.

The Financial Action Task Force (FATF), an inter-governmental body which monitors efforts to combat financial crime, also called out Australia for failing to crack down on the significant risk of money laundering through Australian property.

Thomson Reuters financial crime expert Nathan Lynch said the Federal Government was under pressure to act because FATF will visit Australia in September to monitor progress on anti-money laundering laws.

“The international standard setter will want to see evidence Australia has acted upon the weaknesses set out in its 2015 mutual evaluation report. Chief among these was the failure to regulate lawyers, accountants and real estate agents,” he said.

“Chinese oligarchs and organised crime groups are extremely fond of the privacy, lack of scrutiny and legal certainty that Australian real estate offers.”

Mr Lynch’s report for Thomson Reuters Regulatory Intelligence said that Chinese drug syndicates are targeting people in China who want to get their money out of the country and who may not be aware that the house they are buying was originally purchased with cash generated from drug sales in Australia.

“Money laundering facilitators will take these illicit funds, place them in the financial system, then use them to buy hard assets, including real estate,” the report said.

ANZ’s head of financial crime told the ABC in 2017 that Australia was “a place of choice for illegitimate money” because of a lack of regulation.

Real Estate Institute of Australia president Adrian Kelly said the association wanted to limit the impact of any changes on the industry.

“Any moves down this track are going to be an imposition on real estate agents who are largely small-business people,” he said.

“We wish to ensure the impact on agents is minimised because much of the information required can be sought from others involved in the transaction process, including the banks and their conveyancing process, the ATO and the Foreign Investment Review Board,” Mr Kelly said.

 

SOURCE:  https://mobile.abc.net.au/news/2019-02-25/money-laundering-laws-chris-bowen-dirty-money/10846552

KENNETH HAYNE’s FINAL ROYAL COMMISSION REPORT HELD BACK ‘HEAVY HITS’ FROM THE BANKS

Finally someone has put it out there, history may leave Hayne dangling, indeed he may regret he failed to act as they should have …

“The body language said it all” …

 

Kenneth Hayne’s final royal commission report held back ‘heavy hits’ from the banks

ANALYSIS BY STEPHEN LONG

TUESDAY 26 FEBRUARY 2019
Commissioner Kenneth Hayne (left) and Treasurer Josh Frydenberg as the final report is handed over.
PHOTO

Kenneth Hayne and Treasurer Josh Frydenberg share an awkward moment during a photo op.

AAP: KYM SMITH

 

The body language said it all.

On the afternoon of Monday, February 4, representatives of the banking lobby and various other interest groups were locked in a windowless room at Parliament House, perusing the three-volume report of the Hayne royal commission before its public release by the Treasurer.

According to several people in the room, some 35 minutes into the lock-up, Anna Bligh, chief executive officer of the Australian Banking Association, sat back, relaxed and looked around the space.

Bligh’s brow unfurrowed and the tension in her shoulders slipped away.

*Although she and her minions kept reading, the former Queensland Premier had seen enough to know that it was a good outcome for the banks.

“Fifteen minutes in, people were looking perplexed,” recalls someone who was in that room.

“Where were the heavy hits?”

*About the same time as Ms Bligh relaxed, a representative of the industry funds turned to a colleague and said: “He’s squibbed it.”

That phrase soon echoed around the hall.

It became the headline on the Finance Sector Union’s media release expressing “bitter disappointment” at the outcome.

 

Investors also seemed to take the view that Kenneth Hayne had delivered a damp squibthe following day a relief rally sent bank share prices soaring.

*In the wash-up of the royal commission, the disconnect between the evidence unearthed in the hearings and the commissioner’s mild recommendations for change remains striking.

*With a tone of moral outrage, the report catalogues, in detail, transgressions by all the major banks and finance houses such as AMP and IOOF: fees for no service; gouging money from the dead for “financial advice” and even life insurance; traducing customers’ best interests and profiting at the expense of the people these financial institutions are meant to serve.

Is self-restraint the solution to a culture of greed?

The analysis firmly ties this behaviour to an aggressive sales culture in the industry that puts the pursuit of short-term profit ahead of basic standards of honesty and decency.

*”Rewarding misconduct is wrong. Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards,” the commissioner lamented.

*”Providing a service to customers was relegated to second place. Sales became all important.”

How does the commissioner plan to dismantle that culture?

Although he has called for some tweaks to the law, self-regulation is one of the main remedies he’s relying on.

Justice Hayne wants the banks to adopt the recommendations of the Sedgwick review, a study of bank remuneration by former APS commissioner Stephen Sedgwick commissioned by the big banks’ lobby group, the Australian Banking Association.

 

The Sedgwick review stopped short of recommending an outright ban on incentive payments for product sales, but said pay incentives for retail bank staff should not be based directly or solely on sales performance, and that sales incentives should form a minor part of remuneration for bank employees.

*All the banks have publicly committed to implementing the Sedgwick review’s recommendations.

*But bank insiders say privately there is a lot of wriggle room; and how long before commitments are eroded under pressure to deliver shareholder returns?

*Just as instructive is what the Hayne commission didn’t recommend.

The conflicts of interest, the duping of customers, the sales pitches masquerading as financial advice were all underpinned and amplified by regulators’ decisions to let banks swallow up wealth management businesses and broking houses.

This turned banks into vertically-integrated behemoths with a vast sales force to flog financial products they manufactured and sell people investments that made the banks’ money, often regardless of whether this was in the best interests of the customer.

*Enforced structural separation of these businesses was one of the biggest fears of the finance sector and an obvious remedy.

*But it was not considered in the Hayne report.

Super conflicts sidestepped

In a similar way, the royal commission sidestepped the blatant conflicts of interest that extend all the way to the boardroom.

Under law, the “sole purpose” of the trustee of a superannuation fund is to serve the interests of members.

Yet in the retail superannuation funds run for profit by banks and finance companies, the interests of members have been routinely undermined by arrangements that place bank executives and senior employees on the trustee boards.

*What a surprise that trustees whose remuneration in their day job is tied to the profits of the bank have let underperforming super funds funnel huge revenues to the banks that own them and pay multiples of market rates for in-house bank services.

*These conflicted governance arrangements were left untouched by the royal commission.

 

 

After posing the question of what led to the scandalous behaviour, Justice Hayne concluded: “Too often, the answer seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty.”

Yet the laws governing much financial regulation were built on the assumption that “greed is good” — in the economist’s sense that the pursuit of self-interest (profit) will lead to competition and innovation that benefits consumers.

*In the superannuation sector — where not-for-profit industry and corporate funds have overall consistently outperformed bank funds run for profit — this is a highly questionable assumption.

*A different commissioner, a different inquiry, might have contemplated whether the purpose of maximising retirement savings is served at all by having profit-driven funds in the compulsory superannuation sector.

He or she might have gone where the Cooper review of superannuation baulked at going, and recommended that everyone’s superannuation be transferred into a basic account with balanced investments and low fees unless they actively opted out and chose another fund.

But it was unrealistic to expect this from a small ‘c’ conservative and black letter lawyer such as Justice Hayne.

Can bankers really change their spots?

Someone I know recently observed that in most professions — medicine, law, even economics — there is a cohort of people whose primary motivation is not to make money but to serve the public good, but you don’t find this much in finance and banking.

 

It’s a view reflected in popular culture: from Billions to Wall Street and advertisements that harness the trope of the greedy banker, the pursuit of profit and naked self-interest is portrayed as a hallmark of the industry.

Justice Hayne’s view was that the problem lay less with the law than with a lack of enforcement; stung by his criticisms, the corporate watchdog ASIC is now promising that litigation — rather than doing deals with banks — will be its first option.

Yet, at the same time, its new chairman James Shipton has been complaining to all who will listen that ASIC doesn’t have enough money.

If the regulators up the ante, and while the memories of the commission linger, there are sure to be less bankers behaving badly.

Whether it lasts is less certain.

*Like the bread and circuses served up in the arenas of Rome, it may be the royal commission’s main purpose was to distract and entertain.

*The hearings were great theatre — daily revelations of egregious conduct absorbed the populous and the shaming of bank executives and directors helped sate the public’s anger.

There’s even a couple of heads on sticks now NAB’s chiefs have resigned, and the politicians are promising action, though few people will examine the detail.

But will it slowly return to business as usual as we look away?

 

SOURCE:  https://mobile.abc.net.au/news/2019-02-26/hayne-banking-royal-commission-squib/10832620

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LAND AND ENVIRONMENT COURT HALTS DEMOLITION OF SYDNEY FOOTBALL STADIUM

These btards along with their pollie mates and acolytes are on a mission as part of the reshaping of Sydney …
-recycle as much of our public assets and space as possible into the private sector

-remove and replace older developments including those with a significant public amenity purpose with those that provide more lucrative commercial opportunities; indeed landmark sites from the Bicentennial and Olympic events are not seen as worthy of retention

-ensure there is a stream of development sites available to be exploited

-remove as many restrictions as possible and ensure the planning process supports developments even if It is at the expense of local communities …

IT IS A SORDID TALE … MORE COULD BE SAID …

 

Land and Environment court halts demolition of Sydney Football Stadium

BY KATHLEEN CALDERWOOD AND NICOLE CHETTLE

A wide shot of the stadium full of people
PHOTO

A legal challenge threatens the NSW Government’s $730 million plan to knock down the Sydney Football Stadium.

SUPPLIED: MDM AT ENGLISH WIKIPEDIA

 

The Land and Environment Court has halted the “hard demolition” of the Sydney Football Stadium while they prepare a judgement on a legal challenge on its reconstruction.

 

Justice Nicola Pain issued an 11th-hour injunction on Friday, which prevented the developer Lendlease from carrying out “hard demolition” works as part of the government $730 million plan to knockdown and rebuild the stadium.

The ruling means the roof and walls of the stadium can’t be removed until early March.

The community group Local Democracy Matters and Waverley Council launched the legal challenge, claiming the planning process was flawed.

Their lawyers said the NSW Government did not adhere to its own rules around public consultation and design excellence requirements.

Thousands of seats have already been ripped out of the stadium.

Speaking in court today, Local Democracy Matters’ barrister Tim Robertson SC said the matter was urgent because the process was “moving from so-called soft demolition to hard demolition”.

“It’s the initiating step to destroying the stadium,” he said.

“This is not the demolition of a toilet block — this is a demolition of exceptional value.”

Philip Clay SC, representing Waverley Council, told the court there was significant public interest in the case.

Lawyer for Infrastructure NSW, Sandra Duggan, warned delays were costing her client $46,000 a day and threatened the completion date of June 30, 2020.

She told the court the works planned for the next fortnight included the removal of the stadium roof, expansion joints and access stairs.

“There’s no evidence that work is irreversible,” Ms Duggan said, prompting laughter from the public gallery.

“The stadium and roof would remain intact, albeit the roof will be relocated.”

The decision to demolish the stadium followed a NSW Government claim in 2017 the state’s sporting infrastructure fell behind the rest of the country.

 

SOURCE:  https://mobile.abc.net.au/news/2019-02-26/court-halts-hard-demolition-of-sydney-football-stadium/10849068?pfmredir=sm&WT.ac=statenews_nsw

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OPAL TOWER REPORT BLAMES DESIGN, CONSTRUCTION FLAWS

 

b4805086-7224-4ea5-b08a-506d6c37f402

 

The Report commissioned by the NSW Government found changes made after the original Opal Tower design were exacerbated by “construction issues”  … begs the question at whose direction were changes made?

It is the project of the Developer Ecove …

 

 

PROPERTY DEVELOPMENT TED TABET MON 25 FEB 19

 

OPAL TOWER REPORT BLAMES DESIGN, CONSTRUCTION FLAWS

 

An independent report directed to the NSW Minister for Planning and Housing has found multiple design and construction faults led to cracking at Sydney’s Opal Tower.

The Opal Tower final report, made public on Friday after a two-month investigation, found that critical hob beams in the residential tower were prone to cracking due to their design as well as the use of a lower-strength concrete.

The decision to only partially grout between the beams and panels were also highlighted as “adding to the problem”.

The 36-storey Sydney apartment building was evacuated on Christmas Eve after cracking in precast concrete panels was discovered on level 10, sparking fears that the tower could collapse.

The worst of the damage was found on levels 10 and 4 with levels 3, 9, 16 and 26 as well as basement level 3 within the $128 million tower.

Structural failings had resulted above and below the “garden slots”recesses in the facade where precast concrete panels joined structural columns.

Related: NSW Sets up Productivity Commission to Tackle Regulation

The report found that aside from poor assembly of beams, there was also insufficient grout at the joints between the hob beams and panels, causing stress in the panels.

The report found that aside from poor assembly of beams, there was also insufficient grout at the joints between the hob beams and panels, causing stress in the panels.Image: Unisearch
The report, written by three of state’s most senior engineers and triggered by the state government in the days after the cracks emerged, found changes made after the original Opal Tower design were exacerbated by “construction issues”. 

Experts agreed that the timing of the damage was likely caused by the progressive build-up of load on the structure as apartments became occupied, “culminating in the observed failures at level 10”.

“During the numerous visits to the site of the Opal Tower, we inspected and reinspected a number of locations where significant damage had occurred to load bearing concrete members,” the report said.

The report found a number of structural design and construction issues, including non-compliance with national codes and standards, were responsible for the observed damage at Opal Tower.

“We found some of the hob beams and panel assemblies were under-designed according to the National Construction Code and Australian Standards, leaving the beams prone to failure,” the report said.

“We consider the building is overall structurally sound and the localised damage to the building can be rectified.”

The report did not name Australian-based developer Ecove, backed by multi-billion-dollar Japanese firm Kajima Corporation, or the engineers, WSP and builder Icon.

The NSW government-commissioned report called for the creation of databases of registered engineers and NSW building certifications, the implementation of third party certification by an independent registered engineer along with the formation of a building structure review board to monitor known property design flaws.

“These recommendations are about ensuring qualified people design buildings and that buildings are built to those designs,” NSW minister for better regulation Matt Kean said.

Remediation works at the tower are currently under way, and being supervised by owner’s corporation’s engineer Cardno.

Almost a third of the apartments in the 392-unit Olympic Park building remain unoccupied with 34 units directly affected by ongoing remediation works.

LABOR TO TARGET LAWYERS, ACCOUNTANTS, REAL ESTATE AGENTS

Image result for FOUR CORNERS PROJECT DRAGON

DIRTY MONEY IN AUSSIE REAL ESTATE … CLEAR AND PRESENT DANGER!

Shadow treasurer Chris Bowen is promising to make cross-border financial crime a pillar of Labor’s election campaign in wake of the Hayne royal commission …

A 12 YEAR DELAY FOR REFORMS!

“Malaysia, Singapore Hong Kong and New Zealand have all taken action. This makes Australia a highly attractive destination for the proceeds of crime,” financial crime analyst at Thomson Reuters, Nathan Lynch said. “Most Aussies, especially FIRST HOME BUYERS, would be furious to learn that they’re competing for houses with people who are trying to wash the proceeds of illicit drug sales, fraud or corruption.”

WHY did the LNP fail to act?  Such reluctance … is it the company they keep?

It’s on the Public Record that in our midst through the PROXY, Alliances and Syndicates … people without genuine financial circumstance are owners of multiple properties …

WHY is this so?

HOW can this happen?

VIEW CAAN WEBSITE for categories or search:

-Anti Money Laundering Legislation Shelved

-Black Money:  Money Laundering in Australian Real Estate

-Proxy Buyers, Agents and Trustees … Family & Friends

-Visa Manipulation

WHY is it with the purchase of real estate there should be some difference compared to buying or selling a vehicle, why is it different?

Why is it difficult to apply laws to the purchase of real estate?

Why is that compromising a lawyer?  Why should real estate be any different to any other matter?

If there are laws governing real estate so be it.  It should not make any difference to a lawyer. If lawyers have a matter before them that involves a crime they have two choices:

-do it for their client knowing their risk

-not do it

READ MORE!

https://www.afr.com/business/labor-to-target-lawyers-accountants-real-estate-agents-20190224-h1bnd3

SLUICE GATE – MONEY LAUNDERING AND REAL ESTATE SHAPE AS AN ELECTION ISSUE!

 

MOVING ON THE ‘DIRTY MONEY’ …

RE Agents, lawyers and accountants are included in proposed Anti Money Laundering (AML) mechanisms because on the rare occasion this behaviour has come to light!

.they have been found to be involved in such transactions
.they operate and/or have access to trust accounts
.are able to handle large transactions, and indeed could be used in avoiding scrutiny by AUSTRAC (they usually start their work at a lower end of $10K)

-rumours about brief cases of cash being seen at the sale of real estate have not gone unnoticed, for only a limited time can such goings-on occur before people start talking and sure enough that time has come

FURTHER …

… IN most cases political parties arrive at policy announcements after a fairly exhaustive internal debate and examination of the issues, involving:
-research to define and refine the area of interest
-discussion groups tasked with identifying who, where and why
-testing opinions using focus groups to identify matters not raised earlier in the process
-final evaluation through a committee process
-adoption at higher levels after consultation with some/all stakeholders

SO …
-this latest tilt at AML has probably been on internal agendas for some time, and has likely only surfaced now as part of an overall strategy worked out months ago

Basically it’s all contrived, very little is left to chance …

 

Sluice Gate – money laundering and real estate shape as an election issue

Sluice Gate – money laundering and real estate shape as an election issue
Financial crime. (Image courtesy http://www.raymancini.com.au/)

“Most Aussies, especially first homebuyers, would be furious to learn they’re competing for houses with people who are trying to wash the proceeds of illicit drug sales, fraud or corruption,” writes financial crime expert Nathan Lynch.

Yet incredibly – as global money laundering authorities are increasingly annoyed about Australia’s failure and dithering on compliancereal estate agents, lawyers and accountants still remain free from money laundering laws which were supposed to be introduced 12 years ago.

In the story below, Lynch, a financial crime expert from Thomson Reuters, examines how the government has been making cuts to the Australian Federal Police and ASIC as Australia falls further behind the rest of the world on fighting financial crime.

Two years ago, this website revealed how the Financial Action Task Force (FATF) had put Australia on a watch-list for its failures to comply. For five years, we have been contacting the Minister for Justice to ask when its promised legislation would be enacted, only to be stonewalled.

 

VIEW:  Australia on watch-list as China billions pour into property

https://www.michaelwest.com.au/australia-on-watch-list-as-china-billions-pour-into-property/embed/#?secret=iDw5P8adS8

Now however it is shaping up as an election issue in the wake of the systemic fraud unveiled by the Banking Royal Commission.

Labor is putting financial crime and regulatory policy front and centre in the lead-up to the May election. It’s part of a broader financial crime and regulatory strategy post-Royal Commission,” Lynch tells this website.

“Australia needed to act quickly with the Financial Action Task Force (FATF) due to run a razor across the country’s (Australia’s)  AML/CTF regime in September. (2019)”

He says overseas banks may need to apply enhanced due diligence to Australian companies if the laws are not in place.

“This “EDD” (expected delivery date) had imposed significant costs on New Zealand’s economy, as well as delaying international payments, when the Panama Papers exposed widespread money laundering through foreign trusts.

“The New Zealand government did the numbers in 2016 and discovered, to their horror, that their exporters were paying a real price for these policy failures.

This was particularly damaging in Europe and the US, where the banks have very strong AML obligations. Australian importers and exporters face the same problems if the FATF declares us to be breaching our international AML/CTF obligations, Lynch said.

“The Tranche 2 reforms had been delayed for more than 12 years, leaving Australia well behind the rest of the Asia-Pacific region.

“We’ve dropped the ball on this crucial policy issue, there’s no doubt about it. Malaysia, Singapore Hong Kong and New Zealand have all taken action.

*This makes Australia a highly attractive destination for the proceeds of crime.

*“Chinese oligarchs and organised crime groups are extremely fond of the privacy, lack of scrutiny and legal certainty that Australian real estate offers,” Lynch said.

China’s decision to use ‘bounty hunters’ to track down assets is extremely controversial. It poses diplomatic challenges during a difficult time for Australia-China relations.

“There’s formal channels to pursue illicit assets and the Australian government has expressed its strong desire for China to use those avenues,” Lynch says. “A lot of the time, the difficulty for Australian authorities is the lack of a prosecution in China.

*“Under Australian law, there’s very little authorities can do for China if the Mainland hasn’t secured a conviction or issued arrest warrants.

*One of the long-term challenges with cross-border asset recovery operations is that China has been unable to issue arrest warrants for offences if the alleged offender has already left the country.

*This legal loophole was eventually amended but only for corruption-related offences. The result is that financial criminals could leave China and move their assets to Australia with near-impunity.

“Criminal money is fluid, opportunistic and innovative,” says Lynch. “It flows very quickly to the path of least resistance. Australia’s problem right now is that we’ve opened a sluice gate to allow that money to flow into our residential and commercial property markets. This can create a lot of systemic risk in the broader economy if it’s allowed to run for too long.”

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THE FIGHT against cross-border financial crime is shaping up to be a political battlefield in Australia, as the major parties prepare their policy platforms for this year’s federal election, writes Nathan Lynch.

The election will be held against the backdrop of the financial services Royal Commission, a cooling property market and revelations that Chinese kleptocrats have washed billions in the proceeds of corruption through Australian real estate over the past decade.

*Chris Bowen, the shadow treasurer, has made it clear that financial regulation and anti-money laundering policy will feature heavily in Labor’s 2019 election campaign. On Friday, Bowen gave Thomson Reuters Regulatory Intelligence an exclusive insight into the financial crime platform that Labor will take to voters.

*Crucially, the shadow treasurer has committed to push ahead with the “tranche two” AML/CTF laws for real estate agents, lawyers and accountants if Labor wins the next election. A Shorten government would also reverse funding cuts to the Australian Federal Police (AFP) and the Australian Securities and Investments Commission (ASIC) to help tackle serious and cross-border financial crime.

Australia is expected to go to the ballot in May, with recent polling data predicting a 2.5 percent swing against the incumbent Coalition. Political analysts have said the election result could go either way, however, with the result too tight to predict at this early stage.

Hot money, even hotter property

Australia’s financial crime laws have become a pre-election policy minefield, following revelations about “dirty money” in the Project Dragon investigations on ABC’s Four Corners and Regulatory Intelligence last week.

Shadow treasurer Chris Bowen said the reports about Chinese money laundering and potential foreign interference were concerning. The investigations unearthed evidence of “bounty hunters” operating in Australia with orders to recoup illicit assets on behalf of the Chinese Ministry of Public Security (MPS).

Bowen said the government had “completely dropped the ball” on money laundering reform.

“According to the government’s own work plan, real estate agents should already be covered by our money laundering laws.

(CAAN:  That is misleading!  The LNP as recently as October 2018 exempted the Real Estate Gatekeepers from the Anti Money Laundering Legislation; second tranche; AFR; with black money awash in our Real Estate: 

View:                                         

https://caanhousinginequalitywithaussieslockedout.wordpress.com/2019/02/26/8746/?fbclid=IwAR0lSgXKd4s0CzghnG95Z8-lcYQyizpAh636RYn5rhnwHKXdD-OnYnE4sKk  )

 

The Liberals have done nothing to progress this,” Bowen told Regulatory Intelligence, after viewing and reading the reports.

The incumbent government, meanwhile, has said it will begin to move on the issue as soon as the “parliamentary timetable” allows.

Peter Dutton, the Home Affairs minister, has been sitting on transitional “Phase 1.5” legislation since late last year. The Coalition government said it could not set a firm timetable for laws enacting the second tranche of the AML regime, which has been a bipartisan federal policy since 2006.

Tsunami of flight capital

The Project Dragon investigations showed that Australia’s failure to crack down on laundering through real estate agents, lawyers and accountants had attracted a tsunami of flight capital to the country’s shores.

China’s unprecedented moves to engage bounty hunters reflect the scale of the problem, as well as Beijing’s frustration. These private sector “civil recovery agents” are skirting dangerously close to Australia’s new foreign interference laws, experts said.

Neil Jeans of Initialism, a Melbourne based AML/CTF consultancy, described the civil recovery agents acting on behalf of China as unprecedented and “operating in a very grey area of what is legal and what is illegal in Australia.”

“I think the bounty hunters need to tread carefully. They need to walk a very, very narrow line, or they could find themselves on the wrong side of the criminal law very easily,” Jeans said.

Bill Majcher, a civil recovery agent based in Hong Kong, said real estate agents, lawyers and accountants had become central to the major laundering activities in Australia. The former undercover agent for the Canadian Mounties said it was well known that illicit funds flowed to the path of least regulatory resistance.

The Chinese MPS is concerned that tens of billions of dollars have poured into Australia from China over the past decade, as corrupt officials sought to park their funds in a safe jurisdiction, Majcher said.

“Australia is a very attractive destination for Chinese kleptocrats,” he said.

*China is also concerned about a tsunami of money flowing back into the country after being washed abroad, Majcher added. He said this was a major concern for President Xi Jinping, as the returning proceeds of corruption are undermining the authority of the Chinese state.

“It’s not all about the outflow. China’s government is also very concerned about illegal capital inflows. They understand that billions of dollars flow outside of the country, outside of the purview of the government, as the byproduct of corruption and criminality. That money comes back into China without them seeing it and fuels further corruption and criminality. So it’s a two-way street,” Majcher said.

Reinforcing enforcement

Bowen said the Coalition government’s inaction on Tranche 2 of the AML regime was consistent with its broader policy failure with regards to tackling serious financial crime. He pointed out that the Coalition had baulked on its promised AML/CTF Act reforms since coming to power in the September 2013 election.

*“The Liberals aren’t interested in prosecuting serious financial crime. They cut funding to ASIC, they planned to cut funding to the Serious Financial Crime Taskforce and they ripped hundreds of millions of dollars out of the Australian Federal Police (AFP), who work with our partners abroad to disrupt transnational organised crime,” the shadow treasurer said.

The opposition will reverse cuts to the AFP and ASIC if it takes power in May.

“Under the Liberals, we’re set to lose more than 500 AFP officers over the next four years. Who is going to crack down on these crimes?” Bowen said.

“Only Labor can be trusted to take money laundering financial crime seriously.”

*Bowen’s comments were supported by industry experts, who said the government had missed an opportunity to get legislation through in a policy area that has bipartisan support.

“The current government has had ample opportunity to act on deficiencies in the current AML/CTF regime, including those identified by the FATF. This is particularly concerning as the FATF are coming back later in 2019 to assess Australia’s progress in addressing the gaps in the AML/CTF regime they identified in 2015,” Jeans said.

The costs of non-compliance

*Australian businesses that do international transactions could suffer financial costs if the government fails to act before the FATF runs a razor across the country’s AML/CTF regime in September. AML experts said banks would need to apply enhanced due diligence to Australian companies if the laws are not in place.

This “EDD” had imposed significant costs on New Zealand’s economy, as well as delaying international payments, when the Panama Papers exposed widespread money laundering through foreign trusts.

The New Zealand government did the numbers in 2016 and discovered that their exporters were paying a real price for these policy failures. This was particularly damaging in Europe and the US, where the banks have strong AML obligations.

*Australian importers and exporters face the same problems if the FATF declares the country to be breaching its international obligations on “gatekeeper” professions.

Jeans said the failure to address the FATF issues, combined with the lack of action in addressing the 84 recommendations identified in the Attorney General’s Department 2016 Statutory Review, puts Australia in a vulnerable position with its international partners.

“It this is not urgently addressed it could have an adverse impact on Australia’s international standing and the financial services sector’s ability to transact internationally,” he said.

Chinese interference

*With regards to China’s use of civil recovery agents in Australia, the opposition said this had set a worrying precedent and needed to be addressed.

The shadow treasurer urged China to stop the practice and return to the use of official channels, such as the mutual cooperation agreements between the Ministry of Public Security and the AFP.

“We believe the best way to deal with transnational crime is through official cooperation, including arrangements that already exist between Australia and China,” Bowen told Regulatory Intelligence.

Project Dragon, which aired on Four Corners, is available to view on ABC iView

———————

 

This article was published in Thomas Reuters and is republished with permission. See the original here Regulatory Intelligence — Anti-Money Laundering Report –Project Dragon.

Nathan Lynch is the Asia-Pacific Bureau Chief, Financial Crime and Risk at Thomson Reuters.

 

 

SOURCE:  https://www.michaelwest.com.au/sluice-gate-money-laundering-and-real-estate-shape-as-an-election-issue/

CAAN FACEBOOK:

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LABOR MAKES PROPERTY MONEY LAUNDERING AN ELECTION ISSUE

“In 2015, the Paris-based Financial Action Taskforce’s (FATF) mutual evaluation report found Australian homes are a haven for laundered funds, particularly from China, and demanded we implement the tranche two AML rules.

Then in June 2017, FATF placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.”

YET in October 2018 … the Scomo Government exempted the Real Estate Sector from Anti-Money Laundering Legislation (the second tranche) …

“In September 2019, FATF is scheduled to conduct another evaluation of Australia’s AML laws, which is certain to lead to further censure, damage Australia’s international reputation, and potentially result in Australian companies facing enhanced due diligence abroad.

Put simply, Labor must act.”

 

https://sourceable.net/australian-real-estate-haven-money-laundering/

 

 

Labor makes property money laundering an election issue

 

By Leith van Onselen

 

*For years MB has lobbied the federal government to enact the second tranche of anti-money laundering (AML) legislation covering real estate gatekeepers.*

These laws were promised more than a decade ago and the federal government’s failure to implement has left Australia with the weakest AML laws in the world and has made Australian property a haven for laundered funds, especially from China.

Finally, Labor has signalled that action to combat money laundering and financial crime will be a key focus of its 2019 election campaign.

Shadow treasurer, Chris Bowen, has committed Labor to implementing the second tranche of AML rules and criticised the Coalition’s lack of sufficient action on the issue, as well as its decision to reduce funding for the Australian Securities & Investments Commission (ASIC) and the Australian Federal Police.

*Nathan Lynch – the Asia-Pacific Bureau Chief, Financial Crime and Risk at Thomson Reuters – explains in further detail:

Chris Bowen, the shadow treasurer, has made it clear that financial regulation and anti-money laundering policy will feature heavily in Labor’s 2019 election campaign.

On Friday, Bowen gave Thomson Reuters Regulatory Intelligence an exclusive insight into the financial crime platform that Labor will take to voters.

*Crucially, the shadow treasurer has committed to push ahead with the “tranche two” AML/CTF laws for real estate agents, lawyers and accountants if Labor wins the next election.

*A Shorten government would also reverse funding cuts to the Australian Federal Police (AFP) and the Australian Securities and Investments Commission (ASIC) to help tackle serious and cross-border financial crime…

Bowen said the government had “completely dropped the ball” on money laundering reform…

He pointed out that the Coalition had baulked on its promised AML/CTF Act reforms since coming to power in the September 2013 election…

“According to the government’s own work plan, real estate agents should already be covered by our money laundering laws. The Liberals have done nothing to progress this,” Bowen told Regulatory Intelligence, after viewing and reading the reports…

“Only Labor can be trusted to take money laundering financial crime seriously.”

Bowen’s comments were supported by industry experts, who said the government had missed an opportunity to get legislation through in a policy area that has bipartisan support.

“The current government has had ample opportunity to act on deficiencies in the current AML/CTF regime, including those identified by the FATF.

*This is particularly concerning as the FATF are coming back later in 2019 to assess Australia’s progress in addressing the gaps in the AML/CTF regime they identified in 2015,” Jeans said…

Australia’s financial crime laws have become a pre-election policy minefield, following revelations about “dirty money” in the Project Dragon investigations on ABC’s Four Corners and Regulatory Intelligence last week…

*The Project Dragon investigations showed that Australia’s failure to crack down on laundering through real estate agents, lawyers and accountants had attracted a tsunami of flight capital to the country’s shores.

China’s unprecedented moves to engage bounty hunters reflect the scale of the problem, as well as Beijing’s frustration…

*Bill Majcher, a civil recovery agent based in Hong Kong, said real estate agents, lawyers and accountants had become central to the major laundering activities in Australia. The former undercover agent for the Canadian Mounties said it was well known that illicit funds flowed to the path of least regulatory resistance.

The Chinese MPS is concerned that tens of billions of dollars have poured into Australia from China over the past decade, as corrupt officials sought to park their funds in a safe jurisdiction, Majcher said.

*“Australia is a very attractive destination for Chinese kleptoctrats,” he said…

*Nathan Lynch said the Tranche 2 reforms had been delayed for more than 12 years, leaving Australia well behind the rest of the Asia-Pacific region.

“We’ve dropped the ball on this crucial policy issue, there’s no doubt about it. Malaysia, Singapore Hong Kong and New Zealand have all taken action. This makes Australia a highly attractive destination for the proceeds of crime.

*“Chinese oligarchs and organised crime groups are extremely fond of the privacy, lack of scrutiny and legal certainty that Australian real estate offers,” Lynch said…

“Criminal money is fluid, opportunistic and innovative. It flows very quickly to the path of least resistance. Australia’s problem right now is that we’ve opened a sluice gate to allow that money to flow into our residential and commercial property markets. This can create a lot of systemic risk in the broader economy if it’s allowed to run for too long.

Most Aussies, especially first homebuyers, would be furious to learn that they’re competing for houses with people who are trying to wash the proceeds of illicit drug sales, fraud or corruption,” Lynch said.

In 2015, the Paris-based Financial Action Taskforce’s (FATF) mutual evaluation report found Australian homes are a haven for laundered funds, particularly from China, and demanded we implement the tranche two AML rules.

Then in June 2017, FATF placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.

In September 2019, FATF is scheduled to conduct another evaluation of Australia’s AML laws, which is certain to lead to further censure, damage Australia’s international reputation, and potentially result in Australian companies facing enhanced due diligence abroad.

Put simply, Labor must act.

unconventionaleconomist@hotmail.com

What to Expect from the Property Market in 2019: Experts Weigh In

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Falling property prices, credit availability and uncertainty ahead of the federal election are factors shaping Australia’s property industry this year.

Westpac chief economist Bill Evans on Thursday said he expects falling house prices to drag the economy, that could ultimately force the Reserve Bank to make two cuts this year.

Speaking at The Urban Developer’s 2019 Property Market Outlook event today in Brisbane, Macroplan chairman Brian Haratsis said he thinks the banks will keep the cash rate at 1.5 per cent for the calendar year.

“But either way, it doesn’t really matter,” he said.

“Because what will happen is, I think credit spreads will actually increase. So, if the Reserve Bank was to reduce interest rates, mortgage rates won’t come down.

“The banks will retain credit spread, the banks will retain margin — so it probably won’t have a big impact on the overall market outcome,” Haratsis said.

Domain Research analyst Eliza Owen said the market is pricing in further cash rate cuts towards the end of 2019.

“I think it’s important as to what happens in the housing market,” she said.

“With the RBA coming out recently and saying that if they can’t stabilise the property market, it’s going to have an impact on wages growth and employment because so many people are employed in construction and real estate.

“Historically we’ve seen there have been successive cash rate cuts, and Australian property prices have responded. That’s because when the cost of money is cheaper Australians have the tendency to borrow more money to buy housing.”

Australia’s changing housing market drivers

One of the most important things to understand is how the housing market has gone from depending on market forces and the cash rate, to dependence on government policy, and its impact on credit markets, explained Owens.

“While housing cycles are influenced by interest rates, policy has started to have much more of an impact.”

In their response to targets set by APRA Owens says banks have well “over-shot” targets.

“The latest banking data shows growth in investment lending is not just below 10 per cent, it’s at 1.6 per cent.

“The portion of interest only lending out of total lending is down to 16 per cent.”

The property market in 2019

Across the major capital cities, Haratsis anticipates Sydney home prices to fall 8 per cent for the 2019 calendar year.

And forecasts Melbourne house prices to also fall eight per cent.

While in southeast Queensland, Owens said Brisbane was outperformed by the Sunshine Coast and Gold Coast property markets for the final quarter in 2018.

However Owens said Domain has been tracking where viewers are looking when they search for property.

“Brisbane is actually, currently, the top capital city in terms of views per listing,” Owens said.

A key factor of this year’s federal election is housing

As Australia faces a federal election this year, The Urban Developer’s Adam Di Marco says several policies impacting the housing sector, notably, negative gearing and capital gains tax are up for grabs.

“The election battlegrounds of housing and property include negative gearing, public housing, infrastructure and ‘city deals’, banking reform, population and foreign investment,” he said.

With news surfacing overnight that China has banned Australian coal exports, Haratsis says it’s something to keep an eye on as news develops.

So far RBA governor Phillip Lowe has said he doesn’t expect the blocking of Australia’s coal imports to have a “dramatic effect” on the economy, as it’s understood the blocking could span a couple of months.

‘UNPRECEDENTED OVERDEVELOPMENT’ AT WATERLOO SLAMMED BY LORD MAYOR

SELLERGATE …  WATERLOO … purported to be part of the Berejiklian Government’s “communities plus” program, in which PRIVATE HOUSING is built on PUBLIC LAND to fund the upgrade or replacement of PUBLIC HOUSING will include a mere 35 per cent of ‘social and affordable housing’ … note no longer “Public Housing” …

-to be staged over 20 years

-seven towers up to 40-storeys high and another 12 towers up to 32-storeys high

-the proposal for some 6,800 homes east of a new metro station at Waterloo, and 700 above the station

-only 70 of the 700 apartments above the station will be set aside for social housing, and 35 for affordable rental units.

NOTE FOR YOUR DIARY … A public meeting is now set to take place Wednesday 6 March, at Alexandria Town Hall.

 

‘Unprecedented Overdevelopment’ at Waterloo Slammed by Lord Mayor

 

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City of Sydney Lord Mayor Clover Moore has expressed her dismay at recently renewed plans for 6,800 new homes to be built in an area to the east of a new metro station at Waterloo.

 

The development, part of the government’s “communities plus” program, in which private housing is built on public land to fund the upgrade or replacement of public housing will include 35 per cent social and affordable housing.

The 20-hectare Waterloo precinct sits 3 kilometres south of Sydney’s CBD and includes large swathes of government-owned land, including the Waterloo Metro Quarter and the Waterloo Estate.

The development, to be staged over 20 years, includes seven towers up to 40-storeys high and another 12 towers up to 32-storeys high.

Lord Mayor Clover Moore, who has called for local residents and businesses to meet and discuss the future of Waterloo, said the NSW government’s concept plans for Waterloo were “gross overdevelopment”.

Under the proposal, which would create one of the densest conglomerations of development in the country, about 6,800 homes would be built in an area to the east of a new metro station at Waterloo, and 700 to be built above the station itself.

Only 70 of the 700 apartments to be built above the station will be set aside for social housing, and 35 for affordable rental units.

“The NSW government’s proposal is little more than a glossy brochure and a press release.

“It provides few details, and the artist’s impressions obscure the terrible outcomes this plan will produce for the public,” Moore said.

“Of the 4,788 additional dwellings proposed on the Waterloo Estate, the redevelopment will only provide an extra 28 homes for social housing tenants.”

Moore argues that up to 4,300 extra vehicles would be added to an already dense and congested area with 3,850 car parking spaces planned for Waterloo Estate and 427 spaces for the Metro Quarter.

“Residents in Waterloo are telling me they are deeply distressed and concerned.,” the Lord Mayor said.

“The government’s so-called community ‘consultation’ has lacked any proper detail and ignored the impacts.

“We’re holding a public meeting to discuss the government’s proposal with all concerned Waterloo residents and businesses.”

“We need to find a better way forward.”

The public meeting is now set to take place Wednesday 6 March, at Alexandria Town Hall.

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