Following this program in February 2018 … the Morrison Government exempted (excluded) the Real Estate Gatekeepers … the lawyers, accountants, conveyancers, and real estate agents from the Second Tranche of the Anti-Money Laundering Legislation … in October 2018 …
IMAGE: AUSTRALIA’S LAXED LAWS MAKE IT ATTRACTIVE FOR CRIMINALS TO LAUNDER THEIR MONEY IN REAL ESTATE (SUPPLIED: DISTRICT COURT OF WA)
Stash pad: How criminals are laundering their dirty cash in Australian real estate
Sunday 18 February 2018 8
(view full episode) IMAGE: AUSTRALIA’S LAXED LAWS MAKE IT ATTRACTIVE FOR CRIMINALS TO LAUNDER THEIR MONEY IN REAL ESTATE (SUPPLIED: DISTRICT COURT OF WA)LINK TO LARGER IMAGE.
International experts are warning that Australia is one of the most attractive destinations to launder money through real estate.
Criminals from all over the world are looking at mansions in the suburbs of Melbourne and Sydney to park their cash.
Reporter Connie Agius investigates the gaps in our money laundering laws and why they haven’t been closed.
ARTICLE:NAB working with AUSTRAC on money laundering and counter terrorism funding issues – Having secured a record $700m fine from CBA, financial intelligence agency AUSTRAC is now working with NAB on “a number of issues”.
ARTICLE:CBA to pay record $700m fine over money laundering breaches – The Commonwealth Bank agrees to pay a record $700 million fine for breaches of anti-money laundering and counter-terrorism financing laws.
ARTICLE:How $1m of your money helped trap the world’s most wanted money launderer – How Australian taxpayer dollars and a fake drug cartel helped bring down the world’s most wanted money launderer.
Alice Brennan: You can’t have organised crime without money laundering. Just ask Saul Goodman from a Breaking Bad:
[Excerpt from Breaking Bad]
International experts say Australia is one of the most attractive destinations for money laundering. I’m Alice Brennan, and today on Background Briefing we’re delving into why, why are criminals from all over the world looking into mansions in the suburbs of Melbourne or Sydney and thinking to themselves, hmm, that’s where I want to park my cash. Where are the gaps in our laws and why haven’t they been closed yet? After all, they’ve been on the books for over a decade now. And yes, we also investigate the merits of disguising your illegally obtained cash in businesses like cafes and nail salons.
[Excerpt from Breaking Bad]
Connie Agius has the story.
Connie Agius: Australian real estate. It’s in high demand. Families, developers, investors, everyone wants a piece of it. Even organised crime groups. Australia is one of the most attractive places in the world to launder money through real estate.
Real estate agents, accountants and lawyers handle large sums of cash with little scrutiny because they aren’t covered by federal anti-money laundering laws.
Serena Lillywhite: There’s no time to waste to ensure that real estate agents, accountants and lawyers are covered by the same requirements to report suspicious transactions to Australia’s financial regulator.
Connie Agius: International crime syndicates love it.
Scott Cook: Organised crime is about money. Money laundering facilitates organised crime.
Connie Agius: In this Background Briefing, we’ll investigate how and why Australia’s laws fall short.
It’s 6pm, and a black Mazda parks outside Auburn RSL. Two brothers are inside the car. Ten minutes later, another car pulls up next to them. The driver talks to the brothers, grabs a backpack and passes it to the men. They all drive away.
The brothers have no idea they’re under police surveillance. The police officers stop and search their car and open the backpack. Inside are two vacuum-sealed plastic bags with rolls of cash: $250,000. The brothers are collecting cash for an international money laundering network. Police say they have no idea how many professional syndicates like this are operating in Australia.
Detective Superintendent Scott Cook was the Commander of the Organised Crime Squad for the New South Wales Police Force from 2014 until this year. He says these illegal transactions happen all the time.
Scott Cook: Most people in the street would not even notice that it’s happening. I think that’s highlighted by the fact that a transaction for $250,000 happens in western Sydney and no one notices. That’s how subtle it is.
Connie Agius: The service the brothers are providing outside Auburn RSL is the first step of many to clean illegal money and get it into the legitimate market. If police hadn’t intercepted the cash, it would have been sent overseas.
Scott Cook: That money is then diverted either electronically through bank accounts, into businesses. And sometimes they transfer it into what’s trade based money laundering. For example buying 100 iPads and then selling them in China in order to get the value transferred from Australia to China, and so that transfer of value is what is really occurring, but there are many methods.
Connie Agius: That money would have been returned to the criminal in the form of normal-looking transactions. Squeaky clean.
The New South Wales Crime Commission says services like this are about moving large amounts of money quickly, and distancing the criminal from the process.
These two men were involved in a syndicate that laundered at least $19 million for Australian organised crime figures before they were caught and convicted.
Journalist [archival]: An expert on monetary laundering laws expects heads to roll at the Commonwealth Bank after allegations the bank allowed itself to be used for unlawful transactions.
Connie Agius: The conviction is one of 53,000 alleged breaches of Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act in a case brought against the Commonwealth Bank of Australia at the end of 2017.
Journalist [archival]: The corporate regulator ASIC has lashed out at the Commonwealth Bank for not telling it about tens of thousands of alleged breaches of anti-money laundering laws…
Journalist [archival]: Also staggering is the claim that CBA did not monitor its customers, even after it became aware of suspected money laundering.
David Chaikin, University of Sydney Business School [archival]: They’re very serious allegations because it’s the first time in Australian history that a financial institution has been accused of facilitating money laundering.
Connie Agius: Organised crime needs money laundering. These groups look for opportunities to clean their money without attracting police attention. And that comes at a cost.
Scott Cook: There’s all these other societal costs that people don’t see directly and this is the thing about organised crime, it’s largely not seen. It’s infiltration of industry, it’s the infiltration of institutions in this country, it’s not seen. Together with money and money laundering, the infiltration of legitimate businesses, for example, is the way organised crime works.
Connie Agius: The United Nations Office on Drugs and Crime says up to US$2 trillion is laundered around the world every year.
Australia’s financial regulator, AUSTRAC, says it’s difficult to know how much is laundered in Australia and the loss to our economy. An estimate in 2004 put the loss from money laundering at $4.5 billion. That means you pay more tax, less money goes towards your local hospital, you can’t afford to buy your first home, and ultimately money laundering fuels more crime on our streets.
Superintendent Krissy Barrett is the national coordinator for money laundering at the Australian Federal Police. She plays a key role in their organised crime and cyber portfolio.
Krissy Barrett: The AML/CTF Act regulates financial and remittance services, gambling industry, and it regulates bullion industry as well.
Connie Agius: The law she’s referring to is Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act, which authorities call the AML/CTF Act.
Krissy Barrett: It captures most of the industries that are providing services around opening or transacting accounts, accepting international fund transfer instructions to move money offshore, or exchanging money for gaming chips or tokens or anything where you are changing the value of cash into another commodity.
Connie Agius: The law targets some big players; banks, casinos, and precious metal dealers.
Krissy Barrett: They have obligations about knowing their client, knowing their customer, conducting ongoing customer due diligence, they have record keeping obligations, they have obligations to report suspicious matters in a timely manner, the threshold transactions.
Connie Agius: These obligations are like circuit breakers. A circuit breaker stops electricity when the energy supply might damage the wiring in your house. A transaction report is designed to trigger an investigation to determine whether proceeds from crime are entering Australia’s financial system.
But is the current Australian legislation working? Not all the time, according to John Chevis. He spent 12 years working on fraud, corruption and terrorist financing cases for the Australian Federal Police and is now an adviser on money laundering to the United Nations. He says the allegations against the Commonwealth Bank aren’t isolated.
John Chevis: There’s a range of cases that have been examined recently where individuals have been charged with money laundering offences, and the reconstruction of those individuals’ movements show that they had been conducting smurfing transactions or structured transactions, depositing amounts of cash into bank accounts at just below the reporting threshold of AU$10,000.
Connie Agius: One of those cases was heard in Western Australia. A money laundering syndicate based in Hong Kong used cash collectors here to deposit proceeds from crime into Commonwealth and Westpac bank accounts. Each transaction was under the reporting threshold of $10,000. This syndicate moved at least $29 million in 10 months.
John Chevis: We’ve had instances shown in court cases where people have been banking literally hundreds of thousands of dollars in cash a day just by walking around the banks in the CBD in Sydney and depositing $9,000 at a time without showing any form of identification.
Connie Agius: There are penalties under civil and criminal law for banks if this can be proven. But John Chevis says the civil penalties aren’t always enough to ensure banks follow the rules.
John Chevis: The Anti-Money Laundering and Counter-Terrorism Financing Act puts obligations on banks to conduct customer due diligence. Now, those penalties for failures in that regard are civil penalties, so no one can go to jail if they don’t do it properly. The risk with those sorts of civil penalties is that the decision to comply with the law perhaps then becomes then a business decision.
Connie Agius: And he says the criminal penalties are never applied.
John Chevis: The criminal code places obligations on all of us, including banks, to not deal in proceeds of crime. But they’ve not been applied against banks, and in many respects banks have been a bit of a protected species when it comes to handling the proceeds of crime.
Connie Agius: Lawyers, accountants and real estate agents can conduct transactions worth thousands of dollars on behalf of clients.
They’re called professional facilitators, and they’re currently not covered under Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act. That means they don’t have to report suspicious transactions to Australia’s financial regulator, AUSTRAC.
We spoke to an investigator from the New South Wales Crime Commission, who can’t be named because of ongoing operations. She’s worked with state, federal and international law enforcement to investigate key figures in organised crime groups and confiscate the money and assets they’ve made from breaking the law. She’s seen criminals use professional facilitators to launder their money.
Investigator: We do have evidence that shows that professional facilitators are often very much aware of who they’re dealing with, why they’re dealing with those individuals, and that at the very minimum they are reckless to the fact that they’re dealing with the proceeds of crime or setting up structures to enable someone else to deal with the proceeds of crime.
Connie Agius: Detective Superintendent Scott Cook says it’s becoming more obvious that organised crime figures are using professional facilitators to launder their money.
Scott Cook: And so we’re seeing more and more facilitators being misused. We’ve seen examples where one individual had 30 companies, none of them produced any profit, none of them paid any tax, but they had millions of dollars going through. Now, that’s money laundering. Those companies were set up and established by an accountant who is not required under the current legislation to report.
Connie Agius: The Australian government is currently considering expanding the anti-money-laundering legislation to cover real estate agents, lawyers, accountants, as well as conveyancers, luxury good dealers and trust or company service providers.
But here’s the thing; the laws have been under consideration since 2007. John Chevis says 11 years later, consecutive governments have failed to introduce what’s referred to as the ‘second tranche’.
John Chevis: It was delayed and then it was delayed again because of the global financial crisis, and it’s been delayed ever since, really I suspect because of some fairly powerful interests who would prefer not to have to bear the regulatory burden of being covered by the Act.
Connie Agius: Those powerful interests include lobby groups for professional facilitators. In a submission to the government, the Law Council opposed the extension of the anti-money laundering legislation to include lawyers. The submission claimed potential new reporting obligations could stop them doing their jobs. And the extra costs could put small practitioners out of business.
John Chevis: Clearly for the law abiding entities amongst these professions it comes with a cost. Having to have in place the anti-money laundering and counter-terrorism financing policies and processes doesn’t come free. And for law firms in particular I think there’s a large push-back in terms of the…and I probably should be careful how I couch this…perhaps represent clients that don’t have a legal source of income.
Connie Agius: Konrad de Kerloy is the Chair of the Law Council’s Anti-Money Laundering Working Group.
Konrad de Kerloy: There is no evidence of a systemic issue within the legal profession of money laundering. When we’ve actually asked to be shown the evidence, the evidence seems to point to a tiny, tiny, percentage of lawyers who the authorities have identified may be involved in money laundering. Now, we would be having a completely different conversation if the evidence demonstrated a large number of lawyers were systemically involved in money laundering and terror financing. If that’s not the case, we again plead with the government to allow us to work with them to find a sensible middle ground where we can deal with the risks but within an existing regulatory framework which does not overburden lawyers with regulatory cost.
Connie Agius: Another group involved in the consulting process is the accounting body, CPA Australia. The head of policy, Paul Drum, says they’re supportive of the anti-money laundering legislation, but concerned about compliance costs.
Paul Drum: CPA Australia is supportive of the Anti-Money Laundering and Counter-Terrorism Financing Regime, it’s just how it’s going to be applied that we’re concerned about. So we’ve said those that call themselves accountants and are outside the profession, it should apply to them. We’ve said for those who are in the profession, that perhaps the government needs to look at how those compliance obligations should be tailored. The compliance obligations for major financial institutions as it applies now shouldn’t be imposed holus bolus on small accounting firms if there’s no risk.
Connie Agius: Hi. My name’s Connie Agius. I’m here to see Malcolm Gunning.
Malcolm Gunning is the president of the Real Estate Institute of Australia.
He says the institute recognises the issue of money laundering in real estate, but the burden of further regulation must be shared with other professional facilitators.
Malcolm Gunning: We’ve been working with the Attorney General on this very Act to make sure that if it’s to be brought in or extended that it’s practical and it doesn’t really impede the way we transact property in Australia, which is very fair and an open arrangement. What we have to do is look at who is in the chain of consultants when it comes to transacting real estate. The real estate is at the forefront, but the advisors really are the lawyers and the accountants.
Connie Agius: But that is why they’re looking at a group of professional facilitators, so there are multiple triggers in the system and they’re all checking each other, so to speak. Is there not merit in that though?
Paul Drum: There is, but I suppose it’s the practical side. Now, as far as the sale of a property is concerned, because I’m assuming that the vendor or the seller has spoken to an accountant, taken advice from a lawyer, but when it comes to the purchases, it’s difficult, particularly from residential real estate where someone fronts up to an auction, registers, bids, signs a contract and buys. And that’s as simple as that. Currently, what we need to do is identify the person, and that’s showing a driver’s license.
Connie Agius: But isn’t that a reflection of how easy it can be to launder money? If it’s that easy?
Paul Drum: It probably is to a certain extent. Except if the regulations come in, do it when the contract is exchanged.
Connie Agius: Serena Lillywhite is the CEO of Transparency International, an NGO fighting against corruption. She says it’s taking too long to include professional facilitators in Australia’s anti-money laundering laws.
Serena Lillywhite: Transparency International released a report called ‘Doors Wide Open’, which looked at corruption in the real estate sector and it looks specifically at Canada, the United Kingdom, the USA and Australia. It actually assessed Australia as being the most attractive destination to launder money through the property market. So, this report really highlights the vulnerability of the Australian real estate market to launder money, and in our view there’s no time to waste to ensure that real estate agents, accountants and lawyers are covered by the same requirements to report suspicious transaction to Australia’s financial regulator.
Connie Agius: She says there have been allegations that politically-linked people are laundering money in Australia’s property market.
Serena Lillywhite: In recent years there’s been suggestions of money laundering through the property market by investors from a range of countries, which include Papua New Guinea, Malaysia, China, Russia and South Sudan who are all investing in real estate in our capital cities and on the Gold Coast.
Connie Agius: I put this to the president of the Real Estate Institute of Australia, Malcolm Gunning.
What measures are in place, as it stands, to stop that from happening?
Malcolm Gunning: None. None at this stage. It’s checked during that exchange settlement period. So if this happens, I would have thought there is quite strong advice given to those people who want to launder money, so they’ve got quite a sophisticated arrangement, whether it’s a group of companies linking all the way back to other parts of the world. So it’s fairly sophisticated. So, that, at this stage, it’s not picked up.
Connie Agius: So I go back to the other point, if that is part of the Anti-Money Laundering and Counter-Terrorism Financing Act, is it not another reason to include not only real estate agents but also lawyers, accountants and those involved in the entire process under the Act?
Malcolm Gunning: I agree with that, and the institute agrees with that, Connie, it’s just a matter of where the compliance starts and finishes.
Connie Agius: But even if professions like lawyers, accountants and real estate agents are brought under the legislation, there’s another issue. AUSTRAC is the federal agency responsible for analysing and communicating financial intelligence to partner agencies like the Australian Federal Police. When there’s a suspicious transaction, it’s reported to this agency. If the law is extended to professional facilitators, the agency’s workload will explode.
John Chevis says it’s already struggling to keep up.
John Chevis: We have incidents where we know single individuals have been reported multiple times to AUSTRAC and no action has been taken for many, many years. We have situations where if AUSTRAC were able to take action, and if banks were of a mind to perhaps restrict or refuse business to individuals that they know are criminals, then we would potentially have a much better and a much more efficient anti-money laundering system.
Connie Agius: John Chevis says the federal government needs to allocate more resources to AUSTRAC.
John Chevis: If that reporting obligation only turns into a report that goes to AUSTRAC and gets filed along with the 80,000 other reports made every year to AUSTRAC, filed in this case with an entity that is potentially overwhelmed by the volume of information it has and underfunded, then the law is effectively not working as it should.
Connie Agius: AUSTRAC declined Background Briefing‘s request for an interview, but in a statement pointed out that the government announced an extra $43 million in additional funding in December last year.
James Hoth Mai: Thank you very much. Yes, the SPLA is ready to defend, to meet any challenge that may come to us.
Connie Agius: That’s a former army chief from South Sudan. General James Hoth Mai was in charge of Sudan People’s Liberation Army from 2009 to 2014
James Hoth Mai: We are an army that is capable of meeting any challenges. We are 100% sure that we will defend the people of South Sudan and other marginalised areas.
Connie Agius: Debra LaPrevotte first noticed General Hoth Mai when she was investigating corruption in South Sudan. She’s a former FBI agent.
Debra LaPrevotte: The United States recovered $680 million that was stolen by Sani Abacha, the former president of Nigeria, while he was president, and similar cases, whether it’s the countries of the Arab Spring, Yemen, Tunisia, Egypt, Bangladesh.
Connie Agius: She retired in 2015 after two decades of service, and now works for The Sentry, an anti-corruption watchdog set up by George Clooney and activist John Prendergast.
Debra LaPrevotte: My job was to find out how did the money leave those other countries, what was the mechanism, what was the crime. Was it procurement fraud, was it embezzled, was it bribery and kickbacks, and then actually figure out how did the money leave the country, where did it go?
Connie Agius: As she followed the money trail from South Sudan, it led her to Australia.
Debra LaPrevotte: As we were investigating, we looked at how did the money leave South Sudan and where did it go? What we found is that a number of the political elites that were in power in the last 10 years were offshoring a great deal of wealth in Uganda, Kenya and Australia.
Connie Agius: Former agent LaPrevotte uncovered evidence that political elites invested their money in Australia’s real estate market. As you’ll remember, the real estate industry isn’t covered by Australia’s anti-money laundering laws. That means there’s no requirement to perform due diligence on house purchases when they involve what is called a ‘politically exposed person’. That’s someone who holds an important position in a government or international organisation, people like General Hoth Mai.
Debra LaPrevotte: I went to Australia and I talked to people and followed up on leads for properties, bank accounts, vehicles, any assets that we heard were being offshored and maintained in Australia.
Connie Agius: The Sentry released a report linking a property they found in Melbourne to General James Hoth Mai. It was purchased with funds transferred from overseas to the bank accounts of a company controlled by a relative in Australia. The General is said to have visited Australia in 2014 to inspect the property
Debra LaPrevotte: During our investigation we found out that he had purchased a property in Australia valued at $1.5 million, and that a number of his family were living in Australia and driving BMWs and luxury vehicles.
Connie Agius: That property sits on a one-acre block in the suburb of Narre Warren, 40 kilometres from Melbourne’s CBD. It has four spacious bedrooms, a state-of-the-art kitchen, large home theatre, sauna, and an outdoor pool that overlooks a reserve.
Debra LaPrevotte: We are not coming out and accusing people of money laundering, but what we’re saying is that we have probable cause to believe that based off their salary and based off their legitimate income and based off the investigation that we’re conducting, a number of people that are within President Kiir’s inner circle are living way beyond their means. And in some cases, just having unexplained wealth is grounds for an investigation.
Connie Agius: Background Briefing tried to contact the General and his family, but we haven’t had any luck. We also contacted an associate of the family, but he says they’re no longer in touch.
Debra LaPrevotte: Our investigation in South Sudan indicated that the average high ranking general within South Sudan makes on average $45,000-$65,000 per year. Based off of that income, how is it that a former army officer and then later the chief of staff could afford a $1.5 million home?
Connie Agius: And that’s the million-dollar question.
The Criminal Assets Confiscation Taskforce, led by the Australian Federal Police, has commenced proceedings to restrain the property under the Proceeds of Crime Act. But could that have been avoided if the real estate industry had been covered by Australia’s anti-money laundering legislation? Let’s imagine for a moment that real estate did come under the federal law.
John Chevis: Through all of that, the real estate agent should then have been able to identify that that was a suspicious transaction because the source of wealth was unexplained
Connie Agius: John Chevis says this is because there’s a disparity between the General’s salary and the cost of the property.
John Chevis: Then both report that transaction as a suspicious matter to AUSTRAC, which is Australia’s anti-money laundering regulator, and also have senior management consulted about whether to continue with that transaction.
Connie Agius: Under the proposed new laws, the real estate agent would also need to trace where the money came from.
John Chevis: Those obligations come from a mix of the Anti-Money Laundering and Counter-Terrorism Financing Act and the anti-money laundering and counter-terrorism financing rules that Australia has in place currently, but real estate agents are not covered currently.
Connie Agius: Should they be?
John Chevis: In my opinion, yes they should. Having them covered would potentially, depending on how the laws were framed and how the processes around the laws were put in place, and by ‘processes’ we’ll be talking about the sorts of processes that AUSTRAC can undertake. If real estate agents were covered there would be a potential that those sorts of transactions conducted by the Sudanese general would be identified.
Connie Agius: The Financial Action Task Force is an international body that sets standards for combating money laundering and terrorist financing. It says the gap in Australia’s laws is a deficiency. It claims most professional facilitators don’t understand the money laundering risks, and don’t have the right measures in place.
Malcolm Gunning from the Real Estate Institute of Australia says it’s about education.
Malcolm Gunning: Real estate agents are not as well educated, their qualification is at best diploma. They’re not tertiary. Their level of understanding of law would not be as competent as the other consultants. And we’ve suggested to the attorney general, that if this does come in, what we need to do is put in place not just for the real estate agents, but also the lawyers and the accountants, a very strong education program.
Connie Agius: You might be wondering why you’re hearing the sound of a coffee machine in a money laundering story. Well, I really like coffee. But aside from that, cafes are cash intensive business, just like restaurants, gyms, mechanics and wineries.
The investigator we spoke to earlier from the New South Wales Crime Commission, says she’s seen a number of money laundering cases involving businesses like these.
Investigator: One of the reasons why cash intensive businesses are favoured is because you can hide additional cash flows within the business much more easily than you could in an organisation where the majority of your business is based on electronic payments.
Connie Agius: This is another gap in state and federal money laundering legislation. One recent case involves a man called Peter.
Investigator: Peter and his associates ran a cocaine importation network importing marketable quantities of cocaine from Los Angeles to Australia. He was also involved with criminal groups of a variety of descriptions and fraud offenses.
Connie Agius: He needed to launder the hundreds of thousands that he was making from drug trafficking. So he got his wife to set up a cafe.
Investigator: He paid for the fit-out costs in cash. An amount of this cash was actually structured into his wife’s business account and then used to purchase goods from locations that would not take large volumes of cash. He then stopped paying the cash into the accounts.
Connie Agius: The drug money is mixed with the company’s legitimate earnings to give the impression that not only is business good, but legal. Cash intensive businesses are difficult to spot unless the owner or an associate is linked to a crime like drug trafficking.
Investigator: What we then see is that Peter started funding the ongoing running costs of the business in cash. For example, they didn’t purchase coffee or chocolate or milk or anything like that. All of that seems to have been paid for in cash.
Connie Agius: Peter used the drug money to pay for the cafe’s expenses because he needed to flush the dirty money into the legitimate economy. A close look at the books also showed Peter was buying high end luxury goods through the business account. It’s another form of money laundering because these items retain value and the item can be traded between people.
Investigator: Peter’s wife had expensive tastes. So in addition to running the standard business expenses through her business accounts, she also purchased large quantities of goods from Burberry, Hermes, Chanel and Louis Vuitton. Peter and his wife had a one-week holiday in the year before he was arrested in which they spent $132,000. In addition if we exclude that particular trip from their expenditure, they spent at least $110,000 on designer goods in the space of two years.
Connie Agius: A key facet of organised crime is making the source of money look legitimate. To do that, Peter also moved his drug money through a mechanic shop, another cash intensive business. He used a technique known as round robin.
Investigator: Peter wanted to get a mortgage. Because Peter didn’t have an apparently licit source of income, he had to establish one.
Connie Agius: So he used his friend.
Investigator: His friend owned a company. We believe he said to his friend, ‘If I give you this much, will you put me on the books and pay me a salary?’ This is a salary that he declared his tax on, he paid his tax, he did everything that you’re supposed to do.
Connie Agius: Police conducted extensive physical and electronic surveillance. Peter went to the gym, had coffee with friends, attended numerous brothels, but didn’t go to work. However, the company’s books show he was paid more than $5,000 a month for being a manager.
Investigator: Why it’s a round robin is because the proceeds from crime that Peter was dealing with went to his friend. His friend probably took a small commission and paid that money back to Peter in the form of a salary.
Connie Agius: His goal now was to launder that cash in real estate. He used his fake salary to obtain a loan.
Investigator: He takes those payslips to a bank or to a financial institution and uses them as evidence to show that he has sufficient income to repay any loan that he seeks.
Connie Agius: He takes out a loan and what does he do?
Investigator: He purchases a house for a particular amount, he then knocks it down, he rebuilds it.
Connie Agius: All of this was paid in cash.
Investigator: He then sells the property for nearly three times what he paid for it. By the time the property is then sold and particularly in the manner in which he sold it, which I can’t discuss, he effectively laundered the funds.
Connie Agius: And the cycle of money laundering goes on and on.
Australia is often referred to as the lucky country, but it also makes for a very attractive place to launder money. This is why experts like Serena Lillywhite from Transparency International are calling for our laws to be strengthened, to protect our interests.
Serena Lillywhite: In our view, a really fundamental and important development would be for the Australian government to establish a public register of beneficial ownership, to ensure that real estate agents and others are subject to the anti-money laundering laws and also have a much better understanding of exactly who the real owners or the beneficiaries are of any deals that are being done. In other words, much more needs to be done in terms of knowing your customer.
Connie Agius: But Australia doesn’t live in a bubble; crime is transnational, it crosses borders and boundaries. Serena Lillywhite says money laundering will only be stopped if the solution is global.
Serena Lillywhite: We need to make sure that the standards and practices around the world are better harmonised, so that there can be more efficient cross-referencing of databases and the exchange of information. And we need to improve governance to actually stop money laundering.
Connie Agius: Background Briefing‘s sound engineer this week is Mark Don, our sound producer is Leila Shunnar, production by Brendan King and our series producer Jess O’Callaghan.
Our executive producer is Alice Brennan. And I’m Connie Agius.
ReporterConnie AgiusProducerBrendan King / Jess O’CallaghanSupervising ProducerLeila ShunnarSound EngineerMark DonExecutive ProducerAlice Brennan