Dirty money spotlight on estate agents
The real estate sector has continually been identified as a weak spot in Australia’s anti-money laundering regime, with financial intelligence agency AUSTRAC estimating $1 billion in suspicious transactions from China in 2016.
Edmund Tadros, Angus Grigg and Neil Chenoweth
Nov 11, 2019
Australia is set to receive another black mark for its lax anti-money laundering laws, putting renewed pressure on the federal government to force real estate agents to report suspicious sales.
The Financial Action Taskforce, which sits under the G7 major world economies, is due to release its latest report before Christmas and those who have seen an early draft say it will make for uncomfortable reading in Canberra.
“We’re going to get another kicking,” said one person familiar with the process.
The renewed focus on the real estate sector and its lack of reporting requirements comes after The Australian Financial Review revealed that a 32-year-old Chinese-born man, Bo Zhang, had six houses in Sydney’s Mosman worth $37 million, but lived in none of them.
In addition, the mysterious Mr Zhang has purchased $1.2 billion worth of hotel, apartment and retail developments in Sydney and on the Gold Coast.Advertisement
The real estate sector has continually been identified as a weak spot in Australia’s anti-money laundering regime, with financial intelligence agency AUSTRAC estimating $1 billion in suspicious transactions came into the Australian property market from China in the 2016 financial year.
The Financial Action Taskforce added that, “large amounts are suspected to be laundered out of China into the Australian real estate market“.
The taskforce’s most recent report said Australia was non-compliant or only partially compliant with 14 of its 40 recommendations.
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At issue is Australia’s delay in enacting so-called “Tranche II” of the anti-money laundering laws, which would compel real estate agents, lawyers and accountants to report suspicious transactions.
All have fiercely resisted the move, and for the last 13 years both sides of politics have failed to implement tougher measures.
It is understood the government is due to receive a submission from the Department of Home Affairs by Christmas, which would outline options to toughen Australia’s anti-money laundering regime.
A government spokesman said: “The Morrison government is committed to continually improving Australia’s anti-money laundering and counter-terrorism financing laws and working with industry to ensure that Australia’s financial system is hardened against criminals and terrorists without placing undue burden on industry.”
The inaction has brought together an unlikely coalition of the Australian Bankers Association and the Greens, which are both pushing for the introduction of Tranche II.
“The exemption for lawyers, accountants and real estate agents is a gaping hole in Australia’s anti-money laundering laws,” said Greens Senator Peter Whish-Wilson.
“We’ve had 13 years of inaction, from both Liberal and Labor governments, on the fabled Tranche II.”
Senator Whish-Wilson said during this period of inaction billions of dollars had washed through the Australian property market.
“In particular, investors are using real estate as a safe haven and to clean up money coming out of China,” he said.
The Australian Bankers Associations also supports toughening anti-money laundering rules and pointed the Financial Review to a submission it made last year.
“The ABA recommends progressing the Tranche II reforms as a priority. It is vital that Australia closes the current gaps in the Australian money laundering/terrorism financing regime,” its submission said.