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.
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.
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.
While residents of Sydney and Melbourne are suffering from crush-loaded roads, trains, schools, and hospitals, as well as smaller and more expensive housing, toll road company Transurban is making out like a bandit.
Last year, ABC News reported that Sydney’s toll road network is the most expensive and extensive in the world, most of which are owned and operated by Transurban:
…transport experts have given the city the dubious honour of having the most extensive — and expensive — urban toll road network in the world.
Sydney has nine toll roads that include a total of 15 toll points, and will soon have even more when motorways under construction are completed.
Currently, motorists are charged when driving on the:
new M4 WestConnex
Lane Cove Tunnel
Sydney Harbour Bridge
Sydney Harbour Tunnel
There will be at least six additional tollsbetween now and 2023 upon completion of the:
M5 (from Beverly Hills to St Peters)
M5 East (Beverly Hills to General Holmes Drive)
“In terms of the kilometres of tolls in the urban area, Sydney has the most in the world,” said Chinh Ho, senior lecturer with the Institute of Transport Logistics Studies at the University of Sydney.
“We have an expensive network of toll roads…
Shortly afterwards, The SMH reported that tolls on some of Sydney’s roads are rising at triple the rate of inflation:
Tolls on some Sydney motorways are rising at more than three times the rate of inflation. CREDIT:ROB HOMER
Treasurer Josh Frydenberg said there were positive signs for wages in some sectors such as education and health.CREDIT:DOMINIC LORRIMER
Tolls on three existing motorways – the widened M4 between Parramatta and Homebush, the M2 and the Eastern Distributor – are also escalating by 4 per cent a year…
Martin Locke, an adjunct professor at the Institute of Transport and Logistics Studies at the University of Sydney, said… “If someone is struggling to pay tolls today, in 10 years time it will be significantly worse if the tolls increase at 4 per cent per annum…
The Grattan Institute’s transport director, Marion Terrill, said she was concerned that the NSW government was continuing to lock in “extremely long-lived arrangements” for toll roads, citing WestConnex’s concession deed lasting until 2060.
Crikey’s Stephen Mayne also exposed the unbelievable extortion of motorists by Transurban, which has taken place with the blessing of Australia’s governments:
Transurban was created by Macquarie Group and Transfield in 1995 to bid for Citylink, a major Kennett government toll road project in Melbourne. Macquarie pocketed a $25 million success from the deal and Transurban was floated in 1996 at the equivalent of $1 a share.
More than 20 years later, Melbourne’s Citylink project is the world’s second most valuable privately owned toll road. This has allowed Transurban to extract the following tolls from motorists over the past six years:
That, however, is dwarfed by the story in Sydney where Transurban now controls seven different toll roads which managed to lift total toll revenue from $1.34 billion in 2017-18 to a record $1.53 billion last financial year. This is primarily due to the addition of the M4 motorway, which is part of the monster $9.3 billion Westconnex privatisation deal sealed by the NSW Liberal government last year. *
The story in Brisbane is more modest. Here, Transurban managed to lift tolling revenue from its five different toll roads from $629 million in 2017-18 to a record $644 million last year. All up, motorists in Australia’s three biggest cities were stung $2.98 billion for tolls by Transurban last financial year… *
Transurban is the Pac-Man of toll roads, snapping up ownership stakes in all but two of Australia’s toll roads…
Only in Australia could a company which has seen its share price go from $1 to more than $15 have a history of never having paid corporate tax. *
Toll road giant Transurban is positioning itself to manage the entire road networks of Australia’s three major cities as governments make the “inevitable” shift to road pricing.
A senior Transurban executive told a private meeting of investors this month that the company wanted to be viewed as the “natural custodian” of the nation’s motorways, in the likely event of motorists being charged to drive on them.
The Melbourne-based company has a near monopoly on private roads in Australia already, controlling 13 of the 15 toll roads in Melbourne, Sydney and Brisbane.
Analysts Morgan Stanley have described a Transurban-run, user-pays system across all roads as a “meta-monopoly”.
Such a move would further entrench the company – which owns Citylink in Melbourne, the M2 in Sydney and all of Brisbane’s toll roads – as a de-facto private sector planning agency in those major cities. *
Few, if any, countries in the world have allowed a private operator to control so much of their road network.
Even Jeff Kennett, the man who in effect launched Transurban through its Melbourne CityLink contract in 1996, now warns governments against granting the company more toll road projects, arguing that taxpayers are being “ripped off”.
Now, the Victorian Government is locked in a dispute with Transurban over how to dispose of contaminated soil at the build site of the West Gate Tunnel project:
CIMIC and John Holland last week terminated a contract to build the new tunnel for Transurban, claiming they were not responsible for the unexpected cost and difficulty of disposing of contaminated soil…
The contractors claim they were told by Transurban that 85 per cent of the soil they would have to move to build the tunnel would be classified as “fill material” that could be recycled or put into regular landfill sites, but subsequently found that most of the soil was contaminated…
The termination has been rejected by Transurban, which has its own fixed price contract with the state government to deliver the project…
Analysts have estimated the West Gate Tunnel could now cost an additional $1 billion to finish, but the Victorian government is reluctant to pump in additional taxpayer funds…
“There’s a contract, it needs to be delivered, that road needs to be completed in 2022”, [Premier Daniel Andrews said].
As revealed by Clay Lucas earlier this week, the 1465-page agreement between the Victorian Government and Transurban contained 125 references to “contamination”. Transurban also reportedly boasted to the Victorian Government that it was well equipped to deal with the contaminated soil.
West Gate Tunnel construction was delayed when contaminated soil was discovered.CREDIT:JOE ARMAO
Therefore, the Victorian Government must enforce the West Gate Tunnel contract.
Transurban, not taxpayers, must foot any additional costs required to finish the project.
For too long,Transurban has outmanoeuvred and bullied Australia’s governments at great cost to motorists and taxpayers.This must stop.
A West Gate Tunnel construction site in Footscray.CREDIT:LUIS ENRIQUE ASCUI
… has penned an article lamenting that first home buyers (FHBs) are again being shut-out of Australian housing:
*While Sydney and Melbourne, as well as the national average, are still below their 2017 peaks, at the current pace of growth those record price levels are set to be broken by March this year.
Data on vendor asking prices for houses from SQM Research also has them back around record levels, with Sydney again above $1.3 million and Melbourne above $1 million…
These prospective buyers have been hit with a triple whammy of factors good for those who already own property, but bad for those wanting to buy — lower interest rates, looser mortgage lending restrictions and the retention of negative gearing and the 50 per cent capital gains tax discount…
In the end, it is only a fall in property prices relative to incomes that will genuinely improve long-term housing affordability for first home buyers.
That is only likely to happen through an increase in the number of properties for sale and/or a reduction in the number of existing property owners buying more real estate.
Basically, until you make it less attractive for existing owners to buy more property, or even give them a reason to dump some of their current holdings, first home buyers are not going to see a genuine improvement in affordability.
One of the most logical ways to achieve this is to remove the tax breaks that currently make it feasible and attractive for investors to buy and hold loss-making properties in the hope of future capital gains.
But such changes to negative gearing or capital gains tax look further off than ever after May’s election result.
Michael Janda’s sentiments are justified. But like most of his ilk, he has failed to mention that Sydney’s and Melbourne’s explosive population growth, driven by mass immigration, is making the affordability situation much worse:
Sydney’s and Melbourne’s populations are growing by between 1,700 (Sydney) and 2,300 (Melbourne) people each week. And this manic growth is projected to continue indefinitely, with both cities’ populations to double to around 10 million people each by 2066.
This permanent demand shock created by the mass immigration means that continuous upward pressure will remain on dwelling values, crushing affordability and forcing future generations to live in shoebox apartments.
If you don’t like this situation, Michael Janda, perhaps you should start lobbying against a ‘Big Australia’, rather than focussing purely on tax distortions.
These trends are also observed in a tendency for volunteer groups to struggle in maintaining their memberships, the non-marketplace society has been under stress.
It has been influenced by …
-separation -individualist ideas -detached singularity and –insufficient time
And so on, the message is there … maybe it’s not a bright one, it has been bleak!
Has there been something sinister in this new marketplace environment?
Well it maybe …
Could it be a cohort of willing participants, for each having their own reasons to actively or passively adding, aiding and/or cooperating to alter, and gain what they can in manipulated/contrived circumstances?
Have we been witnessing passive and active coercive undertakings to not only disrupt past practices and societal arrangements, but also wide-ranging ideas shaping on a scale unimaginable less than 2 decades ago?
Are we foolish enough to dismiss ideas such as the role media manipulation has had in all of this? AKA …
Are we now getting the message?
Protesters react after police threaten to arrest them during a protest outside of Kirribilli House in Sydney, Thursday, December 19, 2019. (AAP)
NOTE … their Message: ‘Look at What You’ve Left Us … Watch us fight it … Watch us WIN!’
Climate Change Protests Continue
Climate activist Tim Flannery is the force behind a band of former state fire and emergency chiefs accusing Scott Morrison of abandoning bushfires across the nation and demanding an immediate end to the burning of fossil fuels.
Deposit funds into a financial system. They don’t attract federal attention for cash deposits less than $10,000. For larger sums, they comingle the illegal gains with funds from a cash-heavy legal business.
The layering of transactions to disguise the source, ownership, and location of the funds. They may create overseas shell companies that are only used to launder the cash.
Integrate the funds into society in the form of holdings that appear legitimate. Many use funds to buy real estate.
“There really was a lack of rules or protections built into this scheme, which meant that private providers or marketers even could sign students out and get paid straight away just for the enrolment,” Gerard Brody from the Consumer Action Law Centre told 7.30.
The Australian Federal Police (AFP) has pursued some college owners for running “ghost colleges”, which operate fraudulent enterprises with no real teaching in order to reap those subsidies.
In some extreme cases, students were even signed up for courses without their knowledge.
The Australian Housing and Urban Research Institute (AHURI) Report advises the demand for affordable rental properties exceeds supply by 212,000 homes!
-the shortage had increased since 2011 and would continue to rise
.coinciding with NSW Liberal Coalition Planning Law changes for higher density
.the sell-off of NSW Public Housing Estates for private redevelopment
.overseas sell-off ‘new homes’; high immigration and visa manipulation housing demand
AND once again it would appear ‘the Rot’ set in earlier with the HOWARD Liberal Coalition Government when the Commonwealth State Housing Agreement -which evolved under the Chifley Labor Government in 1945 – because in 1996 there was an emphasis on housing outcomes for individuals as opposed to building up the stock of * public housing!
Australia’s private rental market is failing to provide affordable homes to the bottom 40 per cent of income earners, forcing many to live out of cars, couch-surf with friends, or cram into overcrowded rooms.
For the bottom 20 per cent of income earners, demand for affordable rental properties exceeds supply to the tune of 212,000 homes, according to a new report by the Australian Housing and Urban Research Institute (AHURI).
The large shortage, which rises to 305,000 homes when unavailable properties are excluded, means that four out of five very low-income households in Australia are paying unaffordable rents – defined as more than 30 per cent of a household’s gross income.
*Lead researcher Kath Hulse, from Swinburne University, said the shortage had increased since 2011 and would continue to rise over the coming years.
*Firstly because Australia isn’t building enough social and affordable housing.
*And secondly because higher-income households are moving into the only homes that low-income households can afford.
“What’s really clear is that while the private market has produced a lot more supply, it hasn’t, and it isn’t, and it almost certainly won’t, produce supply at the lower end [of the income scale],” Professor Hulse told The New Daily.
“Well, they either have to rent something that’s more expensive, beyond any reasonable definition of affordability, or – and we know this from other research – they get squeezed out of the rental market, into sharing with others, living in caravans … all the invisible homelessness stuff.”
AHURI’s reportfocuses on very-low income households, which earn up to $673 a week, and low-income households, which earn between $674 and $1200 a week.
*Very low-income households face an affordable and available housing shortage of 305,000 homes; low-income households, a shortage of 173,000.
Professor Hulse said very-low income households were struggling to find affordable homes because neither the public sector nor the private sector was building enough of them.
*“The next 20 per cent have got a slightly different problem,” Professor Hulse said.
“There are properties on the market that they can afford, but they’re mainly occupied by middle- or higher-income households.”
According to AHURI’s report, almost one in two (43 per cent) affordable homes for the second quintile of income earners are occupied by middle- and higher-income households.
And, in Sydney, there’s an absolute shortage of affordable homes for low-income households, which means they wouldn’t be able to find affordable homes even if middle- and higher-income households weren’t living in them.
“There’s a bit of a locational thing to this, too, which is an important part of the story,” Professor Hulse said.
“The properties that are affordable to [the low-income households] are increasingly in outer areas of large cities and in big regional towns, rather than inner or middle city suburbs.”
This means low-income households face longer commutes to work.
AHURI said the government needed to build a minimum of 200,000 additional homes over the next 10 years, at rents at or below $202 per week, to meet the needs of Australia’s very low-income households.
AND the Morrison Coalition Government exempted the Real Estate Gatekeepers from these AML laws in October 2018!
-before the May 2019 Election!
IT would appear there are no good reasons why the second tranche hasn’t been passed! WESTPAC, the Banking Sector, the Coalition Government and the Real Estate Gatekeepers together are not only failing in the War on Terror … but this is FAILING THE AUSTRALIAN PEOPLE … their security … and their right to Home Ownership in their Own Country!
Crime and punishment: Why Westpac turned its back on the war on terror
When all is said and done, the only thing of value any of us have is our reputation.
For years, Westpac chief Brian Hartzer and his chairman Lindsay Maxsted have been handsomely rewarded for their stewardship of one of the country’s biggest financial institutions. Along the way, they’ve been elevated to pillars of society.
That now counts for nought. Community outrage and Federal Government anger now threatens to boil over following revelations the bank aided and abetted child pornographers and child exploitation on multiple occasions and did absolutely nothing to stop it.
*Incredibly, reports from within the organisation suggested on Friday, as the Westpac board held a crisis meeting to deal with the unfolding disaster, that senior management and directors thought they were being unfairly and harshly treated; that somehow this was all a huge injustice.
The statement they released after the meeting was breathtaking in its arrogance, stunning in just how removed from reality those running Westpac really are.
It’s a malaise that appears to have infected the entire Australian banking landscape.
Rather than quit, the chairman and chief executive dug in with a “sincere” apology and a vague promise of justice Westpac style with an in-house investigation.
If the gravity of the situation appears to have been lost on our business leaders, it certainly hasn’t been in Canberra.
Or Washington. Or London. Or Frankfurt. Or Basle. Or any other country committed to the war on terror.
The sickening and horrific revelations of child abuse in the Philippines are bad enough.
But this scandal isn’t simply about Westpac’s own criminal customers.
And when added to the failings of the Commonwealth Bank two years ago, this has far deeper ramifications.
*There are implications here for national and global security as both banks, for years, have left the door wide open for global terrorist financing, delivering easy access to the Australian banking system for criminal money laundering.
*In Westpac’s case, 16 separate foreign banks that had a relationship with the Australian bank — in a deal known as correspondent banking — were delivered open access to our banking system with no oversight.
*It would appear other regional and global banks piggybacked off those relationships as well.
*According to the regulator, in a large number of cases Westpac had no idea where the transactions originated, who was behind them, what the cash was for or the identity of the beneficiaries.
This went on for more than five years. And it continues to this day.
In short, this is an unmitigated disaster.
There is evidence Westpac helped foreign banks open accounts in sanctioned countries such as Iraq, Lebanon, Ukraine, Zimbabwe or the Democratic Republic of the Congo.
Just to add fuel to that toxic mix, it then failed on 23 million occasions to meet its legal obligation to report these transactions to authorities.
We’ve been here before: Westpac’s Somalia experience
Westpac has form in this area, going back years.
In 2014 it was the last western bank to withdraw its money transfer services to Somalia.
It caused an uproar in Somali communities, many of whom depended upon foreign remittances for their survival and Westpac had become the only conduit.
But when you are the last operator you attract all the business, even the illegitimate.
The reason every other global bank had shut down remittance payments to Somalia was that, with the introduction of new global anti-money laundering laws, the risk of financing terrorism simply was too great.
Banks such as HSBC, Standard Chartered and Bank Paribus had paid billions of dollars in finesto settle money laundering and sanctions-busting cases.
*There was clear evidence from within Westpac that cash was being funnelled through to “charity” groups of dubious origin and — despite a concerted push from Somalian groups that included court action against Westpac to maintain its services — it shut down its remittance operations.
That’s what makes the revelations from last week even more shocking.
Having dodged a bullet on its Somalian transfers and being forced to deal with specific problems around terrorism funding, Westpac then designed and established a cheap and hugely profitable operation called Litepay to allow for remittance payments.
*It was a system designed to circumvent the SWIFT global payments system and it effectively took all the business from small remittance firms.
What it didn’t do was put in place the necessary oversight to ensure its money laundering and anti-terrorism commitments could be met or even its obligations to report transactions to the proper authorities.
Why? The answer is simple. Profit.
Profit before responsibility
During the past 30 yearsexecutive salaries, and particularly chief executives, have depended upon profit.
Base pay often is well below half the potential take-home salaries with the bulk made up in short-term and long-term bonuses with profit the major driving factor.
It’s a system designed to maximise shareholder returns. The better the company performs, the better the boss is paid.
But it has one major flaw. Given it’s in their own interests, executives invest in areas that make the greatest returns.
And they reduce costs or shut down areas that don’t deliver earnings.
As a bank executive, you can’t just get rid of the compliance division, the area that ensures you meet all your legal obligations.
But given it’s a cost centre rather than a profit centre, you look to trim those costs and invest the savings in the areas that deliver the loot.
This is a system that has been at the heart of everything that is wrong with modern banking.
These are the institutions that delivered the global financial crisis a decade ago, that have been involved in rigging every conceivable market in recent times from foreign exchange to interest rates.
As evidenced from the recent royal commission, most of Australian’s banking atrocities have been concentrated on home turf — until now.
Money laundering heaven
Westpac isn’t alone in this. The Commonwealth Bank two years ago was left reeling — after a series of scandals involving stealing from its own customers — when a police investigation found the bank may have been involved in money laundering for local criminal syndicates.
National Australia Bank has warned that it too has been the subject of an AUSTRAC investigation.
*That means that three of our big four banks have failed to meet global standards and obligations on anti-terrorism and money laundering rules, leaving the door ajar for global terrorism financing.
Both CBA and Westpac have claimed technical glitches for the oversight. That simply cannot be believed.
While not his fault, this is hugely embarrassing for Prime Minister Scott Morrison who no doubt will be asked to explain how and why our banks could so comprehensively disregard international law for so long, given the potentially dire consequences.
Global regulatory bodies also would be justified in questioning the ability of our systems, and particularly AUSTRAC, which only recently appears to have become a force to be reckoned with, to enforce the law.
When it comes to the war on terror, our reputation is in tatters.
Brian Hartzer and Lindsay Maxsted, meanwhile, are digging in, in a desperate effort to preserve their own.
THE Country’s second largest bank is deep in damage control. Westpac stands accused of 23 million breaches of money laundering laws facilitating terrorism and child sex offences.
WESTPAC could be facing fines of Billions of Dollars!
With questions over the future of Brian Hartzer mounting …
EXTRACT FROM THIS PROGRAM …
SCOTT MORRISON: They should be taking this very seriously. Reflecting on it very deeply, and taking appropriate decisions for the protection of people’s interests in Australia.
Leading Bank AnalystBRIAN JEFFERIES further into the interview with Rachel Pupazzoni:
‘ … but can I float to you this idea of money laundering – it will only ever be as strong as the weakest link in the chain. …
while we love to focus on this as just being a banking issue this could ripple into a lot of other industries, for example, if you go to an auction in Sydney you will suddenly see someone bidding with money. Where did that money come from?
So this could ripple well beyond the banking sector …. . ‘
IT would seem that questions ought be raised with the Prime Minister about the protection of the interests of Australian Constituents in the Australian Housing Market?
OBVIOUSLY the most significant damage for Australia is to our ownership of our country!
AND why did FATF cave in as AUSTRALIA keeps Propping up Property market with BLACK MONEY … providing a secure home for international flight capital?
AFTER 13 years of policy makers sidestepping international obligations to include real estate gatekeepers under the AML regulatory net, Australia is free once more to launder billions of dollars of dirty foreign money through our homes.
FOR the ‘truth’ find it here …
FROM the comments … we were constantly fed that we had to become ‘part of Asia’ … and what does that mean?
‘Massive inequality, unchecked corruption, servitude level wages , congested cities , rampant environmental pillaging and non existent building regulations……welcome to Asia !’
The latest scheduled review of Australia’s anti-money laundering (AML) laws by the global Financial Action Taskforce (FATF) has been cancelled, with Australia given free rein to continue laundering money through property. Via Michael West:
Most of the major international money laundering schemes that have been uncovered rely on lawyers, accountants or real estate agents.
After 13 years of empty bipartisan promises about “Tranche 2” AML/CTF laws, the deeper question needs to be asked: does Australia really have the political fortitude to dam those rivers of illicit money?
Or is our economic model too precarious, and our democracy too feeble, to risk taking some juice out of the politically sacred property market?..
The policy failure on “Tranche 2” of the AML/CTF regime over the past 13 years indicates Australia is willing to subjugate all other interests to the inflation of its property market.
It will do this even if it means forcing homebuyers to bid at auction against international criminals, drug dealers buying with powder-coated cash or terrorism financiers…
This was all due to come to a dramatic head this month, with international assessors from the Financial Action Task Force (FATF) coming to Australia to conduct a scathing review of the country’s sclerotic AML/CTF reform program. This was being viewed in the financial crime compliance sector as the moment of reckoning for Australia…
But Australia is indeed the Lucky Country. Thomson Reuters has revealed today that the FATF has cancelled its mutual evaluation follow-up program indefinitely while a “strategic review” takes place. In a stroke of extremely good fortune, the review of Australia’s Tranche 2 failures has been put on ice…
So, after 13 years of policy makers sidestepping international obligations to include real estate gatekeepers under the AML regulatory net, Australia is free once more to launder billions of dollars of dirty foreign money through our homes.
What a corrupt little nation we have become, with that corruption seemingly spilling over to the global regulator, FATF.
why GENS X Y Z are poorer … and locked out of the Real Estate Market!
BECAUSE our corrupt little grubment have allowed black money to be awash in our Real Estate market … as foreign buyers particularly from China fly in and launder their black money in Australian Real Estate with a ‘Permanent Resident Visa’ thrown in …
Our Youth having to compete in the jobs market with Visa workers ready and willing to be exploited … with the lowest wages growth for 60 years … and insecure work … because the Visa workers too are seeking a ‘PR Visa’ …
ANTHONY QUINN, founder of Arctic Intelligence said:
“There is zero political will to regulate lawyers, accountants or the real estate sector in Australia, where a Chinese political donor has allegedly squirrelled away a $1.2bn property portfolio in Australia,”
FATF caves as Australia keeps propping up property market with black money
Money laundering in Australia (photo courtesy abc.net.au and Alistair Krole)
Welcome to the dark side of the Great Australian Dream, an investigation byNathan Lynch.
Facetiously referred to as the Lucky Country for its ability to ship off endless boatloads of minerals, surfing the waves of economic good fortune with a “she’ll be right” swagger. But there’s another more important driver of the 30-year Australian economic miracle — credit growth, real estate and the business of providing a secure home for international flight capital.
*Unfortunately, the latter business model clashes with Australia’s international commitment to stamp out money laundering and terrorism financing through the gatekeeper professions. Most of the major international money laundering schemes that have been uncovered rely on lawyers, accountants or real estate agents.
*After 13 years of empty bipartisan promises about “Tranche 2” AML/CTF laws, the deeper question needs to be asked: does Australia really have the political fortitude to dam those rivers of illicit money?
Or is our economic model too precarious, and our democracy too feeble, to risk taking some juice out of the politically sacred property market?
*For 30 years, the fortunate citizens of Australia, the lucky country, have enjoyed an unending wave of economic growth, powered and juiced along by resources, credit and the once-in-a-century property market.
*On the other hand, this has created a bipartisan political paralysis where governments are loathe to go anywhere near the sacred cow of house prices. At a state government level, meanwhile, house price growth means billions of extra dollars in rising stamp duty receipts.
*The policy failure on “Tranche 2” of the AML/CTF regime over the past 13 years indicates Australia is willing to subjugate all other interests to the inflation of its property market. It will do this even if it means forcing homebuyers to bid at auction against international criminals, drug dealers buying with powder-coated cash or terrorism financiers.*
This was all due to come to a dramatic head this month, with international assessors from the Financial Action Task Force (FATF) coming to Australia to conduct a scathing review of the country’s sclerotic AML/CTF reform program. This was being viewed in the financial crime compliance sector as the moment of reckoning for Australia. Falling foul of the FATF obligations can lead to a country being greylisted, which is what happened to Iceland at the most recent plenary meeting in Orlando.
Countries that are struggling to overhaul their laws against insurmountable odds, such as Pakistan, have a Sword of Damocles hanging over their heads in the form of FATF blacklisting. This would choke the country’s access to international development loans and increase the cost of doing international business. The FATF has ways of making countries act.
*But Australia is indeed the Lucky Country. Thomson Reuters has revealed today that the FATF has cancelled its mutual evaluation follow-up program indefinitely while a “strategic review” takes place. In a stroke of extremely good fortune,the review of Australia’s Tranche 2 failures has been put on ice.*
The decision has also sparked claims that the standard-setter has become overtly politicised and buckled to pressure from major backers, including Australia, the United States and China.
Australia is already on an enhanced follow-up remediation program over its 13-year failure to pass laws to cover lawyers, real estate agents, accountants and high-value goods dealers.
The controversial decision to suspend the review comes as Australia was preparing for a disastrous on-site visit this month, culminating in FATF’s five-yearly follow-up report. Australia was one of the first jurisdictions to receive a fourth-round evaluation in 2015. This meant it would be the first country to face a follow-up visit while being in breach of all three recommendations on designated non-financial businesses and professions (DNFBPs).
*Australia, the United States and China have all received fourth-round evaluations that highlighted their failure to regulate DNFBP professions.
Recommendations 22, 23 and 28 cover the so-called gatekeeper professions. The United States and China, however, are still several years away from receiving their follow-up assessments.
In 2018, FATF published the first follow-up report on Australia’s technical compliance with the 40 recommendations; Australia has been rated as “non-compliant” or “partially compliant” on 14 of them.
“On this basis, Australia will remain in enhanced follow-up. According to the enhanced follow-up process, Australia will continue to report back to the FATF on progress to strengthen its implementation of AML/CFT measures,” the 2018 review said.
The second report, incorporating this month’s crucial on-site component, was due to tackle the issue of effectiveness.
A FATF spokesman in Paris said the review process for Australia had been running in the background for the past four years. FATF decided to suspend all the follow-up reviews, starting with Australia’s, in October.
“The FATF has decided to temporarily pause the start of all scheduled follow-up assessments pending the outcomes of the strategic review of FATF currently underway. The FATF plenary will discuss aspects of this review at its next meeting in February 2020. New dates for the start of follow-up assessments, including for Australia, are still to be finalised,” the spokesman said.
Financial crime officials sharply criticised FATF’s decision to suspend the Australian review at such a crucial time. They have also raised concerns FATF will water down the assessment methodology before re-starting with the Australian review.
“The FATF says it wants to pause the start of all follow-up assessments. But Australia’s assessment wasn’t starting — it was almost completed. This decision sends a terrible message for an organisation whose reputation hinges on being politically impartial. The perception is that Australia has made empty promises to the FATF, with impunity, for over a decade,” said Bill Majcher, a financial crime consultant in Hong Kong.
FATF has been very strict with countries such as Pakistan, which is facing a possible blacklisting, and Iceland, which was grey-listed at the most recent plenary meeting.
“Australia is already on ‘enhanced follow-up’ over its non-existent Tranche 2 laws. All of its neighbours have moved ahead on this. New Zealand was well behind Australia but managed to pass its own laws for DNFBPs in 2017,” Majcher said.
“It raises a serious question: what does it take for a FATF founding member like Australia to face a grey-listing, like some of the non-members?”
Financial inaction, in action
Australian compliance practitioners are scratching around for explanations as to why a country with a leading financial intelligence unit (FIU) would disregard its FATF obligations. The Home Affairs Department has continually missed the deadlines in its reform timetable following a 2014 statutory review of the AML/CTF Act.
Anthony Quinn, founder of Arctic Intelligence in Sydney, said the AML/CTF community had been watching the Australian review closely. It was crucial FATF showed it was politically impartial and there were consequences for ignoring it — and not just for weaker countries and non-members, he said.
“If there is a plausible reason for the Financial Inaction Task Force to postpone then I would love to hear it. Australia has addressed less than 10 of 84 recommendations since 2015, as set out in the country’s Statutory Review timetable. This clearly demonstrates that Australia is unfazed by international criticism by the FATF,” he said.
Quinn questioned the sincerity of the Australian government’s public statements on its commitment to tackling financial crime.
*Peter Whish-Wilson, Greens senator from Tasmania, said the failure to move on AML/CTF commitments reflected a deeper political malaise.
“The FATF’s abandoning of the review of Australia’s anti-money laundering laws is an indictment on this government. Australia is one of a handful of countries where lawyers, accountants and real estate agents are still exempt,” he said.
“We’ve had 13 years of inaction, from both Liberal and Labor governments, on the fabled Tranche 2 of the AML/CTF Act.Billions of dollars in hot money has washed through Australia’s property market in that time.”
Whish-Wilson said the Greens would consider introducing a private member’s bill if the government fails to act. The Greens aim to explore these issues, as part of a broader “black economy” review, if the government’s proposed cash limit legislation enters parliament. The controversial laws are under consultation.
“I suspect that donations from developers and investors go a long way towards explaining why successive governments haven’t acted. There are simply too many people making too much money and wielding too much influence,” Whish-Wilson said.
Tough on terrorists, easy on facilitators
The failure to address the money laundering risk in Australia’s gatekeeper professions comes amid a heightened international concern over terrorism financing risks. Earlier this month, Australia hosted the second “No Money For Terror” conference in Melbourne, which featured senior government ministers from around the world who made a commitment to work together to choke the funding lifelines that fuel violent extremism.
“No one country, no matter how powerful, can defeat terrorism alone. The international community must continue to stand shoulder-to-shoulder against what is an increasingly complex and borderless threat,” Peter Dutton, Australia’s Minister for Home Affairs, said during an opening address.
Despite these high-level commitments, financial crime experts have warned that DNFBPs are commonly exploited in sophisticated, cross-border terrorism financing schemes.
Yehuda Shaffer, former head of Israel’s financial intelligence unit, said it was well established that DNFBPs pose a high threat for terrorism financing, which must be properly mitigated. Mossack Fonseca’s client base included 33 suspected financiers of terrorism, which indicates that TF-linked entities are seeking professional advice, he said.
“Much of the movement of funds by terrorist organisations and individuals is still undetected. But there is growing anecdotal evidence that they also rely on complex legal structures to hide the underlying beneficial owner,” he said.
“The Panama Papers show that OFAC-listed terror-related persons used complex structures to avoid sanctions. We have TF-related suspicious transaction reports regarding trusts mentioned in some of the FATF reports, such as the Cayman Islands. We have seen the Isle of Man criticised in its report for not understanding its terrorism financing DNFBP risks.”
Major financial centres, such as Australia, needed to ensure they are not being used as a source of terrorist funds or as a “pass through” jurisdiction, Shaffer said. They needed to harden their system to avoid the abuse of non-profit organisations and charities, legal entities and complex structures.
FATF has reaffirmed its official public position that Australia takes the agency’s demands regarding DNFBPs seriously.
“As a member of the FATF, Australia has committed to fully and effectively implement all of the FATF recommendations, including those that concern DNFBPs,” the spokesman said.
The Department of Home Affairs, meanwhile, said it was still committed to the Tranche 2 reforms.
“The Morrison government is committed to continually improving Australia’s AML/CTF laws and working with industry to ensure that Australia’s financial system is hardened against criminals and terrorists, without placing undue burden on industry,” a spokesman said.
Thirteen years on, however, Australia’s promises and the FATF’s assurances are starting ring a little hollow among the financial intelligence community.
“There is zero political will to regulate lawyers, accountants or the real estate sector in Australia, where a Chinese political donor has allegedly squirrelled away a $1.2bn property portfolio in Australia,” Quinn said.