The past few years, several reputable international authorities have derided Australia’s failure to implement anti-money laundering (AML) rules for real estate – something the federal government promised to do more than a decade ago.
For example, in 2015, the global regulator of money laundering – the Paris-based Financial Action Taskforce (FATF) – released its mutual evaluation report which found Australian homes are a haven for laundered funds, particularly from China.
In March last year, Transparency International ranked Australia as having the weakest anti-money laundering (AML) laws in the Anglosphere, failing all 10 priority areas.
In June, FATF placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.
And in December, the OECD Working Group on Bribery in International Business Transactions urged Australia to implement the second tranche of AML legislation covering real estate, noting that the entire ecosystem for the buying and selling property using cross-border fund flows is beyond the reach of regulators.
Now, the Tax Justice Network has released its Financial Secrecy Index for 2018, which joins the conga-line shaming Australia for failing to police the international dirty money flooding into the housing market:
Australia has been assessed with a secrecy score of 51 out of a potential 100, which places it in the lower mid-range of the secrecy scale…
Despite its relatively low ranking on the Financial Secrecy Index, a number of cases demonstrate that Australia undoubtedly hosts significant quantities of illicit funds from outside the country.
In June 2015, Global Witness worked with a number of media outlets to expose evidence of how Australian lawyers have been allegedly involved in facilitating bribery and money laundering of funds out of Papua New Guinea (PNG).
Also in June 2015, the media reported on allegations of senior Malaysian Government officials and businessmen involved in bribery laundering money through the purchase of Australian property.2 The purchase of Australian properties was conducted via shell companies in the British Virgin Islands and Singapore.
In September 2016 it was revealed the son of General James Hoth Mai Nguoth, who served as the Sudan People’s Liberation Army’s (SPLA) chief of staff from May 2009 until being dismissed and replaced by General Paul Malong Awan in April 2014, bought a property in Melbourne worth $1.5 million. Even as a senior official in the SPLA, General Hoth Mai’s salary was never more than about US$45,000 per year.
Yeo Jiawei, who was convicted in Singapore of money laundering and obstructing justice as part of the Malaysian 1MDB scandal, used a Seychelles-based company for a series of purchases in Australia.4 In 2017 it was reported that Yeo’s court case in Singapore uncovered substantial purchases of property in Australia worth AUS $6m.
One reason for the failure to stop illicit funds finding a safe haven in Australia are weaknesses in Australia’s anti-money laundering laws. In 2007 the Federal Government released draft legislation to extend anti-money laundering provisions to real estate agents in relation to the buying and selling of property, dealers in precious metals and stones, lawyers, accountants, notaries and company service providers. Yet this legislation was never implemented…
In 2016 the Attorney General’s Department launched a consultation about including designated non-financial professionals into Australia’s AML/CTF laws. However, the results of the consultation have not yet resulted in any legislative action.
Again, legislation to implement the second tranche of anti-money laundering (AML) legislation covering real estate gate keepers has been gathering dust in Canberra for more than a decade.
Accordingly, realtors, lawyers, accountants and other real estate gate keepers are currently exempted from AML requirements. And this exemption has provided an easy avenue for foreign buyers to launder funds through Australian property.
The Australian Government is currently undertaking yet another consultation on implementing the second tranche of AML legislation, and had promised to finalise the new rules by the end of last year. However, the Government set similar deadlines 2008, 2010, 2012 and 2014, all of which failed to deliver legislation. And now it has failed yet again.
By failing to ratify the second tranche AML rules, as promised more than a decade ago, the Australia’s Government is tacitly complicit with the dirty foreign money flooding into Australia’s homes and robbing young Australians of a housing future.
