This followed the Paris-based Financial Action Taskforce’s (FATF) mutual evaluation report, which found Australian homes are a haven for laundered funds, particularly from China. In June 2017, FATF also placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.
The OECD Working Group on Bribery in International Business Transactions also 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.
Yesterday, Nathan Lynch – the Asia-Pacific Bureau Chief, Financial Crime and Risk at Thomson Reuters – published an alarming report highlighting that Australia’s AML rules are among the weakest in the world and shaming the Coalition’s latest refusal to regulate real estate gatekeepers. From MichaelWest.com:
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Ten years, no action. Laws designed to protect Australians from criminal abuse – no action. No action because of weak government and strong lobbying from real estate, lawyers and accountants…
AML experts have warned that failing to crack down on illicit funds flows, including “hot money” from China, has added significantly to Australia’s housing affordability problem…
The unregulated nature of Australian real estate has made it attractive to park criminal funds but there is no reliable data on the extent to which this is happening. As such, the government lacks a clear idea of the impact the “tranche 2” laws will have on a softening property market…
The second tranche of anti-money laundering (AML) regulations capturing real estate agents, accountants, lawyers, and other non-financial businesses have remained in limbo in Australia since we first agreed to implement them in 2003, and have been delayed continuously by the Australian Government.
The federal government conducted consultations on the AML second tranche in 2008, 2010, 2012, 2014 and 2017, all of which failed to deliver legislation as promised.
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The only conclusion we can draw is that the Australian Government has zero interest in policing this issue, and is complicit with the dirty foreign money flooding into Australia’s homes and robbing young Australians of a housing future.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
