Australia is one of the world’s worst money laundering property markets

01 April 2017 12:17 pm

Australian real estate agents with offshore sales offices and websites targeting foreigners are attracting money launderers.

That’s one of the findings in a new Transparency International report Doors wide open: corruption and real estate in four key markets.

The report found money laundering through real estate is particularly rife in Australia, the US, UK and Canada. In all four countres, foreign buyers don’t have to provide information on who the real owners are.

In Australia, while no risk assessment has been conducted in the past six years, the government has looked at but done nothing about the high risks of money laundering in the real estate sector. In Australia and the US, professionals involved in real estate closings are not subject to anti money laundering obligations, and therefore are not monitored by competent authorities or self-regulated bodies.

“In Australia, real estate agents are not subject to the provisions of the Anti-Money Laundering and CounterTerrorism Financing Act 2006,” says Transparency International.

“Other professionals such as lawyers and accountants who may also play a role in the sector are not covered either. This means that properties can be bought and sold without any due diligence on the parties. Currently there are no requirements for real estate agents or any professional involved in real estate deals to submit STRs, even if they suspect illegal activity is taking place, and there are no requirements or rules for verifying whether customers are PEPs or their close associates. Of the countries analysed, only Australia has a check on foreigners wishing to purchase residential properties, but there is no requirement to disclose the identity of individuals (or beneficial owners) behind foreign companies purchasing property.

“In Australia, Canada and the US, the current anti-money laundering framework shows a tendency to rely on financial institutions to conduct the necessary background checks on real estate transactions… there are no checks on cash transactions.

“In Australia, 70 per cent of Chinese buyers pay in cash and they represent the largest proportion of foreign purchases in the country.

Austrac, an Australian government body that monitors cash flows, reported a 300 percent increase in suspicious transactions in the past two years with $4 billion coming from China alone.

China's crackdown on corruption has several cases where corrupt officials have laundered money and pumped black cash into Australian real estate. One example is the way Chinese prosecutors last year accused Li Huorong, the head of a company called China Development Bank, of taking bribes and using the funds to purchases two properties in Sydney. That’s worth $6 million.

The problem is a lot of property is being sold to Chinese buyers online and it’s harder to control money laundering when it’s done online.

Examples include Woobuyers which targets Chinese buyers.
“We help you reach cashed up Chinese property buyers,” the website promises.

Add to that the findings from the Paris-based Financial Action Task Force showing that Australia is seen as an attractive destination for foreign proceeds, particularly corruption-related proceeds flowing into real estate.

Foreign buyers have been blamed for pushing up property prices which are now out of control in Australia, pricing young people out of home ownership.

This is a disgrace. These sorts of concerns have been around for years and the Australian government has done nothing about it. If they’re serious about tackling housing affordability, they need to bring in laws cracking down on money laundering in real estate.

Leon Gettler

2017

October

22 Oct 2017 - Trump vow to declassify Kennedy files is a distraction

07 Oct 2017 - What’s ahead for the Minerals Council of Australia?

September

16 Sep 2017 - Australia’s energy crisis shows the stupidity of privatisation

09 Sep 2017 - Why climate change will devastate Florida

July

16 Jul 2017 - Laws of mathematics don’t apply to Australia: Malcolm Turnbull

June

17 Jun 2017 - Political backlash over the Grenfell fire

11 Jun 2017 - A win for Macron is a lesson for Theresa May

04 Jun 2017 - Attacks in London could change the election

May

28 May 2017 - Why Donald Trump will survive and be re-elected in 2020

20 May 2017 - Will the Mueller probe examine Trump’s Russian business ties?

13 May 2017 - Hypocrisy over Chloe Shorten’s necklace

06 May 2017 - Macron vs Le Pen: France is no longer one country

April

29 Apr 2017 - Turnbull government attacks banks over Adani

23 Apr 2017 - Why the French election is important

08 Apr 2017 - Russian navy moves in

01 Apr 2017 - Australia is one of the world’s worst money laundering property markets

March

19 Mar 2017 - Peter Dutton goes poofter bashing

04 Mar 2017 - Trump will take the market to a fiscal bloodbath

February

26 Feb 2017 - Trump’s mental condition

18 Feb 2017 - Adani’s results tell us the company will not develop in Australia

11 Feb 2017 - Why the Coalition’s “clean coal” plan is crap

04 Feb 2017 - It’s Trump versus the courts

January

27 Jan 2017 - The cost of Trump's wall on consumers

21 Jan 2017 - A look at Europe's future

20 Jan 2017 - Can Trump make America great again?

16 Jan 2017 - Trump parallels with Iraq


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