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To: Malcolm Turnbull
Implement Anti Money Laundering laws to cover Real Estate transactions in Australia
Implement the second tranche of the reform to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
Why is this important?
Today I learned more worrying information about the state of affairs in the context of money laundering through real estate assets.
From the report (http://www.transparency.org/whatwedo/publication/doors_wide_open_corruption_and_real_estate_in_four_key_markets) by Transparency International:
Australia has severe deficiencies under all 10 areas identified in the research and is therefore not in line with any of the commitments to tackle corruption and money laundering in real estate made in international forums. In Australia, real estate agents are not subject to the provisions of the Anti-Money Laundering and Counter Terrorism Financing Act 2006. 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.
The areas identified in the research are the following:
1. Inadequate coverage of anti-money laundering provisions
2. Identification of the beneficial owners of legal entities, trusts and other legal arrangements is still not the norm
3. Foreign companies have access to the real estate market with few requirements or checks
4. Over-reliance on due diligence checks by financial institutions leads to cash transactions going unnoticed
5. Insufficient rules on suspicious transaction reports and weak implementation
6. Weak or no checks on politically exposed persons and their associates
7. Limited control over professionals who can engage in real estate transactions: no “fit and proper” test
8. Limited understanding of and action on money laundering risks in the sector
9. Inconsistent supervision
10. Lack of sanctions
In Australia, 70 per cent of Chinese buyers pay in cash and they represent the largest proportion of foreign purchases in the country.
The proportion of foreign investors paying cash to settle new Melbourne apartment acquisitions has surged to more than 35 per cent…
Nick Holuigue, a partner in law firm Maddocks’s development practice, said there had been an “unusually high percentage of cash buyers”…
Evan Cathcart, a director at Three Sixty Property Group, which sells apartments and townhouses off-the-plan into China (including Ikebana) said there had been a “huge surge in cash buyers in the past 12 months or so”…
A Melbourne-based Chinese estate agent who asked not to be named said it was quite possible that Chinese buyers were paying 100 per cent cash for new apartments.
“While there are capital controls, there are tons of ways to get around it. My partners having used these channels to transfer cash across for Melbourne purchases. If these buyers have enough connections on the Chinese side, it can be done,” he said.
The Anti-Money Laundering (AML) regime could minimise or stop this criminal activity if the second tranche of the reform to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 were implemented.