Along with the UK, the USA and Canada, Australia's real
estate market was identified as a money laundering hotspot. 10
weaknesses were identified as making it easier for property to be
bought so to hide stolen money:
Inadequate anti-money laundering provisions
Identification of the beneficial owners of legal entities,
trusts and other legal arrangements is still not the norm
Foreign companies have access to the real estate market with
few requirements or checks
Over-reliance on due diligence checks by financial institutions
leads to cash transactions going unnoticed
Insufficient rules on suspicious transaction reports and weak
Lack of proper checks on politically exposed persons and their
Limited control over professionals who can engage in real
estate transactions: no "fit and proper" test
Limited understanding of, and action on, money laundering risks
in the sector
Lack of sanctions
Of the four countries analysed, Australia was the worst,
deficient in all 10 areas.
Australia performed this poorly because of inadequate
legislation and weak implementation of existing rules. Real estate
agents, lawyers and accountants are not subject to the provisions
of the Anti-Money Laundering and Counter Terrorism Financing
Act 2006. This means that properties can be bought and sold
without any due diligence from these parties. Customer due
diligence on real estate transactions is left to financial
institutions. This creates an environment where large cash
transactions can go unnoticed.
TI reports that, in Australia, Chinese buyers often pay in cash.
These transactions represent an increased risk of money laundering.
Global Financial Integrity, between 2004 and 2013,
China1 led the world with USD1.39 trillion in illicit
outflows. In 2013, China had the largest such outflows of any
country: nearly USD260 billion.
The TI report concludes that Australia has failed to meet its
international commitment to tackle corruption and money laundering
as a member of the Financial Action Task Force ('FATF'),
the global regulator against money laundering.
The definition of 'foreign person' under FATA is very wide and can apply to a broad range of individuals and entities.
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