The rules requiring identity checks of clients and reporting of suspicious transactions already cover banks. Westpac this week to launch a new crackdown on identity checks for foreigners taking out property loans.

But the Financial Action Task Force, a global organisation fighting illicit cash transfers, warned in 2015 that the failure to extend the rules to real estate agents put Australia well behind its global peers.

Austrac, a Federal 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. Foreign buyers have also been blamed for pushing up property prices. NSW has reported foreign citizens accounted for 11 percent of homes sold.

Dobbing

While the REIA has accepted the need for tighter laws if applied evenly and carefully, the peak body for real estate agents in Queensland says the new rules are tantamount to dobbing.

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"Obligations...in relation to suspicious matter reporting and 'dobbing' in of offences are incompatible with an Real Estate Institute of Queensland's member's duty to maintain confidentiality and also interferes with a real estate agent's relationship of trust between themselves and a client."

The REIA said in its submission that requirements for identity checks in Queensland were already "less stringent" than in other states.


A submission by Mark Zirnsak of the Uniting Church argued that including real estate agents in anti-money laundering rules "would spread the compliance burden more fairly between Australian businesses, reducing the risks faced by financial institutions in dealing with transactions involving real estate professionals."

Cash up Chinese

In line with the warning from the REIA, it highlighted a "significant risk" of money laundering via real estate agents with China-based offices or targeting Chinese buyers. It gave as examples ASX-listed McGrath's global agent, Savills and a website called Woobuyers, which targeted Chinese buyers. The English-language version of the site promises, "We help you reach cashed up Chinese property buyers."

The United Church report said that McGrath maintained a specific China desk for foreign investors, which raised risks. It gave the example of a $16 million harbour side residential property sold via McGrath's in 2015 to an Australian firm, incorporated in the same month of the property purchase, which lists the major shareholder as a Chinese born man. His listed residential address in Australia was a rented Sydney 2-bedroom unit.

A spokesperson said McGrath was "very supportive of any initiatives to prevent money laundering and terrorism financing in any form. McGrath has very strong compliance guidelines for any real estate transactions to ensure that they comply with existing laws." McGrath agents ensure buyers have Foreign Investment Review Board approval in place to buy at auction.

China's crackdown on corruption has highlighted several cases where corrupt officials have channelled black cash into Australian real estate. 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.

The Uniting Church report also documented several cases where Papua New Guinea nationals involved in corruption had purchased Queensland property and used complicated asset protection structures to conceal the purchases and prevent their seizure.

The Federal government says it wants to work out how to implement the new rules by the end of this year.