By Leith van Onselen

Back in April, the Paris-based Financial Action Task Force (FATF) on money laundering released its scathing report on Australia, which found that Australian residential property is a haven for international money laundering, particularly from China. The report also recommended that Australia implement counter-measures to ensure that real estate agents, lawyers and accountants facilitating real estate transactions are captured by the regulatory net:

Australia remains at significant risk of an inflow of illicit funds from persons in foreign countries who find Australia a suitable place to hold and invest funds, including in real estate… Australia is seen as an attractive destination for foreign proceeds, particularly corruption-related proceeds flowing into real estate… Large amounts are suspected to be laundered out of China into the Australian real estate market. China and other countries within the Asia-Pacific region were also seen as likely sources of corruption proceeds that are laundered in Australia… Of great concern is that Australia has not brought real estate agents within the AML/CTF [counter-terrorism finance] regime… Most DNFBPs, including real estate agents and legal professionals, are… not subject to AML/CTF controls or suspicious transaction reporting obligations, even though they are highlighted as being high-risk for ML activities… The authorities should place more emphasis on pursuing ML investigations and prosecutions at the federal as well at the State/Territory level.

Australia’s draft rules on anti-money laundering (AML) affecting real estate were released in 2007, but have been all but ignored by the federal government ever since. By contrast, Australia’s financial and gambling industries have been subjected to AML rules.

Fancy that. If somebody wants to set up an account to place a $10 bet at Sportsbet, or invest $1,000 into a managed fund, then they must provide sufficient identification under the Anti-Money Laundering and Counter-Terrorism Financing (AML) Act. But if they want to launder $2 million through an Australian home, few questions are asked.

Not surprisingly, then, dodgy foreign money has gushed into Australia’s homes, helping to price young Australians out of home ownership.

Indeed, the huge share of established homes selling to foreign buyers, contrary to Australia’s foreign investment regime, suggests the problem is rife, particularly in Melbourne and Sydney: