As billions in black money from China continues to flood into property markets, the global Financial Action Task Force has put Australia on a watch-list for failing to comply with money laundering and terrorism financing reforms. Canberra has been dragging the chain for nine years while the powerful lawyers, accountants and real estate lobby groups keep successive governments mired in a consultation process.

The Samuel Beckett classic, Waiting for Godot, features a couple of weary old guys Vladimir and Estragon waiting for another guy called Godot to arrive. Godot never arrives. The play finishes as the two protagonists contemplate hanging themselves.

As we contacted the Department of Justice again last week we were struck by the parallels with the always-impending though never-arriving Anti-Money Laundering and Counter-Terrorism Financing legislation (AML-CTF).

These are laws which were to have been introduced nine years ago but instead have been bogged down in a marathon of “reviews”, “stakeholder engagement”, “industry consultation”, “papers”, “studies” and “submissions”

Banks, bullion dealers and casinos were captured by the first tranche of the legislation way back in 2006 but as any self-respecting money-launder knows, if you are keen to launder some money, or perhaps finance a spot of terror, you can still do it through lawyers, accountants or real estate agents. These sectors are yet to be captured by the Godotesque second tranche of the legislation.

Besides tightening the screws on launderers and financiers of terrorism, the importance of these laws are that they could take steam out of the property market and address, albeit only in part, the crisis in affordability for first home buyers.

When asked last week how the process was coming along, since the laws were supposed to have been enacted in 2008, the response from the office of the Minister for Justice, Michael Keenan, was:

“A cost/benefit analysis of extending AML/CTF regulation to certain non-financial business (lawyers, conveyancers, accountants, real estate agents, trust and company service providers and high-value dealers) is well progressed and will be completed by July this year.

“The outcome of the cost-benefit analysis will inform the Government’s decision on the regulation of tranche two entities under the AML/CTF Act.”

In Waiting for Godot, Vladimir has to keep shuffling off to urinate when he starts laughing at his own jokes. This play however only runs for two acts. If Vladimir were a player in Australia’s money-laundering tragicomedy – assuming a constant rate of two urinations per hour – he would have urinated at least 153,792 times by now.

It would not only be Vladimir, and money laundering authority AUSTRAC, holding on either. When asked how Australia’s compliance with international standards was coming along, the communications officer for the Financial Action Task Force (FATF), Alexandra Wijmenga-Daniel, told michaelwest.com.au:

“Following its mutual evaluation, Australia was placed on enhanced follow-up and is reporting back to the FATF on an annual basis concerning the progress it has made to address the deficiencies identified in its mutual evaluation report.”

In the classroom of international compliance, this is the equivalent of nose-in-the-corner-at-the-back-of-the-classroom status. “Enhanced follow-up” and “deficiencies”.

The reason the process has meandered on for so long is clearly because the stakeholders involved: the accountants, lawyers and real estate lobbies, don’t want it to happen.

And now government is in a bind. If it stems the flow of Chinese capital it might prick the property bubble.

Chinese money is not alone in driving up prices but it is a factor. On Credit Suisse numbers, some $50 billion of Chinese capital has flooded the Australian property markets, mostly in Melbourne and Sydney, over the past eight years.

How much is black money? We don’t know but the Chinese are only permitted to take $US50,000 out of the country, so the rest, probably the majority of money landing here, is black money.

Introducing the second tranche of the AML-CTF legislation is no silver bullet which will suddenly make houses affordable for first home buyers. Though, along with reform to negative gearing on established homes, it would certainly help.

It is also important because the more the property bubble inflates, the more damaging will be the economic aftermath.

Meanwhile, other measures to address the first-home-buyer crisis, such as stamp duty relief (and a stamp duty surcharge for foreign buyers) are a step in the right direction though tinkering around the edges and arguably incentivising young buyers to hop into an overheated market.

In NSW, the measures run so close to the price threshold that they constitute an incentive to leave the city and go elsewhere to buy a house. The stamp duty measures are far better than cash hand-outs though, which only serve to drive up prices and put cash into the arms of agents and property developers.

Apprehensive of political reprisal, the money laundering agency AUSTRAC has been reliably mute on the failure of governments to comply with international standards. And even though the latest timeframe for action is the completion of a cost-benefit analysis by next month, the commitment to do anything about it remains up in the air, as usual. We remain waiting.

As the second and final act of Waiting for Godot closes, Vladimir and Estragon talk about hanging themselves. But when they conduct a strategic analysis of the strength of Estragon’s belt, which they intend to use as a noose, it breaks and Estragon’s trousers fall down.

STATEMENT BY FATF

Following its mutual evaluation, Australia was placed on enhanced follow-up and is reporting back to the FATF on an annual basis concerning the progress it has made to address the deficiencies identified in its mutual evaluation report. Follow-up reports are not published unless the country has made sufficient progress to justify a re-rating of its compliance with FATF Standards.

The FATF expects countries to have satisfactorily addressed most, if not all, of their technical compliance deficiencies by the end of the 3rd year after their mutual evaluation report has been adopted. Australia would be expected to have reached this stage by June 2018.

In addition to the follow up reports each country is subject to, that consider changes to laws and regulations (technical compliance), five years after the mutual evaluation report, all countries are assessed against the actions they have taken to improve the effectiveness of their measures to combat money laundering and terrorist financing. This 5-year follow up assessment looks specifically at actions taken by a country to address the high-risk areas and priority actions identified in the mutual evaluation report.

For more information, see the Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations : www.fatf-gafi.org/publications/mutualevaluations/documents/4th-round-procedures.html