For decades, Australia has been a favored destination for criminals looking to launder their ill-gotten gains, particularly through the country’s lucrative real estate market. However, new legislation aims to change that by cracking down on money laundering and tightening regulations for real estate agents, lawyers, and accountants.
Tranche 2 Laws
Tranche 2 laws refer to the second stage of anti-money laundering and counter-terrorism financing (AML/CTF) reforms.
The recently announced “Tranche 2” laws represent a significant step forward in Australia’s efforts to combat money laundering and bring the country in line with international standards.
Under these new laws, real estate agents, lawyers, accountants, and dealers in precious metals and stones will be required to report suspicious transactions and conduct due diligence checks on their customers.
Attorney-General Mark Dreyfus emphasized the importance of these reforms in stopping the flow of dirty money into Australia’s property market. “Each year, billions of dollars of illicit funds are generated from illegal activities such as drug trafficking, tax evasion, people smuggling, cybercrime, arms trafficking, and other illegal and corrupt practices,” he stated.
China’s Impact on Property Market
The reforms come at a crucial time, as Australia faces increasing pressure to tackle money laundering and prevent criminal elements from using the country’s real estate market to launder their funds. In 2020 alone, criminals linked to China reportedly laundered $1 billion through Australian real estate, highlighting the scale of the problem.
Financial crimes agency AUSTRAC will receive $166.4 million in funding to help implement the new laws and support affected industries in meeting their obligations. This funding will be used to provide education programs for real estate agents, lawyers, and accountants, ensuring they are equipped to identify and report suspicious transactions effectively.
The need for these reforms has been highlighted by recent reports revealing the extent of money laundering in Australia’s real estate sector. According to a report from Transparency International Australia, millions of dollars of dirty money are flowing into the country from countries like Cambodia, where money laundering, human trafficking, and the drug trade are rampant.
In 2022, 118 properties with a combined value of $110 million were settled in Australia by Cambodian foreign persons, raising serious concerns about the source of these funds. While some of this money may be legitimate, the vast sums flowing into Australia from countries like Cambodia are disproportionate to these nations’ wealth and raise red flags about the source of these funds.
You May Also Like
TikTok May Face AUSTRAC’s Money Laundering Probe
US to be Cooperative on Australia’s Request to Drop Assange Prosecution
AUSTRAC’s Guideline on Critical Factors to Consider while Engaging a RegTech
Commerzbank Fined $1.5 Million for AML Violations
Additional Burden due to Tranche 2
Tranche 2 laws extend AML/CTF obligations to additional sectors, including real estate agents, lawyers, accountants, and dealers in precious metals and stones.
The new tranche 2 laws have been welcomed by those working in the field, who believe they will help make Australia safer and reduce the risk of real estate being used for money laundering and terrorism financing. However, there are concerns about the additional burden these laws will place on small businesses, including real estate agents.
Real Estate Institute of Australia president Leanne Pilkington noted that while the new laws and Tranche 2 of the reforms are a positive step, they will require substantial investment and training for small businesses to comply effectively.
The second stage of consultation on the laws is currently underway and will close on June 13, 2024. With the federal budget set to be handed down on May 14, 2024, these new laws represent a significant step forward in Australia’s efforts to combat money laundering and protect its real estate market from criminal elements.
