Australia airs its dirty laundry

AUSTRALIAN law enforcement agencies say the nation’s real estate sector has become a key target for getting dirty money into Australia, making the federal government’s plan for stricter anti-money laundering laws a non-negotiable for the sector.

Real estate was increasingly a money laundering option of choice due to Australia’s financial sector and banks getting harder to exploit, the Australian Federal Police (AFP) said.

Australia’s highly regulated financial sector forced “criminals to find alternate means of trying to legitimise their money”, an AFP spokesperson told Australian Conveyancer.

“They can’t just deposit large sums of money into bank accounts and transfer it overseas without attracting the attention of law enforcement and other government agencies.”

On the extent of the problem, the spokesperson described money laundering as “one of the most prevalent crime types for asset confiscation, accounting for more than 30 per cent of all asset restraints made by the (AFP’s) Criminal Assets Confiscation Taskforce”.

Putting the problem in context, the AFP seized 

$1.1 billion in criminal assets between July 2019 and June 2024, with more than $720 million involving real estate, according to AFP data obtained by this news service. 

More than 370 residential and commercial properties were seized over the same period.

“Australia’s strong and liquid property market makes it an attractive destination for criminals to both store value and enjoy the fruits of their illicit activity,” the AFP spokesperson said.

“Tranche 2 aims to improve the transparency of the Australian real property sector and bring visibility of suspicious transactions to regulators and the police, thereby reducing its exploitation by money launderers.”

The tougher regime would help protect Australia’s real estate sector, which remained vulnerable to infiltration from high-level organised crime syndicates involved in drug trafficking, cybercrime and human trafficking, according to the federal agency.

At present, the property market could be exploited by money launderers in several ways, including via “complex ownership structures to obfuscate true ownership”, concealing illicit money flows as rental income, and investing illicit cash into property improvement, it said.

“Criminal groups may use professional facilitators – such as real estate agents, accountants, and solicitors – to give illegal cash the appearance of legitimacy through the purchase of assets, such as property,” the AFP spokesperson said.

AUSTRAC, the federal government’s financial intelligence agency, said criminals were exploiting conveyancers to give the appearance of legitimacy to illegal dealings.

The agency, which oversees the country’s money laundering and counter-terrorism financing regime, pointed to a 2023 operation, known as Steelers. It saw more than $47 million seized, including around 

$43.5 million in real estate – around 60 properties. 

The operation, which hit locations in Melbourne and regional Victoria, was aimed at a large Middle Eastern organised crime syndicate, AUSTRAC said.

“A number of these restrained properties are suspected to be under the effective control of criminals charged with drug trafficking offences, including the suspected syndicate head,” an AUSTRAC spokesperson told Australian Conveyancer.

The agency was confident the new rules, which include a mandate that conveyancers report suspicious matters and cash transactions of $10,000 or more to AUSTRAC, would assist in the nation’s fight against money laundering.

“AUSTRAC and our law enforcement partners know real estate and high-value goods, including precious metals and stones, are attractive to criminals who seek to legitimise the profits from illicit drugs and other criminal activity,” the AUSTRAC spokesperson said.

“The proposed anti-money laundering reforms will equip businesses with the tools to protect themselves against criminal misuse.

“This (new) reporting drives AUSTRAC’s ability to develop actionable financial intelligence that helps law enforcement and other agencies protect the community from social harms.”

The agency said it would take a partnership approach to the looming regulation.

“We look forward to working with conveyancers and building that partnership throughout the development and implementation of the proposed reforms.”