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30 March 2017: Doors Wide Open: Corruption and Real Estate in Four Key Markets



The impact of overseas investment in Australia’s real estate is not limited to elevating home prices.  There is clear evidence that such investment in Australian property is also an easy and convenient way to hide hundreds of millions of dollars from criminal investigators, tax authorities or others tracking criminal behaviour and the proceeds of crime.

In a report released today Doors Wide Open: Corruption and Real Estate in Four Key Markets, in advance of the Anniversary of the release of the Panama Papers, Transparency International calls on the Governments of Australia, Canada, UK and USA to close the legal loopholes to prevent the corrupt elite from laundering the proceeds of grand corruption in their local real estate markets.

Real estate has long provided a way for individuals to secretly launder or invest stolen money and other illicitly gained funds. According to the Financial Action Task Force (FATF), real estate accounted for up to 30 per cent of criminal assets confiscated worldwide between 2011 and 2013.

This important report highlights the vulnerability of the Australian Real Estate market to money laundering. There have been reports in recent years of such activity by investors from PNG, Malaysia, China, Russia and South Sudan in real estate in our capital cities and on the Gold Coast.

The FATF evaluation of Australia in 2015 underscored this vulnerability and the Australian Government, informed by a Statutory Review of Australia’s AML/CTF Regime, has committed to take steps to address the vulnerabilities identified in Doors Wide Open.  While several commitments were made at the 2016 Anti-Corruption Summit in London and Australia’s first Open Government Partnership National Action Plan which would address current loopholes, action which would close the doors is proving too slow.

Anthony Whealy QC Chair of TI Australia urges strong and immediate action.  “We have urged the Australian Government to act on its previous commitments. We urge actions which would strengthen AML laws and empower relevant agencies and agents to respect and enforce the laws.

“TI Australia has called on the Australian Government to establish a public register of Beneficial Ownership and to ensure real estate agents, lawyers and conveyancers, as well as accountants are subject to AML/CTF rules, undertaking Customer Due Diligence and submitting Suspicious Transactions Reports to AUSTRAC,” Mr Whealy said.

TI Australia notes that, to a degree, changes to Foreign Investment Review Board processes in the past 12 months have strengthened protections. While the involvement of the ATO in processing FIRB applications is welcome, urgent action is needed to strengthen AML/CTF procedures. Urgent steps must be taken to prevent foreign real estate deals continuing to be a means to launder proceeds of corruption or criminal activity.

We are concerned that Australia, along with Canada and the US, rely almost exclusively on banks to stop money laundering. Here as in other countries real estate agents, accountants, tax planners, lawyers and others participate in deal-making. This makes all-cash deals, particularly prevalent in urban Australia, which do not require the involvement of a bank, especially difficult to track. There is urgent need for change!

 

Media Contact:

Hon. Anthony Whealy QC, TI Australia Chair:
0414 963 643

Download Report and 10 Key Commitments  Doors Wide Open






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