06 May 2024

New report shows Australian money laundering reform urgently needed

Transparency International Australia has welcomed the announcement of $166.4 million in this year’s Budget to support the implementation of reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.

Australia is currently at risk of being grey listed by the Financial Action Taskforce (FATF) and is one of only five countries yet to implement ‘Tranche 2’ reforms. These long overdue reforms would extend AML/CTF obligations, such as reporting suspicious transactions and undertaking customer due diligence, to high-risk professions like real estate agents, lawyers and accountants, and dealers in precious metals and stones.

A new report released by Transparency International Australia (TIA) today shows the current regulatory gaps need attention, as millions of dollars of dirty money could be flowing from Cambodia into Australia, including in Australia’s lucrative real estate sector.

The report by TIA and KordaMentha shows that between 2019 and 2023, 118 properties were settled by Cambodian foreign persons, worth a combined value of $110 million. In 2022 more than $516 million in total funds was transferred from Cambodia to Australia through Australian reporting entities.

Significantly, the value of money flowing from Cambodia to Australia is vastly disproportionate to Cambodia’s wealth – on average the total funds transferred account for just under 1% of Cambodia’s GDP.

“Cambodia is a regional hub for human trafficking, money laundering, and organised crime and this research shows significant amount of money flowing into Australia. This is red flag as AUSTRAC and other law enforcement agencies have repeatedly highlighted the influx of illicit cash into Australia, particularly real estate.”

“Lawyers, accountants and real-estate agents, sometimes unknowingly, enable money laundering by criminals through the setting up of opaque corporate structures, facilitating payments, or simply turning a blind eye.”

“So we welcome the government’s announcement of new funding in the federal budget to work with these high-risk professions to combat money laundering and terrorism financing,” said Clancy Moore, CEO of Transparency International Australia.

Key Recommendations

TIA’s report calls for greater collaboration between Cambodian and Australian law enforcement and regulatory bodies to mitigate the flow of illegal funds. To do this:

  • Australia must implement the ‘Tranche 2’ reforms to close current gaps and ensure comprehensive oversight of designated non-financial businesses and professions (DNFBPs).
  • Strengthening both countries’ regulatory regimes is essential to reduce the risks of money laundering.