Child sexual exploitation, drug trafficking and large-scale tax fraud threats are on the rise, says a damning report from AUSTRAC. Michael West reports on the epic 17-year failure to deliver money-laundering reforms whose effect is to lock Australians out of affordable property.
The CrowdStrike meltdown, which wrought chaos across the globe, did make one thing clear, the need for alternative currency when online systems breakdown. Coles supermarkets was asking customers to pay in cash.
And while cash is often criticised as a tool of money launderers, and rightly, a damning report from money-laundering regulator AUSTRAC this week confirmed illicit cash transactions are just a bit of the money-laundering picture.
The Big End of Town, the white collar world of lawyers, accountants and property people, is the real growth sector for money-launderers.
Mega dithering
The failure of successive governments to introduce (AML-CTF Tranche II legislation) promised 17 years ago have made Australia a haven for white collar crime. Or, “an attractive destination for illicit funds” as the AUSTRAC report frames it. And this failure is due to relentless lobbying by vested interests.
Not only has it allowed accountants, lawyers and property firms to facilitate money-laundering with impunity, the foreign flows of ‘black money’ into this country put upward pressure on property prices. They lock young Australians out of the property market and put pressure on rents too.
You would think that such an epic failure, a failure so much in the public interest, would entail some explanation by those who govern us. Sadly, there is none, just stonewalling and promises of a crackdown.
Rex Patrick, the former senator turned “Transparency Warrior” and MWM columnist has received heavily redacted responses to recent Freedom of Information requests. But they do indicate that “stakeholders” with vested interests (property, law, accounting professions) are still lobbying against AML reforms.
Recent efforts by Attorney-General Mark Dreyfus to assure the international community and the Financial Action Taskforce in Geneva (FATF) that change is afoot, have met with scepticism. And efforts by this journal to garner public information on the progress of Dreyfus’s “crackdown” remain, at this point, simply words.
And what of the outlook? This week’s release of a National Risk Assessment, Money Laundering in Australia, by regulator AUSTRAC shows the risks are on the rise, even rising risks for children, risks of sexual exploitation by predators.
AUSTRAC National Risk Assessment, Money Laundering in Australia
AUSTRAC finds that money-laundering remained an “intractable issue” and its report is a concession that successive governments have failed to deliver reform.
Dirty money ‘invested’ into our real estate market pushes up house prices. A new @AUSTRAC report shows it’s rife. @MarkDreyfusKCMP refuses to make some simple #transparency fixes🤷♂️. While he sits idle new home buyers lose and crooks, lawyers & property developers win. 1/2 #auspol pic.twitter.com/USyjD4rCPj
— Rex Patrick (@MrRexPatrick) July 19, 2024
“Underpinning many money laundering activities in Australia is opacity, anonymity and a lack of transactional visibility. The use of cash, trusts, identity crime, mule accounts and third-party transactions that obscure identity, beneficial ownership or financial flows continues to be a mainstay of money laundering,” says the report.
The key theme to emerge from this assessment is persistence: persistent exploitation of channels that have historically been used to launder funds (e.g. banks, remitters and casinos); persistent exploitation of high-value assets like luxury watches, vehicles and real estate; and persistent involvement of professional service providers to help establish complex business structures and associated banking arrangements to help individuals launder funds and conceal wealth.
Dissembling
Although the AG’s department got cracking on the AML reforms when the new government got into office two years ago, all we have seen yet is talk of a crackdown, a press release and a speech at the National Press Club by Mark Dreyfus saying things were happening. Then the inevitable press:
“A crackdown on money laundering means real estate agents, lawyers and accountants will need to report suspicious transactions” declared the ABC.
“Australian crackdown to stop dirty money buying real estate,” trumpeted the AFR.
Crackdowns and Crickets: money-laundering to keep firing up real estate … for now
The Rex Patrick FOIs showed the government is still in consultation with stakeholders but it seems, despite the promises, that the stakeholders and their donors are getting the better of the politicians and bureaucrats
“The Albanese Government recently commenced the next stage of consultation on reforms to Australia’s AML/CTF regime, demonstrating our commitment to combat criminal abuse of our financial system after nearly a decade of inaction by the former government,” said the A-G.
And while the media lapped it up, the money laundering lobby did not see it quite the same way.
The Law Council of Australia, long-term champions of the money-launderers, welcomed the AG’s ‘consultation paper’ and the loopholes to which the government appears to have already conceded.
Its press release was headlined “Further consultation on Australia’s AML/CTF regime welcome”.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.