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Crackdowns and Crickets: money-laundering to keep firing up real estate … for now

by Michael West | May 9, 2024 | Finance & Tax, Latest Posts

“Crackdown on money launderers!” they cried. But are laws promised 17 years ago to stop lawyers, accountants and property developers from laundering money any closer? Michael West reports.

How wonderful it is to see the government has brought back the mighty ‘crackdown’. Like crickets on a summer evening, we hear crackdowns but never see them. That is the charm of the crackdown; it delivers the appearance of decisive government.

So it was that this very week, we hear of the crackdown on money launderers.

“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. 

Reforms long, long overdue

The crackdown is not before time – because billions of dollars in black money from China and elsewhere have been driving up real estate prices for 17 years since the government first promised it would deliver Tranche II of its AML-CTF (Anti-Money Laundering and Counter-Terrorism Financing) reforms.

These are the laws proposed to compel lawyers, accountants and property developers to identify the source of their funds – just like banks and casinos have had to do since Tranche I of the AML-CTF regime was enacted in 2006.

Inequality: how dithering over money-laundering reforms is fuelling Australia’s house affordability crisis

For 13 years, this humble reporter has been ringing whichever minister is in charge of money-laundering reform – they juggle it about between portfolios –  to inquire as to when lawyers, accountants, and property developers might possibly be forced to comply with AML II, as is the case in most civilised countries around the world.

It now resides in the portfolio of Attorney-General Mark Dreyfus. And this week, in the Budget leak du jour, Dreyfus announced: “Boosting Australia’s anti-money laundering and counter-terrorism financing regime”.

Hooray! Except that, when you read down a bit, it was just more of the same: more consultation with stakeholders, just more talk. 

Just more talkies?

“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 announcement.

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 money-laundering, welcomed the AG’s ‘consultation paper’ (not crackdown) and the loopholes to which the government appears to have already conceded in its two years of talks, sorry, engagement with key stakeholders.

Its press release was headlined, “Further consultation on Australia’s AML/CTF regime welcome.” Nice of them to be so pleased.

“We commend the Government for continuing to consult on potential reforms to simplify and modernise the AML/CTF regime, and we look forward to contributing further to that process,” Law Council of Australia President-elect Ms Juliana Warner said.

Indeed we at MWM commend the commendations of the Law Council of Australia and are pleased that they are pleased. And we look forward to contributing further to the process of hammering them and the other money laundering lobbyists.

“The Law Council is heartened to see that its advocacy for a risk-based response has resulted in some important clarifications by the Attorney-General’s Department in the consultation paper. These include some exemptions that are sensible and proportionate, and the Law Council welcomes these clarifications.”

So what have we here with this ‘crackdown’? We have no legislation, just a proposal to consult further with the money laundering lobby, which has already apparently locked in loopholes.

“Legal professional privilege!” cried the Law Council, which is lawyers’ jargon for keeping client stuff secret, no matter the money laundering.

But we also have some money changing hands. “The Australia Government will invest $166.4 million in this month’s Budget to implement reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime,” says the A-G’s press release. This suggests that they must finally be fair dinkum about doing something to fall in line with the rest of the world.

They couldn’t possibly be just forking out $166.4m for nothing … could they?

Action on money-laundering, property price relief, or plus ça change?

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.

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