TRANSPARENCY International says that the Australian government needs to close glaring legal loopholes to prevent crooked elites laundering the proceeds of corruption in its real estate markets.
There have in the past been many allegations of corrupt funds from Papua New Guinea being used to purchase property in key Australian markets, especially in north Queensland and Brisbane.
In a new report, Doors Wide Open: Corruption and Real Estate in Key Markets, Transparency International identifies problems related to real estate and money laundering and makes recommendations on how to address them.
The report focuses on four countries, including Australia, that are known hotspots where corrupt politicians and others invest and launder money.
The report says Australia has severe deficiencies in this area and “is not in line with any of the commitments to tackle corruption and money laundering in real estate made in international forums.
“There is clear evidence that such investment in Australian property is 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”.
The report continues:
“In Australia, real estate agents are not subject to the provisions of the Anti-Money Laundering and Counter Terrorism Financing Act 2006. Other professionals such as lawyers and accountants who may also play a role in the sector are not covered either. This means that properties can be bought and sold without any due diligence on the parties.”
“Governments must close the loopholes that allow corrupt politicians, civil servants and business executives to be able to hide stolen wealth through the purchase of expensive houses in London, New York, Sydney and Vancouver,” said José Ugaz, Chair of Transparency International."
Real estate has long provided a way for individuals to secretly launder or invest stolen money and other illicit funds. According to the Financial Action Task Force, real estate accounted for up to 30% of criminal assets confiscated worldwide from 2011-13.
Australia, Canada and the US rely almost exclusively on banks to stop money laundering, even though real estate agents, accountants, tax planners, lawyers and others participate in deal-making. This makes all-cash deals which do not require the involvement of a bank especially difficult to track.
You can read the full report here: Download Doors Wide Open_Transparency International