Australians at property auctions are bidding against money launderers who are helped by outdated financial crime laws, an inquiry has been told. NCA NewsWire/Joel Carrett
Camera IconAustralians at property auctions are bidding against money launderers who are helped by outdated financial crime laws, an inquiry has been told. NCA NewsWire/Joel Carrett Credit: News Corp Australia

Homebuyers bidding against criminals using property to launder money, Senate hears

Catie McLeodNCA NewsWire

Australians heading to auctions this weekend could be outbid by financial criminals who are using the property market to launder money, an inquiry has been told.

The Senate has been told Australia is a “honey pot destination” for organised crime and its outdated laws are allowing widespread money laundering in the property sector and contributing to inflated house prices.

It is examining the strength of Australia’s money-laundering and counter-terrorism financing laws, which have not undergone a substantial update since they were introduced in 2006.

Representatives from the Australian Criminal Intelligence Commission, Australian Federal Police, Home Affairs and the financial crimes regulator Austrac appeared before the Senate on Wednesday.

Get in front of tomorrow's news for FREE

Journalism for the curious Australian across politics, business, culture and opinion.

READ NOW
STAMP DUTY
Camera IconAustralians are bidding against money launderers at property auctions who are helped by outdated financial crime laws, an inquiry has heard. NCA NewsWire/Joel Carrett Credit: News Corp Australia

Stefan Jerga, the head of the AFP criminal assets confiscation taskforce, said “without any histrionics” there were times when potential homebuyers faced off against money launderers.

“Of course there are examples of there not being a level playing field when you have a well-financed organised crime individual bidding against honest hardworking people,” he said.

AFP Deputy Commissioner Ian McCartney said the force had seized $116m worth of property of a total $187m in criminal assets it restrained in the last financial year.

He said Australia was a lucrative market for organised crime because of its high demand for illegal substances.

“We’re a fairly affluent society and we’re prepared to pay a high price. Around the world it’s probably the highest price,” he said.

Mr McCartney said the AFP was supportive of expanding anti-money laundering laws to cover real estate agents, accountants and lawyers.

The Senate has this week been told that Australia will remain a “destination of choice” for illegal funds unless its legislation is brought into line with the rest of the world.

Labor senator Deborah O’Neill, who called for the inquiry to be established earlier this year, said Australia was one of three nations, along with Haiti and Madagascar, to agree to but not introduce a “second tranche” of reforms.

The reforms would expand Australia’s laws to regulate “gatekeeper” professions who, unwittingly or otherwise, can be used to enable the laundering of money or the financing of terrorism.

The laws could oblige real estate agents, lawyers and accountants to register with Austrac and report “suspicious matters” under the same anti-money laundering regime as casinos and gold bullion dealers.

In their submissions to the inquiry, the Real Estate Institute of Australia and the Law Council both opposed the tranche two reforms, citing costs for small businesses and constraints on legal privilege.

REIA president Adrian Kelly said on Thursday if all the anticipated requirements for tranche two law amendments were required, costs to the real estate sector “could easily reach the billions”.

“At REIA it is our job to defend against undue regulatory costs and fight for our members against draconian regulation that does not even advance the national interest,” he said.

He said REIA was open to working with the commonwealth government to enhance the country’s anti-money laundering laws.

The Senate was told that the federal government conducted a feasibility study into the tranche two reforms about five years ago but was yet to implement them.

Labor senator Kim Carr said Australia’s progress was like “Waiting for Godot”, referencing the Samuel Beckett play in which two characters wait fruitlessly for a man who will never arrive.