The Government will launch a crackdown on the use of real estate agencies, accountants, law firms, and other legitimate businesses to launder money.
Money laundering is the process of moving or ‘cleaning’ criminal money obtained through illicit activities, so that the funds appear to have come from a legitimate source.
Attorney-General Mark Dreyfus has announced proposed reforms targeting businesses he says are being exploited by criminals.
Money laundering crackdown
It’s estimated billions in illegal proceeds are laundered in Australia each year. However, the true figure could be much higher.
The federal Anti-Money Laundering and Counter-Terrorism Financing Act is aimed at restricting criminal money being moved around Australia.
It requires some businesses to report transactions over $10,000 to the national anti-money laundering watchdog. These businesses are referred to as ‘tranche-one’ entities.
The watchdog
Tranche-one businesses report to the Australian Transaction Reports and Analysis Centre (AUSTRAC). This includes casinos and dealers of bullion (gold and silver bars).
Under reforms announced on Tuesday, the Government will expand the types of businesses that will be obliged to report transactions to AUSTRAC.
Several new ‘tranche-two’ professions will include real estate agents, lawyers, accountants, and dealers of precious metals and stones.
The new professions targeted under the proposed reforms are believed to be targeted by criminals for money laundering.
For example, criminal enterprises could use illicit gains to purchase property in Australia through a real estate agent.
This may be a particularly advantageous method of money laundering for criminals, as large sums of money can often be traded when buying property.
Money laundering reforms
Under the planned reforms, tranche-two businesses will be required to share transactions above $10,000 with AUSTRAC.
It comes after the watchdog’s latest National Risk Assessment found current laws are failing to stop criminals from finding avenues to money launder.
It’s hoped the changes will bring Australian regulations in line with global anti-money laundering standards, and keep up to date with changing technologies and financial systems.
Tranche-two businesses
The Government’s plan to introduce greater scrutiny for tranche-two businesses comes after a 2022 Senate Committee recommended harsher anti-money laundering measures.
The Committee received submissions that warned current regulations were putting Australia’s international reputation and foreign investment channels at risk.
Another submission suggested that money laundering could be linked to rising property prices in Australia.
What happens next?
The Federal Government is expected to table draft legislation in Parliament as a matter of priority.
In a speech to the National Press Club, Dreyfus said the proposed changes “cannot afford any further delay”.
“Opposing these reforms enables criminals to continue to engage in drug trafficking, terrorism and child exploitation to profit from those serious crimes.”
