Australian authorities are failing to adequately monitor the tidal wave of Chinese investment hitting the property market for the presence of ill-gotten proceeds.
While much of the popular anxiety over the widespread acquisition of Australian residential property by Chinese nationals has thus far focused on its impact upon housing affordability, concerns are also emerging criminal elements in the Middle Kingdom could be using real estate investments for money laundering purposes.
The ex-head of Australia’s anti-money laundering body has raised alarm bells over the potential for foreign investment in Australian real estate to be employed as a means for sequestering the illicit proceeds of criminal activities conducted abroad.
John Schmidt, former head of the Australian Transaction Reports and Analysis Centre (AUSTRAC) said in an interview with ABC’s Four Corners that that the country’s regulators are not giving sufficient attention to the possibility that overseas investors are using dirty money to purchase local property.
“Real estate is recognised internationally as one of the means by which people will launder money, but we ourselves have not covered the field as yet,” said Schmidt.
While Joe Hockey launched a $50 million crackdown on the acquisition of domestic real estate by foreign buyers in contravention of Australian regulations just prior to his ousting from office, he also acknowledged the lack of effective legislative measures against the problem of money laundering.
“Currently they are not appropriately covered by the anti-money laundering legislation, but it obviously needs to take place,” Hockey said.
Earlier this year the Financial Action Task Force (FATF) – an international organisation comprised of anti-money-laundering agencies from around the world, took Australia to task for its failure to adequately scrutinise potential money laundering in its property sector.
“Large amounts are suspected to be laundered out of China into the Australian real estate market,” said FATF in a report released in April. “China and other countries within the Asia-Pacific region were also seen as likely sources of corruption proceeds that are laundered in Australia.
According to the Four Corners investigation Australia currently lacks a single federal authority charged with the task of tracking the entry of illicit proceeds from abroad, with the Foreign Investment Review Board (FIRB) deeming the matter to lie beyond the remit of its official duties.
Schhmidt said that the Australian authorities currently lacked the resources to adequately monitor the vast amount of Chinese investment entering Australia’s property market and other sectors.
According to Justice Minister Michael Kennan the government is currently conducting a review of Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006, which is scheduled to be tabled in Parliament at the end of the year.