Australian Real Estate Sector Fears AML Controls are "Taking a Sledgehammer to a Walnut"

Australian real estate agents have expressed concerns that the introduction of new anti-money laundering (AML) controls in their sector could be akin to “taking a sledgehammer to a walnut.” This comes after Australia, along with the U.S. and China, was identified as non-compliant with any Financial Action Task Force (FATF) recommendations regarding AML controls for 'financial gatekeepers'.

Following this revelation, Australian Attorney-General Mark Dreyfus warned in a speech to the National Press Club that Australia risks being grey-listed by FATF. In a joint address with AUSTRAC (Australian Transaction Reports and Analysis Centre) Chief Executive Brendan Thomas, Mr. Dreyfus announced the release of two new national risk assessments on money laundering and terrorism financing in Australia. The findings from these assessments will inform the country’s anti-money laundering and counterterrorism reforms, which propose extensive changes to mitigate the risk of illicit finance. These changes would include tighter oversight of the ‘gatekeepers’ identified by FATF, such as real estate professionals.

“Each year billions of dollars of illicit funds are generated from illegal activities such as drug trafficking, tax evasion, people smuggling, cybercrime, arms trafficking, and other illegal and corrupt practices,” Mr. Dreyfus stated. He blamed the former government’s inaction for Australia’s current predicament, saying, “As a result of the former government’s failure to act, Australia is falling short of meeting the standards required to combat criminal abuse of our financial system, and at increased risk of becoming a haven for money laundering.”

Australian officials have previously noted that illicit finance is often funneled into real estate, creating unfair competition for legitimate buyers and driving up property prices. However, the Real Estate Institute of Australia (REIA) has cautioned the government against harming businesses in its AML crackdown. REIA Deputy President Hannah Gill remarked, “Introducing blanket compliance requirements on all real estate businesses appears once more to be taking a sledgehammer to a walnut.”

Gill pointed out that the Attorney-General himself acknowledged a lack of evidence linking money laundering to house price growth. She noted that Mr. Dreyfus’s speech revealed only $228 million in property had been seized by financial crime regulators, which she described as “a tiny percentage of Australia’s overall residential property market.”

“Compliance programs introduced as a consequence of this fight need to be based on the cost versus the benefits,” Gill concluded.

By fLEXI tEAM