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The so-called “tranche two” reforms have taken another step forward.
Real estate agents will be tasked with reporting suspicious activity to crack down on money laundering through the property market under planned reforms.
The Attorney-General’s Department commenced the second stage of consultation on the tranche 2 reforms – dubbed such as they extend existing reporting requirements to other “high-risk” professions, also known as tranche 2 services, that are not covered in the current Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF) Act.
Those services include lawyers, accountants, real estate agents and dealers in precious metals and stones, with the prevalence of dirty money flowing into the property market a particular area of concern.
Australian Transaction Reports and Analysis Centre (AUSTRAC) estimated that Chinese interests alone laundered more than $1 billion through Australian real estate transactions in 2020.
The second stage of consultation includes a detailed proposal on what reforms would look like, making it clear that the new rules could be set to cover a wide range of property professionals.
The current proposal includes extending due diligence and reporting duties to anyone who represents sellers in a real property transaction, facilitates auctions or acts as an auctioneer, introduces a buyer to a property or acts as a buyer’s agent or developer.
Professionals who fall under these definitions would be required to do due diligence to be reasonably satisfied they know the identity of their customers, and report any suspicious activity during a sale. This might include if the buyer seems uninterested in the property price, wants to pay a large deposit in cash, purchases without viewing or quickly cycles through buying and selling, among other red flags.
Submissions for this phase of the reforms will close on 13 June 2024, but before they do, the process is set to get a major injection of cash from the government to keep the long-awaited reforms moving along, with the budget set to include $166.4 million to facilitate AML/CTF updates.
Stressing the need for the nation to tighten its regulation of the sector, Attorney-General Mark Dreyfus commented that “each year billions of dollars of illicit funds are generated from illegal activities such as drug trafficking, tax evasion, people smuggling, cyber crime, arms trafficking, and other illegal and corrupt practices. 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”.
Dreyfus noted that Australia is now one of only five jurisdictions out of more than 200 that do not regulate tranche-two entities, placing the country at risk of being “grey-listed” by the Financial Action Task Force.
The funding, he said, would enable AUSTRAC “to implement the new regime and to support industries meet their obligations. It will also allow AUSTRAC to deliver comprehensive education and guidance to support businesses, especially newly regulated entities”.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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