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The Attorney-General has indicated the anti-money laundering Tranche 2 reforms are coming this year – and the REIA hopes the transition won’t come with extra burdens on real estate businesses.
In an address to the National Press Club on 9 July 2024, Australia’s Attorney-General Mark Dreyfus stated his aim of tabling the revisions to the national anti-money laundering and counter-terrorism financing (AML/CTF) regime before 2024 is out.
Money was set aside in this year’s federal budget to implement the reforms to Australia’s anti-money laundering and counter-terrorism financing, broadening the scope of the law to see real estate included among professional sectors obligated to report suspicious financial transactions.
This will see agents tasked with reporting suspicious activity, in an effort to crack down on purported money laundering in the property market.
Weighing in on Dreyfus’ address, Real Estate Institute of Australia (REIA) deputy president Hannah Gill said the institute “welcome[s] the Attorney-General’s clear statements and commitment to minimising the burden on businesses as we approach the milestone of Tranche 2 Gatekeeper being implemented by REIA’s members”.
Gill said the “last thing” the REIA wants is “Australian homes falling into the hands of sophisticated criminals with legitimate buyers who are hardworking Australian families and individuals missing out”.
Nevertheless, the deputy president stressed “compliance programs introduced as a consequence of this fight, this needs to be based on the cost versus the benefits”.
“The Attorney-General’s speech identified that only $228 million in property had been seized by the financial crime regulators. The Australian residential property market is worth in excess of $10 trillion.”
“This is 0.00228 per cent of the total market,” she highlighted.
And while the government is deeming real estate “high risk”, she also pointed out that AUSTRAC, the federal organisation responsible for fighting financial crime, has said “they cannot price the size of the problem”.
“The Attorney-General himself has said today that he has no knowledge and there is no evidence to substantiate that money laundering is driving house price growth.”
From Gill’s perspective, “introducing blanket compliance requirements on all real estate businesses appears once more to be taking a sledgehammer to a walnut”.
The REIA has provided a submission on the second stage consultation papers on the reforms, arguing that “real estate agencies provide no new visibility of evidence to the [real estate] transaction”.
The institute has provided seven recommendations to the government, including but not limited to: clarification around the risk profile and specific pain points during a real estate transaction as they relate to AML, a request for a comprehensive data audit, establishment of “real estate regime focused on awareness and partnership”, further consultation to determine appropriate reporting time frames and penalties related to non-compliance, and an exemption for conducting customer due diligence due to lower risk profiles.
The REIA stated that on behalf of its member institutes, they will “continue to work with the Attorney-General’s department on development of a business-friendly compliance regime”.
REB’s Grace Ormsby recently sat down with an AML consultant and financial crime expert, Luke Raven, to unpack what the reforms could mean for the real estate profession. You can listen to the episode here.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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