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The release comes ahead of new laws set to put responsibility for crime reporting on the real estate sector.
A new report issued by the Australian Institute of Criminology (AIC) has demonstrated a clear link between money laundered through real estate transactions and harm being inflicted on communities through organised crime.
AIC’s analysis linked data on organised crime groups known to law enforcement from the Australian Criminal Intelligence Commission, with suspicious transactions reported to the Australian Transaction Reports and Analysis Centre. In doing so, the institute was able to clearly show that organisations that launder money were responsible for causing harm – the greater the value, the more crime they were found to be involved in.
Unfortunately, the report also indicated that real estate continues to be one of the prime avenues for laundering large amounts of money, alongside the gambling sector.
“The vulnerability of the real estate market to money laundering has been well established in Australia and overseas,” AIC stated.
“Groups suspected by law enforcement of laundering money through the real estate sector and through the gambling sector were responsible for much higher value suspicious transactions than other groups,” it found.
“We have also established that money laundering preceded crime-related harm. These findings suggest that reducing the amount of money laundered by organised crime groups would limit their ability to reinvest illicit funds in future criminal enterprises,” the institute said.
The report sets the scene for continued progress on implementing so-called “Tranche 2 reforms”, which will see real estate included among the professional sectors that are obligated to report suspicious financial transactions.
The most recent federal budget earmarked $166.4 million to implement these reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime, a portion of which will be dedicated to providing education and guidance to newly regulated entities like real estate businesses to understand their obligations.
The Real Estate Institute of Australia (REIA) is calling for a “detailed quantification of the costs and benefits of the proposed second tranche of money laundering”, ahead of draft legislation that is expected to be released soon.
REIA CEO Leanne Pilkington noted that “real estate agencies are primarily small businesses and do not have the expertise nor resources to be able to identify such activity”, and pressed for a cost-benefit analysis.
“The experience in New Zealand with the introduction of reporting money laundering by real estate agencies has been that the costs ranged from $30,000 for a small agency to up to $60,000 for a large agency with extra requirements like having a compliance officer and an auditing process. These are additional business costs incurred across the entire industry for an, as yet, unquantified public benefit,” she said.
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