Australia faces dirty money if estate agents, solicitors and accountants aren’t regulated


Australia is only one of three developed countries, along with the United States and Canada, that has not legislated to extend AML laws to the real estate, accounting and legal professions.

The Financial Action Task Force (FATF), which oversees anti-money laundering and anti-terrorist financing standards globally, has previously criticized Australia for not doing so in 2015 and Ms Rose suggested she would do it again on her next exam.

“That’s one of the things they branded us for in 2015, I suggest they’ll be pretty critical if it’s still the case in 2024 that we don’t regulate those professions,” she said .

But the proposed ‘tranche two’ reforms that would legislate for this have been fiercely resisted and intensely lobbied by the real estate industry and law firms, resulting in a decade-long delay. years in enacting a stricter compliance regime.

The FATF was due to give Canberra a black mark again for its delay in enacting the second tranche of anti-money laundering laws in 2019-20, but the review has been suspended.

Gavan Ord, senior director of trade policy at CPA Australia, said the government needed to consider the compliance burden accountants would face if the current AML regime were “transplanted…holus-bolus” to their profession.

He said the AML regime was primarily designed for large institutions and would be difficult for smaller businesses to comply with, calling on the government to carry out a cost-benefit analysis of extending the laws before adopting it. any reform.

“The government needs to be realistic about what it asks accountants to do. Local accountants, especially in regional and rural areas, do not have the resources to perform the same checks as a bank,” he said.

Mr. Ord also called for “a distinction” between accountants who belong to professional orders and those who do not, the former being already subject to quality control and risk management requirements.

“These obligations overlap with the AML/CFT regime. Duplicating them would impose a significant burden for little gain,” he said.

The Real Estate Institute of Australia told a Senate inquiry last year that imposing obligations on estate agents would be “problematic and overly burdensome”.

The property sector in particular has continually been identified as a weak point in Australia’s anti-money laundering regime, with AUSTRAC estimating $1 billion in suspicious transactions from China in 2016.

But the president of the Real Estate Institute of Australia, Hayden Groves, said on Thursday that of the $187 million in assets seized by authorities in the 2021 financial year, $116 million were real estate assets.

“To put that into context, the Australian residential property market is worth around $9.9 trillion,” he said.

“REIA recognizes the need to work within global frameworks, but this should be a decision made with the best available evidence.”

The Law Council of Australia also said the extension of the current AML scheme to the legal profession was “inappropriate” and that lawyers were already obliged to verify the identity of clients and not facilitate illegality.

The proposed reforms would also “unacceptably undermine fundamental principles of the law, such as privilege and confidentiality”, he said, and “impose disproportionate costs” on lawyers and clients.

Legislation on the horizon

Ms Rose refrained from calling for changes to the laws ahead of the 2024 assessment, however told the Australian Financial Review it was up to the federal government to decide.

Anna Ross, Corrs Chambers Westgarth partner and regulatory expert, said she “understands where [Ms Rose] came from” as Australia’s position on anti-money laundering protection “eroded” without controlling regulation, but was expected to be legislated soon.

“It was very delayed and there is no doubt that we are now very significantly behind … we are only one of a handful of countries that have not put in place these second tranche protections, and we are seeing more and more why this is really problematic,” she said.

But the former Morrison government committed many years ago to tranche two of reforms and the Albanian government has reiterated that commitment, she said, predicting that “consultation on [reforms on] it would start very soon”.

She also rejected the refusals of the professional organizations of the reforms.

“Digital innovation means there are opportunities to streamline enough how tranche two entities are regulated,” she said, which would ease compliance burdens.

“It’s too important to avoid, it’s more about finding the right balance and the right path forward.”


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