Banks concede lack of control over foreign housing funds

Banks concede lack of control over foreign housing funds

18 August 2014 by Staff Reporter 0 comments

Australian banks have admitted to having limited control over the financing of residential purchases by overseas investors.

ANZ, the Australian Bankers Association and Macquarie Group all conceded their lack of influence on foreign housing funds during a parliamentary inquiry into foreign investment in residential real estate, according to The Australian.

The inquiry raised concerns that offshore financing, such as “shadow banking” in China, was cheaper and not in line with Australian standards.

Tom Westcott, ANZ’s senior manager of public policy, wrote that the bank would sample pre-sales “to check postcodes and local demographics to give validity to the claim (of the sale)”, but would not source the origin of the capital.

The Australian Bankers Association’s chief executive Steven Munchenberg wrote that the bank is not contracted with the relevant purchaser “and therefore does not have the authority to request personal financial information to verify the source of funds”.

James Laurenceson, deputy director of the Australian-China Relations Institute at the University of Technology in Sydney, denied that there was anything sinister about China’s “shadow banking” sector, and said it was often used to avoid official restrictions on capital being sent abroad.

“We don’t get a lot of Chinese investment, relatively speaking, and this could be a positive if it leads to an expansion in (apartment) supply,” he said.

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