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Proposed changes to the country’s anti-money laundering and counter-terrorism financing (AML/CTF) laws will do more harm than good to the real estate market, the Real Estate Institute of Australia (REIA) warned.
On 20 April, the Attorney-General’s Department announced the opening of a public consultation on the proposed reforms to the existing AML/CTF system, which would expand existing laws to capture additional “high-risk” entities, including lawyers, accountants, trust and company service providers and real estate agents.
In addition, the reforms aim to modernise the AML/CTF regime in line with international standards and boost protection of Australian businesses and sectors against exploitation by organised crime.
However, REIA president Hayden Groves said the proposals would only increase regulation and costs in exchange for “very little community benefit”.
“The Australian government’s response to the inquiry into the efficacy of Australia’s AML/CTF regime would do nothing for Australian consumers, and a comprehensive cost-benefit analysis to support the proposal must be undertaken,” Mr Groves said.
Some of the proposals, including home buyers going through additional identity checks and real estate transactions by both the Australian Federal Police and the AUSTRAC Australian Transaction Reports and Analysis Centre to detect money laundering activity, would effectively turn real estate agents into “a quasi-workforce” for the two agencies, according to Mr Groves.
To back his argument, the executive cited a 2021 inquiry that showed the AFP and AUSTRAC admitted on record that collecting surveillance information would not increase any useful surveillance.
“Obviously, if suburban real estate agents are now required to report every home buyer to authorities and do the AFP and AUSTRAC’s job for them, this cost will ultimately be worn by those involved in the transaction,” he said.
In New Zealand, REIA highlighted that the cost of implementing increased regulations on gatekeeper transactions, which are identified as having a higher risk of being involved in money laundering or terrorist financing, has been estimated at between $30,000 to $100,000 per real estate agency.
And with Australians already dealing with rising cost of living and housing affordability currently at a record low, the peak body’s executive highlighted the proposals would make the real estate system “more complex and expensive” for home buyers to navigate.
“As if buying a house is not challenging enough in Australia in 2023, the government wants it to be even more difficult and expensive for both home buyers and sellers,” he said.
Mr Groves said the proposals’ potential downsides outweighed the positives.
“Whilst the intent is understood, the benefits are underwhelming and unproven,” he said.
REIA argues there are already many identity checks through the conveyancing and financing of real estate purchases, adding that “we need less red tape, not more.”
REIA highlighted that there are currently at least 14 verifications of identity (VOI) of property buyers by both banks and lawyers. Additionally, any cash transaction in Australia over $10,000 triggers an automatic report to the Australian Taxation Office (ATO).
“These should be utilised before imposing unnecessary costs on buyers, sellers and the agents that represent them,” Mr Groves stated.
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