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The federal government is currently undertaking a consultation process about proposed changes to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.
These changes would see the current AML/CTF laws extended to real estate agents, lawyers, accountants and some other professions, which the government says are being targeted by criminals to launder the proceeds of their criminal activity. The proposed new AML-CTF laws, called the Tranche Two reforms, would also look to streamline current parts of the legislation.
The Australian Federal Police (AFP) said criminals are laundering tens of millions of dollars in Australia daily to fund criminal activities and support lavish lifestyles. And authorities said that high-value assets like property are a significant money laundering channel in Australia. Over the past two years, 57.5 per cent of the AFP’s Criminal Assets Confiscation Taskforce’s (CACT) seizures have been made up of commercial and residential property.
In one case earlier this year, the AFP broke up a criminal syndicate that had acquired 20 properties across Sydney with money generated from their criminal activity. Two homes alone combined were worth $19 million and a $47 million block of land near the new Sydney Airport was also seized.
Currently, under Australian law, financial institutions, gambling operators and bullion dealers are required to report large or suspicious transactions to the Australian government’s financial intelligence agency, Austrac. They are also required to perform “know-your-customer” (KYC) checks to make sure they know the true identity of their client and the real source of their money.
Tranche Two reforms could be tabled in parliament this year after the consultation period has finished, so preparing for the changes now would enable a smooth transition to a new regulatory regime.
To begin, it’s important to understand Australia’s current AML/CTF laws and familiarise yourself with the proposed reforms.
Throughout 2023, the government is undertaking roundtable discussions and accepting industry submissions on the reforms, so monitoring this process will be valuable in anticipating how potential changes could affect your real estate business and client base.
Often, money launderers will use fake or stolen identities to cover their tracks, and in recent AFP money laundering raids, fake passports, fake driver’s licences, and stolen IDs have been seized, showing how easy it is for criminals to get their hands on these documents. Review your customer due diligence and proof of identity practices now, so you have the systems and processes in place when the changes are made.
Some real estate agents already opt to verify their clients’ identities during the buying and selling process, and there are digital platforms and apps that can simplify the process and minimise human error using AI technology, which integrates with the Australian government’s Document Verification Service (DVS). This process can take seconds, as opposed to time-consuming manual ID service providers.
Assess the money laundering risk to your business or have an Anti-Money Laundering (AML) company do one for you. There are several factors that can increase the risk profile of your business, including the types of clients you have, the size of the transactions, the source of the client’s funds, and the client’s behaviour.
Although implementing and complying with any changes to the law will incur additional costs, preparing now will enable you to make a smoother transition to the new regime.
Moreover, the payoff for being proactive about safeguarding your business from association with fraudulent or criminal behaviour will give you peace of mind and can act to increase trust among both existing and potential clients.
Ches Rafferty is the CEO of Scantek.
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