Australia leads the world in selling housing to money-launderers

A new Transparency International report ranks the world's most superheated urban property markets to find the most corrupt and finds that Australia is a playground for offshore criminals looking to launder their money, because "real estate agents are not subject to the provisions of the Anti-Money Laundering and CounterTerrorism Financing Act 2006," thus, "70 per cent of Chinese buyers pay in cash and they represent the largest proportion of foreign purchases in the country."

Australia, like many developed nations, is gripped by urban housing crises created by the need to exfiltrate criminal proceeds from autocratic regimes; often this money is taken in with the tacit approval of the state, but any funds left within the nation's borders is liable to seizure at the whim of some local tyrant, so smart crooks get their money out as soon as they can.

Normally, property is highly illiquid, making it a less-than-ideal way to store your ill-gotten booty: no one wants to wait for months of listings, showings, and escrow to convert their safe-deposit box in the sky to cash when the shit hits the fan. But the incredible competition among money-laundering millionaires has created such titanic bubbles in their favored cities that homes can be converted to cash in days (it helps that they're not really being used as homes, being left largely empty in cities where normal working people are struggling to put roofs over their heads).

Don't get smug if you're not Australian!

Canadians! "Canada’s legal framework has severe deficiencies under four of the 10 identified areas. In the other six, there are either significant loopholes that increase risks of money laundering through the real estate sector or severe problems in implementation and enforcement of the law."

Britons! "Transparency International UK found the London property market highly vulnerable to corrupt wealth. Analysis of open source material found that individuals or companies representing a high money laundering risk own over £4.2 billion worth of property in London.7 The UK government has committed to introducing greater transparency on the purchase of properties by foreign companies and will introduce a public register of beneficial ownership for foreign companies with property or wishing to buy property in the UK. Legislation is anticipated in 2018."

Americans! "Within this framework, cash purchases in the US pose particular risks. A 2015 report by the US National Association of Realtors found that 59 per cent of purchases by international clients are made in cash. In New York, 62 per cent of purchases made by international clients costing more than US$2million are made in cash."

In Australia, the AML/CTF Act does not require due diligence or the identification of beneficial owners of customers in real estate closings.

In Canada, the law and guidelines do not require non-financial professionals involved in real estate closings to identify beneficial owners when conducting due diligence on customers. Transparency International Canada’s analysis of land title records found that nearly a half of the 100 most valuable residential properties in Greater Vancouver are held through structures that hide their beneficial owners. Nearly one-third of the properties are owned through shell companies, while at least 11 per cent have a nominee listed on title.40

In the UK, real estate agents and other professionals involved in real estate closings are required to identify the beneficial owner of customers as part of their due diligence process. The failure to identify a beneficial owner should, according to the law, impede the transaction and be reason to submit a suspicious transaction report (STR),41 if there is also suspicion of money laundering. As described above, this requirement does not apply to real estate agents when dealing with the purchaser.

In the US, real estate agents, lawyers and accountants involved in real estate closings are not required to identify the beneficial owner of customers. Since March 2016, title insurance companies are required to identify the beneficial owner in real estate transactions that are made in cash and are above a certain threshold in some places in the US (see box). This requirement only applies to transactions when the purchaser is a legal person and buys the property with title insurance. Other professionals involved in the transaction, such as real estate agents, accountants and lawyers are still neither obliged to identify the beneficial ownership of customers nor to conduct any other due diligence.


Report: Australia world’s worst money laundering property market [Leith van Onselen/Macro Business] [works intermittently, see below for cache]

Report: Australia world’s worst money laundering property market [Leith van Onselen/Macro Business] [Google cache/text-only view]