Why aren’t we cracking down on foreign money laundering in Aussie real estate?
In December, the OECD pointed to serious weaknesses in Federal Government efforts to guard against the laundering of corruptly obtained money through Australian real estate. And it made me wonder: why is the Federal Government not doing more to require those involved in real estate transactions to report their suspicions?
This week, I had this thought again when I read that the Australian Federal Police is launching a civil suit against Ngouth Oth Mai, a 22-year old living in housing commission and receiving welfare payments asking him to explain how he managed to buy a $1.5 million property. Mr Mai happens to be the son of General James Hoth Mai, the former chief of staff of the Sudan’s People’s Liberation Army (“SPLA”) and the money has been traced back to two businessmen who received contracts from SPLA during General Mai’s tenure as chief of staff. The money to purchase the house was transferred in a roundabout way to Australia.
Apart from exposing welfare fraud and other questionable behaviour, which is worth lifting out in the open, the linked article is interesting for a couple of other reasons:
- The suspicious transfers were not reported or picked up either by NAB who was the bank involved or by AUSTRAC but by a charity watchdog called The Sentry (founded by the actor George Clooney who I guess learned some tricks of the trade from starring in the movies Oceans 11, 12 and 13). Normally, transactions associated with someone of General Mai’s position would be flagged as he would be considered a “politically exposed person” but what is really interesting to read is that AUSTRAC does not consider a person “politically exposed” after they leave office. This means that if you want to launder money in Australia, you will have a much easier time after you have left your office. This does not make sense to me and it is also not in-line with the Financial Action Task Forces (FATF) standards. FATF is the international body set up to combat corruption.
- The second interesting part of the article is the following quote:
“The real estate agents involved in the sale of the house in Australia should have conducted their own due diligence on the source of the funds, although Australia’s anti-money laundering laws do not currently require it”.
As pointed out before, it is quite astonishing that Australia’s government has not yet implemented the second tranche of anti-money laundering legislation which would make it a requirement for actors involved in real estate transactions to report suspicious transactions. And this is well over 10 years from when they first said that they would, and despite five sets of stakeholder consultations…
You can read the article on the civil suit against Ngouth Oth Mai here.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
INVEST WITH MONTGOMERY
Chris
:
Nero fiddled while Rome burned. That in itself should tell you what is going on. They (the pollies) don’t care enough to get involved because it doesn’t affect them. On 5AA this morning, Leon Byner said “They love to make rules, they just don’t like to enforce them”.
This is not new, the average bloke who went along to auctions knew about this two, three years ago when people were turning up and buying million dollar homes in suburbs like Toorak and Burnside, with cash in briefcases for their student son / daughter who was studying here.
andrew ronan
:
It’s a sure sign that something’s wrong when we the “lucky country” has to resort to knowingly taking laundered/stolen money to keep our ponzi property/immigration economy afloat.
while at the same time preaching on equality and fairness to the rest of the world.
Worse still, If a resource rich, land rich country such as Australia with close access to the worlds largest consumers of our products has to stoop this low. We must be something less than competent it seems.
xiao fang xu
:
The real purpose of the war on cash is not to combat criminals or terrorists but to ease the government’s ability to plunder its citizenry.
Money laundering itself has only been a federal crime since 1986
Given the history of civil government, we cannot expect bureaucrats to use data about individual citizens only for the detection and prosecution of terrorism, theft, or fraud.
Money laundering fits under the definition of vague law because, unlike murder or robbery, it is not a crime of an act but one of “intent.” …This leads to many problems and substantial prosecutorial abuse. It is not only banks and financial institutions that are supposed to know the source of their clients’ funds, but also such diverse people as car dealers, pawnbrokers, real estate agents, and on and on. Often, it is not considered good enough to know the source of a customer’s funds (often a near-impossibility), but the source of the funds of the customer’s customer. …The result is that banks and other financial institutions increasingly refuse to open accounts for low-income people…
When a government is unjust and corrupt, the people have both the right and the duty to oppose it. A form of opposition is the refusal to fund the government to the best of one’s ability, which can take the form of deliberate tax avoidance or evasion.
Chris
:
It’s a rhetorical question because “why would you when cheap Chinese money is underpinning the construction industry and the apartments market ?”
We’ve got to flog overpriced dogboxes to someone and this is the last gasp of the property market. Aussies won’t / can’t buy them, so sell them to a greater fool.
Luke
:
The perception is that the government is engaged in a “war on terror” and concerned therefore about the funding of terror groups. The reality is that the government is engaging primarily in theatre, announcing this week that the police need new powers that allow them to arbitrarily remove people from airports, we now need to be scanned down to virtualy nudity and so on, because “we live in dangerous times” – whatever that might mean. Reducing immigration and attempting to reduce the flow of dodgy money into the country to buy property are just two examples where the implementation of policy may collide with personal interest and there is a distinct lack of theatre in any possible announcement. Not surprisingly, there isn’t a lot of interest in dealing with either issue.