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Lawyers, Accountants, Real estate agents in scope of new AML/CTF laws

An announcement about Australia’s Tranche 2 anti-money laundering laws is likely at the end of this month. This will be in response to recommendations from the Senate AML/CTF enquiry and will outline the government’s position on Tranche 2 laws, a beneficial ownership register, and a consultation timetable with AML/CTF ‘gatekeeper’ professions.

Australian anti-money laundering and counter-terrorism financing regime currently applies to casinos, bullion dealers, and solicitors that handle cash transactions over $10,000. Currently excluded, but likely to be brought in under potential new AML/CTF laws, would be lawyers, accountants, and real estate agents, who provide a large compliance hole.

Australia is just one of three major developed countries, alongside the US and Canada, that doesn’t have anti-money laundering laws that cover these key industries – called Designated Non-Financial Business and Professions (DNFBPs). Real estate, in particular, has been singled out as a weak spot in their AML regime.

In 2020, the Australian Transaction Reports and Analysis Centre (AUSTRAC) estimated that more than $1 billion was laundered through Australian real estate by Chinese entities alone. And Australian Federal Police told the Senate Committee that, of the $187 million in criminal assets it seized in 2021, $116 million was in real estate.

Australia’s lack of action around the second tranche of its anti-money laundering regime has led to concerns about the risk of sanctions from the global Financial Action Task Force (FATF). A stronger alliance with the UK on combatting money laundering, terrorism financing, and other serious crime has also prompted steps to address the gap.

Reports say the government will open up consultation on the proposals through the Attorney General’s Department (AGD) for 12 to 18 months before introducing a Bill into federal parliament. This will give enough time to have legislation in place before an evaluation visit by the FATF – expected in 2026.

Australia has been let off the hook by the FATF, as it was expected to be one of the first countries to receive a fifth round on-site mutual evaluation, beginning in 2024. It’s now been pushed out, along with Spain and Norway. A failure to address gaps in its AML/CTF regime prompted AUSTRAC CEO Nicole Rose to warn that Australia risked being added to the FATF greylist.

The FATF’s 2015 mutual evaluation report on Australia said it had a ‘mature regime for combating money laundering and terrorist financing, but that certain key areas remain unaddressed’. There is now an opportunity for Australian lawmakers to ensure their AML/CTF house is in order before the upcoming FATF evaluation.

For more information, read Nathan Lynch’s tranche 2 article in Thomas Reuters Business Insight.

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