Thursday, January 12, 2023

Call to extend laundering laws to estate agents, lawyers, accountants


Call to extend laundering laws to estate agents, lawyers, accountants


Australia faces yet more global criticism for its anti-money laundering regime unless laws that guard against washing dirty cash are expanded to include “gatekeepers” such as lawyers, accountants and real estate agents, the chief watchdog has warned.

Members of these professions can either deliberately or “unwittingly” help clients wash dirty money by allowing clients to buy assets, Australian Transaction Reports and Analysis Centre (AUSTRAC) CEO Nicole Rose said, with real estate a particular danger.

Nicole Rose says Australia will cop another round of criticism if it fails to regulate “gatekeeper” professions.  Natalie Boog

But the leading industry bodies representing those professions pushed back on the prospect of law reform, saying it would create a significant regulatory burden.

Ms Rose’s warning comes amid a broader crackdown on money laundering in Australia, after bombshell inquiries into Crown Resorts, Star Entertainment and NSW pubs and clubs revealed billions of dollars worth of tainted cash had been churned through tellers.

On Wednesday, AUSTRAC also launched a new probe into suspected dirty cash flowing through one of Australia’s largest bookmakers, Sportsbet, and its smaller rival Bet365.

Australia is just one of three developed countries, alongside the US and Canada, which has not legislated to extend AML laws to the real estate, accounting and legal professions.

The Financial Action Taskforce (FATF), which oversees AML and counterterrorism financing standards globally, already slammed Australia for failing to do this in 2015 and Ms Rose suggested it would do so again in its next review.

“That’s one of the things that they marked us down for in 2015, I suggest they will be quite critical if that’s still the case in 2024 that we’re not regulating those professions,” she said.

But proposed “tranche two” reforms which would legislate for this have been fiercely resisted and the subject of intense lobbying by the real estate sector and law firms, leading to a decade-long delay in enacting a tougher compliance regime.

The FATF was expected to again deliver a black mark for Canberra over its delay in enacting tranche two of the anti-money-laundering laws in 2019-2020, but the review was suspended. 

Gavan Ord, the senior manager of business policy at CPA Australia, said the government needed to consider the compliance burden accountants would face if the current AML regime was “transplanted ... holus-bolus” to their profession.

He said that the AML regime was primarily designed for large institutions and would be tough for small businesses to comply with, calling for the government to do a cost benefit analysis of extending the laws before it passed any reform.

“The government needs to be realistic about what it’s asking accountants to do. Local accountants, especially in regional and rural areas, don’t have the resources to perform the same checks as a bank does,” he said.

Mr Ord also called for “a distinction” between accountants who belonged to professional bodies and those what did not, as the former were already subject to quality control and risk management requirements.

“These obligations overlap with the AML/CTF regime. Duplicating them would impose significant burden for little gain,” he said.

Last year, the Real Estate Institute of Australia told a Senate inquiry that putting obligations on real estate agents would be “problematic and overly burdensome”.

The real estate sector in particular has continually been identified as a weak spot in Australia’s anti-money laundering regime, with AUSTRAC estimating $1 billion in suspicious transactions from China in 2016.

But Real Estate Institute of Australia president Hayden Groves said on Thursday that of the $187 million in assets seized by authorities in the 2021 financial year, $116 million was in real estate assets.

“To put this in context, the Australian residential property market is worth around $9.9 trillion dollars,” he said.

“REIA recognises the need to work within global frameworks, but this should be a decision made with the best available evidence.”

The Law Council of Australia also said that extending the current AML regime to the legal profession was “inappropriate” and that lawyers were already obliged to verify clients’ identities and not facilitate illegality.

The proposed reforms would also “impermissibly undermine fundamental tenets of the law, such as legal professional privilege and confidentiality”, it said, and “impose disproportionate costs” on lawyers and clients alike.

Ms Rose stopped short of calling for the laws to change ahead of the 2024 assessment, however, told the Australian Financial Review it was up the federal government to decide.

Corrs Chambers Westgarth partner and regulatory expert Anna Ross said she “understood where [Ms Rose] was coming from” as Australia’s standing for anti-money laundering protections was “eroding” without gatekeeper regulation, but expected it would soon be legislated.

“It’s been very delayed and there’s no question that we’re now lagging really significantly ... we’re part of only a handful of nations that don’t have these second tranche protections in place, and we’re increasingly seeing why that’s really problematic,” she said.

But the former Morrison government committed to the tranche two reforms many years ago and the Albanese government had reiterated that commitment, she said, predicting that “consultation on [reforms on] this would start very soon”.

She also pushed back on professional bodies’ rejections of the reforms.

“Digital innovation means there are opportunities to be quite streamlined in the way tranche two entities are regulated,” she said, which would ease compliance burdens.

“It’s too important to avoid, it’s more about finding the right balance and right way forward.”

Hannah Wootton reports on professional services and legal affairs for the Financial Review. Connect with Hannah on Twitter. Email Hannah at
Elouise Fowler is a journalist for The Australian Financial Review based in the Sydney office. Connect with Elouise on Twitter. Email Elouise at