Update on Anti Money Laundering and Counter Terrorism Fraud Reforms for Real Estate
Australia’s AML/CTF regime is proposed to expand to ‘tranche two’ entities – lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious stones and metals. The second round of consultation currently underway re the AML/ CTF reforms.
REIA is currently working with REIs on a submission to the Federal Government on the AML/CTF legislation. As reported in the ABC, there is concern from government bodies that Australia is becoming a prime target for global money laundering. The AFP has indicated that real estate accounted for 65 percent of the total assets confiscated through its anti-money laundering operations in 2023.
The Attorney General and AUSTRAC have committed to the AML Tranche 2 reforms through a Bill to Parliament later this year. AUSTRAC has listed real estate as an industry that is ‘Very High Risk’ whilst real estate agents have been listed as ‘Medium Risk’. These reforms would introduce compliance and reporting mechanisms for agents who become aware of suspicious transactions through their role. The report has indicated that real estate agents do not have a direct role in being complicit with money laundering in the same capacity as lawyers or accountants.
The REIA’s June 2024 submission on the second stage consultation papers for the AML/CTF reforms details the REIA’s concerns over the current legislation under government consideration.
We are working closely with the Real Estate Institute of Australia (REIA) who are leading the real estate response to this matter.
REIA recommendations to government
Recommendation 1: The Attorney General’s Department clarifies the risk profile and specific pain points within a real estate transaction for AML.
Recommendation 2: A comprehensive data audit is undertaken across all responsible parties and data points associated with the real estate transaction process.
Recommendation 3: Establishment of a real estate regime focused on awareness and partnership through the development of a comprehensive industry-wide information dossier that is clear and transparent to better understand legal reporting obligations and associated procedures.
Recommendation 4: Further consultations to be undertaken with real estate agencies to determine appropriate reporting timeframe and penalties associated with non-compliance.
Recommendation 5: A cost-benefit analysis specific to real estate to be developed and made available for the public.
Recommendation 6: An exemption for conducting customer due diligence in the real estate sector based on lower risk profile and duplication of existing reporting processes.
Recommendation 7: Funding for capacity building and training from government to the industry to offset business costs borne by small businesses and customers.
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