The Times Australia
The Times World News

.
The Times Real Estate

.

Australia’s professional services sector is being used to launder money. It’s time for tougher laws

  • Written by Jamie Ferrill, Senior Lecturer in Financial Crime Studies, Charles Sturt University
Australia’s professional services sector is being used to launder money. It’s time for tougher laws

Australia’s stable political and legal systems – and relatively resilient economy – make it an attractive place to do business.

But they also make it an alluring place for criminals to launder ill-gotten gains, heightened by the fact our anti-money laundering regulations are not up to par.

In a joint address[1] to the National Press Club on Tuesday, Attorney-General Mark Dreyfus and Australian Transaction Reports and Analysis Centre (AUSTRAC) chief executive Brendan Thomas jointly announced the release of two new national risk assessments on money laundering[2] and terrorism financing[3] in Australia.

This followed the closure of a second round of consultation[4] on anti-money laundering and counterterrorism financing reforms last month.

Dreyfus and Thomas painted a bleak picture of a country not only fraught with vulnerabilities to criminal activity and money laundering, but also lacking adequate controls to curb them.

What is money laundering?

Money laundering is the process of cleaning “dirty” money.

Dirty money typically refers to the proceeds of crime, which could include drug trafficking, tax fraud, corruption and bribery, or scams.

Money generated through crime typically can’t just be spent by the criminals involved. Simply depositing it in a bank would set off all kinds of alarms.

Criminals need to make it harder for authorities to trace it back to them, so they use a range of methods to launder it. Put simply, they attempt to make it seem like legitimate income.

This could be by buying real estate, funnelling funds through shell companies, depositing small amounts into various bank accounts, or gambling with it at casinos.

Attorney-General Mark Dreyfus speaking at the National Press Club in Canberra
Attorney-General Mark Dreyfus speaking at the National Press Club in Canberra on Tuesday. Mick Tsikas/AAP[5]

Today’s address[6] highlighted that many of these money-laundering methods are often enabled by corrupt or unwitting professional service providers, including legal practitioners, accountants, consultants, trust and company service providers, financial advisers and real estate professionals.

These are known as “gatekeeper entities” because they act as intermediaries who can control access to certain services or information that criminals can use to launder money.

Regulations aren’t up to scratch

In Australia, these gatekeeper entities are not currently covered under the anti-money laundering and counter-terrorism financing regime, making us one of only a few countries neglecting this huge vulnerability.

Coincidentally, on Tuesday, the global anti-money laundering and counter-terrorism financing watchdog the Financial Action Taskforce (FATF) also released a report[7] reviewing gatekeepers’ “technical compliance related to corruption”.

Australia, China, and the United States all scored 0% on requirements to cover gatekeeper sectors, putting all three at the bottom of global rankings.

According to the report, in our case this is largely because:

In Australia, these sectors are required to implement none of the preventive measures that have been required by the FATF Standards since 2003.

A recipe for criminal exploitation

AUSTRAC’s risk assessment[8] ranked domestic real estate, luxury goods, and cash (as both transfer and store of value) as “very high risk” channels or sectors for money laundering.

Accountants, lawyers, precious metals, and legal structures were all ranked “high risk”. These sectors could be playing a role in better controlling money laundering in Australia. Instead, they are currently passive, and sometimes active, enablers.

In rankings of proceed-generating crime threats, illicit drugs, tax and revenue crime, and government-funded program fraud were identified as the highest-risk. The proceeds of these crimes are known to be laundered. Careful laundering can allow criminals to keep using that money with impunity, fueling further crimes.

Bring those two sets of risk ratings together, and it’s clear Australia has both highly profitable criminal activity and a range of sectors highly vulnerable to money laundering abuse. That is a recipe for criminal exploitation.

There’s an appetite for change

The national risk assessments are out at a useful time. Tranche II reforms[9] to update Australia’s anti-money laundering and counter-terrorism financing measures are in progress. In the last budget, A$166.4 million [10]was set aside to implement the necessary reforms.

Under these reforms, a wide range of gatekeeper businesses in Australia will be required to develop an anti-money laundering and counter-terrorism financing program. Organisational risks will need to be assessed. Suspicious transactions will need to be reported. Awareness and education about money laundering through these legal channels will undoubtedly result.

The national risk assessments were a significant undertaking by AUSTRAC. They provide an evidence-base for the money laundering and terrorism financing risks we face in Australia.

As noted[11] by AUSTRAC chief executive Brendan Thomas, Australia’s strong business sector is appealing to both legitimate and illegitimate business. Criminals are good at exploiting weaknesses, so the controls to slow them must be stronger.

An effective anti-money laundering regime is the best tool we can have to control flows of dirty money. While we will never completely eradicate it, we can certainly do a better job of detecting, deterring, and preventing the abuse of legal channels in Australia.

Our government has had 17 years since passing the Anti-Money Laundering and Counter-Terrorism Financing Act to bring the legislation up to the minimum standards set by the global Financial Action Task Force. So far, it has failed to deliver. Not only does this leave gaping holes for criminals to exploit, but it also means we are not collecting data on suspicious transactions within these gatekeeper industries.

Read more: Australia is awash with dirty money – here's how to close the money-laundering loopholes[12]

References

  1. ^ joint address (iview.abc.net.au)
  2. ^ money laundering (www.austrac.gov.au)
  3. ^ terrorism financing (www.austrac.gov.au)
  4. ^ consultation (consultations.ag.gov.au)
  5. ^ Mick Tsikas/AAP (photos.aap.com.au)
  6. ^ Today’s address (iview.abc.net.au)
  7. ^ released a report (www.fatf-gafi.org)
  8. ^ risk assessment (www.austrac.gov.au)
  9. ^ Tranche II reforms (www.grantthornton.com.au)
  10. ^ A$166.4 million (ministers.ag.gov.au)
  11. ^ noted (www.austrac.gov.au)
  12. ^ Australia is awash with dirty money – here's how to close the money-laundering loopholes (theconversation.com)

Read more https://theconversation.com/australias-professional-services-sector-is-being-used-to-launder-money-its-time-for-tougher-laws-234278

The Times Features

There Are No Boundaries In Love and There Does Not Need To Be!

Love is unpredictable and has its own language. It is the most healing and transformative quality of our existence, it does not know separation by race, boundaries, borders, gove...

Restorative massage: Technique and Contraindications

Any massage, including restorative massage, not only gives a person pleasure and enjoyment but also has a beneficial and therapeutic effect on the whole organism. To date, resto...

Tips on Choosing the Right Tibetan Singing Bowl for You

The art of mindfulness can really do wonders for your life. In fact, it has been proven to help people thrive in the most difficult situations, including the pandemic, and being ...

Bali, A stunning island paradise that's truly a feast for the eyes!

As the holiday period approaches, many Australians are thinking of warm destinations, which for them means a chance to get away from the summer heat. Among the most spectacular I...

Discover the Key Habits to Lower Your Water Costs in Canberra

Water conservation has become a critical focus in Canberra due to its growing population and the increased necessity of preserving natural resources. Rising water costs are placi...

Why Every School Needs These STEM Kits to Prepare Students for Tomorrow

As the world moves further into the 21st century, the importance of Science, Technology, Engineering, and Mathematics (STEM) education has never been clearer. Schools across Aust...

Times Magazine

How BIM Software is Transforming Architecture and Engineering

Building Information Modeling (BIM) software has become a cornerstone of modern architecture and engineering practices, revolutionizing how professionals design, collaborate, and execute projects. By enabling more efficient workflows and fostering ...

How 32-Inch Computer Monitors Can Increase Your Workflow

With the near-constant usage of technology around the world today, ergonomics have become crucial in business. Moving to 32 inch computer monitors is perhaps one of the best and most valuable improvements you can possibly implement. This-sized moni...

Top Tips for Finding a Great Florist for Your Sydney Wedding

While the choice of wedding venue does much of the heavy lifting when it comes to wowing guests, decorations are certainly not far behind. They can add a bit of personality and flair to the traditional proceedings, as well as enhancing the venue’s ...

Avant Stone's 2025 Nature's Palette Collection

Avant Stone, a longstanding supplier of quality natural stone in Sydney, introduces the 2025 Nature’s Palette Collection. Curated for architects, designers, and homeowners with discerning tastes, this selection highlights classic and contemporary a...

Professional-Grade Tactical Gear: Why 5.11 Tactical Leads the Field

When you're out in the field, your gear has to perform at the same level as you. In the world of high-quality equipment, 5.11 Tactical has established itself as a standard for professionals who demand dependability. Regardless of whether you’re inv...

Lessons from the Past: Historical Maritime Disasters and Their Influence on Modern Safety Regulations

Maritime history is filled with tales of bravery, innovation, and, unfortunately, tragedy. These historical disasters serve as stark reminders of the challenges posed by the seas and have driven significant advancements in maritime safety regulat...

LayBy Shopping