Login
Property reforms to crack down on dirty money, safeguarding buyers and sellers
Sweeping new anti-money laundering and counter-terrorism financing (AML/CTF) reforms will target organised crime in the property market, delivering benefits for buyers and sellers.
From 1 July, financial crime compliance obligations will apply to companies that conduct services related to the sale, purchase, and transfer of real estate.
As part of Tranche 2 reforms, real estate professionals must develop an AML/CTF compliance program that includes reporting suspicious activity to prevent money laundering.
Property and legal technology provider InfoTrack’s chief operating officer and national AML project sponsor, Lee Bailie, said the reforms introduced financial transparency that had historically been inconsistent across property transactions.
“When professionals are required to verify, identify and understand the origin of funds, it becomes significantly more difficult for criminals to participate undetected,” Bailie said.
According to InfoTrack, the market has long been identified as vulnerable to money laundering.
Australian Transaction Reports and Analysis Centre (AUSTRAC) has estimated that criminals linked to China laundered approximately $1 billion through Australian real estate in 2020.
Bailie said illicit capital in the housing market impacted everyday buyers by distorting demand and pushing prices higher, making it harder for first-home buyers and families to compete.
“For legitimate buyers, this is fundamentally about fairness. Criminal actors are not constrained by lending requirements, affordability pressures or commercial logic.”
“AML/CTF controls help ensure all participants in the market are subject to the same scrutiny.”
According to Bailie, the new reforms would also put in place important safeguards for sellers, including improved verification to ensure proceeds of sale would not be tainted.
“Vendors may unknowingly accept funds derived from criminal activity, which can create legal, financial and reputational complications down the track.”
“Enhanced verification helps ensure that proceeds of sale are not tainted and settlements proceed with greater certainty.”
Bailie said that, given criminal funds tended to enter markets where verification requirements were weakest, the reforms would help to reduce Australia’s appeal as a destination for laundering through real estate.
“Ultimately, these reforms are about ensuring Australians are competing on equal footing.”
“A property market influenced by verified, legitimate capital is not only safer, it’s fairer, more transparent and more resilient,” he concluded.