The Australian Senate looks to strengthen the country’s money laundering and terrorism financing laws by broadening their scope to cover many more organizations, including those in the real estate sector.
Planned legislation in Australia would bring professional services firms under the regulation of financial crime agency Austrac. The so-called AML/CTF Tranche 2 is expected to be approved in September. It would broaden the scope of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to cover 115,000 organizations, compared with 15,000 today.
The changes, first proposed 16 years ago, would bring Australia into line with global standards that many other jurisdictions have already adopted. The Financial Action Task Force (FATF) promotes these standards to regulate services offered by ‘designated non-financial businesses and professions’:
Austrac has already filed a lawsuit against a casino company. Once Tranche 2 is approved, Austrac will prioritize real estate.
If you do business with an entity regulated by Austrac, you need to identify financial crime risks, including money laundering. As in other politically and economically stable countries, real estate in Australia is especially exposed to money laundering. According to Transparency International, it is a popular destination for illicit funds, and many Australians are excluded from property ownership as a result. In 2021,Transparency International Australia provided the Senate with 10 publicly reported examples of money laundering in the property market, showing money coming from countries including Sudan, China, Malaysia, Papua New Guinea, and Russia.
In a 2015 report, Austrac said that confiscations involving money laundering in real estate totaled more than AU$23 million between 2012 and 2013. According to Austrac, money laundering through real estate is simpler than other methods and requires little planning or expertise; several methods are common. Among the features that make real estate attractive to money launderers is the ability to disguise ultimate beneficial ownership.
The report lists ways to detect money laundering where real estate transactions intersect with the regulated sector, such as when financial institutions are brought in for loans, deposits, or withdrawals. It also outlines indicators that should prompt further monitoring and examination. Most of the indicators that Austrac lists relate to the first phase of money laundering, known as placement. To monitor for the second phase of money laundering, known as layering, companies should implement strong know your customer (KYC) and customer due diligence controls to rate customers, companies and source funds for risk.
Understanding who ultimately controls your customer is important in detecting, disrupting and preventing money laundering and terrorism financing. It can also protect your organization from being exploited for other crimes. Austrac requires all reporting entities to identify and verify their customers’ beneficial owners and assess the money laundering and terrorism financing risk they pose. Reporting entities are also obliged to keep records of how they identified and verified each beneficial owner.
A beneficial owner is an individual who controls or owns 25% of an entity. Ownership can be direct (such as shareholdings) or indirect (such as ownership through another company, bank, or broker). To control an entity, the beneficial owner must be able to make decisions about the entity’s finances and operations. An entity may have more than one beneficial owner.
Moody’s Analytics Orbis database has information about more than 400 million companies. Orbis’s size enables it to give you accurate entity name matches at the beginning of your research. You can define your thresholds for beneficial ownership, filter results by jurisdiction, decipher circular and indirect ownership, and quickly assess a group linked to politically exposed persons and sanctions. A searched name is matched with consideration given to variables including linguistic culture, spelling alternatives and word order, resulting in fewer false positives and more relevant screening results. More than 15 years of analyst decisions underpin our AI-enabled model, which can be trained to consistently replicate your organization’s decision-making.
Moody’s Analytics Grid powers our screening solutions to uncover hidden risk. The world’s largest curated risk-relevant database. Comprised of sanctions lists, politically exposed persons (PEPs), watchlists, and 50+ risk types derived from our unrivaled adverse media capabilities. Risk intelligence is curated into detailed, entity-resolved profiles so you can see all risk-relevant data on a given organization or individuals in structured, easy-to-consume reports. GRID combines comprehensive data and categorization to allow filtering by risk type, risk stage and risk age, based on relevance and your own risk appetite, resulting in fewer false positive results, more efficiency and greater speed for your good customers.
For more information about Moody’s Analytics KYC solutions, please contact us to schedule a demo.