The Real Estate Institute of Australia (REIA) has urged the Inquiry into Australia’s anti-money laundering and counter-terrorism financing regime to consider genuine home buyers, tenants and real estate agencies when making its recommendations.
Given there was no evidence proving the size or scale of criminal buyers, or their impact on property market growth, recommendations should target sophisticated money launderers only, without creating a financial burden for everyday Australians or small businesses, the REIA said.
REIA president, Adrian Kelly said the key drivers of high property prices were well documented, from a market’s point of view.
“Low supply, high demand, high taxes, a greater demand for houses over units and uncertainty of vendors to list new properties created by the ongoing COVID-19 pandemic are all major factors in the current market,” Mr Kelly said.
“The overwhelming majority of demand is being experienced domestically and by repatriating Australians.”
Mr Kelly said he was pleased AUSTRAC and AFP had confirmed in their testimony to the Senate Committee that there was no agreed evidence to correlate criminal activity to a strong property market.
Expert testimony was unable to clarify the total size and scale of criminal buyers and how many property transactions were being turned over with dark money, he said.
“The Inquiry heard that of the $187 million in assets seized by authorities in the 2021 financial year, $116 million was in real estate assets.
“Scale needs to be carefully considered.
“To put this in context, the Australian commercial sales market alone over this period recorded more than $50 billion in sales and the residential sector recorded a massive 598,000 transactions.”
The Inquiry also confirmed key issues creating undue burden on small business, should additional Tranche Two or Gatekeeper reporting to intercept money launderers be implemented, added Mr Kelly.
The evidence from a range of stakeholders suggested the potential cost of implementation would range from $10,000 – $120,000.
“For Australian real estate agencies, we estimate these costs to sit around $50k per agency,” Mr Kelly said.
“If all the anticipated activities for Tranche Two reporting are implemented the costs to the sector could easily reach the billions.
“As REIA, it is our job to defend against undue regulatory costs and fight for our members against draconian regulation that does not even advance the national interest.
“Monitoring and enforcement authorities also confirmed additional reporting would likely be of limited impact to intelligence and surveillance, if processed at all,” Mr Kelly said.
Mr Kelly reiterated that REIA is open to working with government to enhance Australia’s AML/CTF capabilities.
“We made it very clear to the Senate Committee we stand ready to play our part in stamping out criminal activity and protecting our clients,” he said.
“We urge the Senate Committee to deliver practical recommendations that target sophisticated money launderers without creating a financial burden on home buyers, tenants and real estate agencies.
“A cost-benefit analysis led by the Commonwealth would be needed to better qualify the cost to real estate agencies versus the projected benefits of additional reform and how additional reporting will actually detect more criminal activity.”
