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Laundering of illicit funds through real estate is an established money laundering method in Australia. Criminals have been drawn to real estate investment due to the fact that the purchase can be made in cash, offers reliable financial returns and there is an ability to disguise ownership.
Common methods of laundering money by criminals include mixing illicit funds with loan funds, manipulating the value of properties and the use of third parties to present as the official owner. These methods often include the use of lawyers and other professional advisors to conduct transactions of their behalf, establishing trusts and other structures to hide identity.
“This is a wakeup call for many in the industry who provide assistance with the purchase of real estate. Often it’s a case of not wanting to know, so many questions don't get asked. If Australia is a 'destination' for this sort of activity, then it will continue to impact the local industry by driving up prices in an already competitive market and generate additional duty revenue for the States if turnover of properties is artificially high. It will be interesting to see how far the new FIRB register to be policed by the ATO will go to dampen this sort of activity” according to Sian Sinclair, Global Head of Real Estate and Construction for Grant Thornton.
Click here to read the AUSTRAC reports.