International body suspends anti-money laundering law evaluations
21 Nov 2019

A global anti-money laundering taskforce has suspended evaluations of financial crime laws mid-way through an examination of Australia’s progress in the area.

The Financial Action Taskforce (FATF), which sits under the G7 major world economies, was due to release its latest Australian report in the coming months, but that process has now been suspended.

The FATF review was expected to deliver a black mark for Canberra over its delay in enacting “Tranche II” of the anti-money-laundering laws, which would compel real estate agents, lawyers and accountants to report suspicious transactions.

“The FATF has decided to temporarily pause the start of all scheduled follow-up assessments pending the outcomes of the strategic review of FATF currently underway,” a FATF spokesman said.

“The FATF Plenary will discuss aspects of this review at its next meeting in February 2020. New dates for the start of follow-up assessments, including for Australia, are still to be finalised.”

The renewed interest in the area and the lack of reporting requirements for the real estate sector comes after The Australian Financial Review revealed that a 32-year-old Chinese-born man, Zhang Bo, had six houses in Sydney’s Mosman worth $37 million, but lived in none of them. Mr Zhang is a business partner of disgraced Chinese billionaire Huang Xiangmo.

The Financial Review also revealed that political fixer Sevag Chalabian used the bank account of his 81-year-old mother to receive an $11 million payment associated with the purchase of a commercial property by Mr Huang’s Yuhu Group.

Tougher laws may have forced those involved in these transactions to flag them with authorities.

One expert said the suspension of the program was partly aimed at sparing the Morrison government a further black mark over its lack of action on anti-money-laundering laws at a time when the group was seeking to force other nations to toughen compliance.

“The rest of the world is scratching its head over Australia’s policy inaction. We’ve gone from a leader to laggard in the space of a decade,” said Nathan Lynch, a financial crime intelligence expert at Thomson Reuters.

“The local financial intelligence community is at a loss. It’s really staggering.”

But the FATF spokesman denied the suspension was targeted at Australia.

“The follow up process for Australia began after its 2015 Mutual Evaluation,” the FATF spokesman said.

“A further follow up process is due to focus on effectiveness. For Australia, that process began over two years ago, with discussions regarding the scope of the assessment.

“In October, the FATF decided to temporarily pause the start of all scheduled follow-up assessments – this is not an Australia specific decision.”

Fiercely resisted by agents and lawyers

The Australian government’s delay in tightening AML laws has been continually identified as a weak spot in Australia’s anti-money-laundering regime.

The proposed laws have been fiercely resisted and the subject of intense lobbying by the real estate sector and law firms, leading to a 13-year delay in enacting a tougher compliance regime.

The FATF’s 2018 report found Australia was non-compliant or only partially compliant with 14 of its 40 recommendations. An earlier report noted “large amounts [of money] are suspected to be laundered out of China into the Australian real estate market”.

By Edmund Tadros, Angus Grigg and Neil Chenoweth, The Australian Financial Review, 19 November 2019

Read more at The Australian Financial Review

Photo (edited): U.S. Pacific Fleet [CC BY-NC 2.0]

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