Compliance Alert, 05 May 2017
Credit Suisse is forecasting $60 billion in new Chinese investment in Australia’s housing market over the next six years, more than double the $28 billion deluge of the past six years. One question is: how much of this is “clean” money? The likely introduction of further money laundering legislation may crimp the flow of Chinese funds. More broadly, it threatens to impose enormous costs on small businesses already foundering under a mountain of compliance paperwork.
This was brought to our attention last week when a fund manager touched base and bewailed, albeit with good reason, how real estate agents were still excluded from all obligations under Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act.
“What this means is that, whereas an investor of $10,000 in the [fund, name withheld], for example, has to experience the financial equivalent of a colonoscopy to prove they are who they say they are and that their money is clean, someone buying a $10 million shack in Vaucluse has to do nothing to show his money is clean, and the real estate agent, unlike the asset manager, has no liability if it isn’t,” he said.
The reason for this AML (Anti-Money Laundering) apartheid is the reluctance of government to ping other sectors with the cumbersome burden of compliance; not just real estate agents (whose patience would be sorely tested by the cliffs of paperwork) but jewellers, car dealers, lawyers and accountants.