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Introduction

Key points

  • The laundering of illicit funds through real estate is an established money laundering method in Australia.
  • As an established money laundering channel, criminals are likely to continue to launder money through real estate. 
  • Money laundering through real estate may be identified where transactions intersect with the regulated AML/CTF sector.

Background

The use of real estate is an established method of money laundering internationally (1).Criminals buy high-value goods such as real estate as a way of laundering or concealing illicit funds.

AUSTRAC has identified high-value goods, including real estate, to be a significant money laundering channel in Australia (2). Asset confiscation cases show the breadth of criminal investment in high-value goods and the scale of criminal wealth that can be laundered and invested this way.

The Commonwealth Director of Public Prosecutions recovered approximately AUD10 million in assets and the Australian Federal Police (AFP) restrained AUD62.5 million in assets between 1 July 2012 and 30 June 2013 (3). The AFP restrained residential property valued at AUD5 million as part of an investigation in March 2013 and approximately AUD8.1 million in property was restrained as part of Project Wickenby in 2012–13.(4)

Criminals may be drawn to real estate as a channel to launder illicit funds due to the:

  • ability to buy real estate using cash
  • ability to disguise the ultimate beneficial ownership of real estate
  • relative stability and reliability of real estate investment
  • ability to renovate and improve real estate, thereby increasing the value.

Criminals are also motivated to buy property for further profit or lifestyle reasons.

Compared to other methods, money laundering through real estate – both residential and commercial – can be relatively uncomplicated, requiring little planning or expertise. Large sums of illicit funds can be concealed and integrated into the legitimate economy through real estate.


Footnotes

  1. Financial Action Task Force (FATF) (2007), Money laundering and terrorist financing through the real estate sector, June 2007.
  2. AUSTRAC, Money laundering in Australia 2011, p. 25.
  3. Commonwealth Director of Public Prosecutions, Annual Report 2012–13, pp. 61, and Australian Federal Police (AFP), Annual Report 2012–13, p. 34. Note – this does not include assets restrained and recovered by state and territory governments.
  4. Australian Federal Police, Annual Report 2012–13, pp. 73 and 75.
Last modified: 02/06/2015 10:09