Good afternoon and thank you for the opportunity to speak with you today here on the land of the Kombumerri people of the Yugambeh Nation.

Today, I want to talk about the future of Australia’s Anti-Money Laundering and Counter-Terrorism Financing regime, and what the upcoming changes mean for businesses in the real estate sector.

Let’s start with scale. The volume of money being laundered in Australia is staggering. 

Australia’s illicit drug market alone is worth around $12.5 billion annually. There are billions more in the illicit tobacco, Tax fraud, human trafficking, scams and child sexual exploitation.

Drug profits reflect just one type of crime and none of that money is legitimate. All of it must be laundered through the Australian economy.

Serious and organised crime costs Australia more than $68 billion every year. 

Globally, the figure is around $2 trillion.

Since 2020 the Australian Federal Police have restrained over $1.2 billion in criminal assets.

More than $790 million of that – 65% - has been residential and commercial real estate.  

It takes a property that would otherwise have been purchased by a hard-working Australian family and puts it in the hands of organised criminals whose only intention is to continue committing crimes and to fund their endless cycle of harm.

Property is a hugely attractive avenue to store and invest illicit wealth.

It is a prime vehicle for laundering because it’s expensive, it’s tangible and can easily look like a normal transaction.

It also delivers something criminals rarely get when laundering money - profit. 

Usually, money laundering avenues result in losses and these losses are written off as the cost of cleaning but when it comes to real estate, criminals can make significant profits through capital growth.

We constantly see this play out.

In April, the Criminal Assets Confiscation Taskforce secured the forfeiture of a waterfront Queensland property and other assets totalling $4.5 million. 

The case began when AUSTRAC was tipped off by our partners in Luxembourg about suspicious Bitcoin transactions, linked to a Queensland man convicted of hacking a gaming company in the United States.

The assets were suspected to be the proceeds of crime as they were not commensurate with identifiable legitimate earnings.

On top of the profits from domestic Australian Crime, Australia is an attractive place for overseas criminals and foreign corrupt politicians to launder money, we see it often entering in real estate. Money laundering isn’t only washing the money from crimes committed in Australia. We continue to see we continue to see examples of foreign criminals bringing their money to Australia to exploit our thriving property market.

In one example last year we saw international family whose members appear on an Interpol red list, purchased $750m worth of real estate in Sydney in one series of purchases.

That’s $750m in transactions where an agent has had their services taken advantage of by criminals. This includes one purchase over $30m where the purchaser’s occupation was a housewife.

Criminals only make that kind of money by inflicting significant harm on the community.

In July a Russian couple were arrested in Queensland with 1.9 million in cash and charged with money laundering through Australian real estate. 

Again, this case began with an AUSTRAC tip off – our analysts alerted the Criminal Assets Confiscation Taskforce to structured and large cash deposits being fed into ATMs and used to purchase properties in Australia.

The couple deposited more than $4 million into ATMs across 576 transactions, which were allegedly structured to avoid the $10,000 reporting threshold. 

The couple allegedly used the funds to purchase or rapidly repay mortgages for waterfront mansions in Hope Island, Broadbeach Waters and Runaway Bay, houses in Labrador, Alexandra Hills and Mount Gravatt, and a high-rise unit at Milton.

Ultimately more than $15 million was restrained by the taskforce which included 7 properties, cash, cryptocurrency and funds in various bank accounts.

The court is yet to decide if the funds were the proceeds of crime but what is certain is that the couple’s behaviour was suspicious and intended to evade detection.

The reforms to the Anti Money Laundering act are not just about stopping Australian criminals, they are also about closing our market to international crime syndicates and making sure Australian real estate is not a safe haven for dirty money. 

The most concerning thing about these examples is that not one real estate professional involved in the transactions was obliged to alert AUSTRAC or the police or even ask questions that could have drawn out their suspicions.

Until now, real estate professionals have had no legal obligation to ask questions of their client or report anything to the authorities.

Time and again we see property used to layer and integrate funds, often unknowingly facilitated by professional advisers and real estate agents – professionals whose businesses are being leveraged by criminals to avoid detection.

Think about it if I were a business owner, the last thing I would want to discover is that my professional services, and my reputation, were exploited by organised crime.

The reforms to our Act aims to close these gaps and, in the process, protect your businesses and staff from being misused this way.

Right now, criminals know they can use the real estate sector to further their enterprise.

From 1 July next year that will change.

From that date, real estate professionals, who provide designated services, will have obligations under Australian anti money laundering laws. 

So, what real estate transactions constitute a designated service under the new law?

A transaction is a designated service when you broker the sale, purchase or transfer of property as part of a business, including transfers where no money changes hands. 

Leasehold arrangements of more than 30 years are also included.

Property management services, such as residential and most commercial leases are excluded and you won’t have obligations in relation to rental properties that you manage.

When you do provide a designated service, you must comply with the AML/CTF Act and Rules. 

This means enrolling with AUSTRAC, knowing your customers, and most importantly, reporting suspicious matters.

We recognise this new regulation brings additional burdens. Our goal is to make the transition as smooth as possible.

AUSTRAC has a long track record of working with businesses to ensure the regime is effective and we will continue that collaborative approach.

You are not expected to do this alone.

We’ve recently released the new Rules and our core guidance on how to implement the law will be released this month.

Detailed sector-specific guidance will be released at the beginning of next year.

The reforms will impact businesses ranging from sole traders to global firms. And we know risk looks different across sectors.

We understand that the risks faced by an agent selling $20 million homes in New Farm are different to those selling house-and-land packages in Rochedale or Warner.

When the reforms commence, AUSTRAC will add nearly 80,000 new businesses to it regulatory purview. 

We are shifting to be stronger and more risk focussed in our regulation. 

In practice, that means we will be much clearer about where we see risk and what we expect industry to do to mitigate it.

In the past, AUSTRAC has expected businesses to assess their own Money Laundering risk and build their own programs. 

We are fully aware that for sectors new to Money Laundering regulation, this approach will not work. 

For the vast majority of small non-complex businesses, AUSTRAC will highlight the key risks and help you understand what you need to do to address them.

For more complex or larger businesses, risk assessments and controls tailored to your business will be required but AUSTRAC will be providing much clearer guidance and support.

Our aim is not box ticking compliance.

The AML/CTF regime is most effective when every business is actively mitigating its risks.

Working together we can make it far harder for criminals to clean the profits of their crimes through Australian real estate.

We also want to minimise the burden of the new regulation; we don’t want to create duplication particularly where clients engage with a number of regulated businesses for the one transaction – like their lender, bank, conveyancer and real estate agent.

As long as those businesses have an agreement in place to share information, in many cases it only needs to be collected and verified once.

In practice that means as long as an information sharing arrangement exists, where know your customer due diligence processes are undertaken by another business working on the deal, the verified customer information can be shared with all professional services involved in the transaction to satisfy the know your customer obligations.

However, a formal agreement must exist between the businesses and the information has to actually be shared, so that every professional involved in the transaction has confidence that they know who they’re dealing with.

This might mean that when a contract is exchanged, the professional services involved all sign an agreement to share information about the parties involved.

Everyone needs to see the information and everyone needs to keep appropriate record of the process but they don’t need to keep copies of the information collected and verified.

The rules allow for the full customer due diligence process to be completed no more than 15 business days after the earlier of either exchange or settlement.

For most of you, the vast majority of clients will be low risk. You will be able to undertake simplified customer due diligence which allows you to streamline customer identification and verification for low-risk customers. 

For example, for low-risk individuals you only need to collect the individual’s details and perhaps sight their drivers licence. Also make sure your confident you understand why they are obtaining your services. 

You won’t need to go into a deeper level of detail when collecting information on these customers unless you come across a red flag. Train your staff on what to look out for and soon the process will become second nature. 

I hope that in time, industry can invest in common platforms so that everybody can share relevant information under a suitable agreement and multiple businesses don’t need to do the same thing multiple times.

Although we are very supportive of a collaborative approach, it is very important to understand that none of your AML/CTF obligations are optional and no matter what, you are responsible for meeting your legal obligations.

Know your customer obligations are really about being confident you understand who you're dealing with. 

If someone is deflecting or being difficult when you’re asking them to confirm who they are, that should be a red flag.

It might be that the person is giving you false documents, or it might be that you think the person is trying to hide behind complex trust or company structures. 

That could well be the basis of a suspicious matter report that you should lodge with AUSTRAC.

Suspicions can be raised by other factors too – we can learn these lessons from our international counterparts who are already regulated under AML/CTF laws.

FINTRAC, Canada’s Financial Intelligence Unit, has a recent example of an individual who attempted to purchase property. 

The $375,000 CAD deposit was received from a third party company with no known association to the buyer and with a murky beneficial ownership structure.

The purchaser refused to provide the requested information, such as who was in control of the company.

In this instance, there were 2 very bright red flags – the deposit was received from a third party and the purchaser had also refused to provide information about the beneficial ownership. 

If you see issues like this, it’s time to submit an SMR. Just like this agent did.

In New Zealand, several lawyers and real estate agents were involved in unknowingly facilitating a string of real estate purchases for a known criminal and their associate. 

They slipped through the cracks because the properties were purchased in the name of the associate and relatives of the offender. 

The individual was either in prison for drug dealing or unemployed at the time of the purchases. 

Although these transactions included a number of red flags that criminal proceeds were being used, none of the real estate agents or lawyers who facilitated the transactions detected them.

This case highlights the importance of knowing who your customer actually is and conducting due diligence such as open-source searches that may give you information that substantiates your red flags.

When facilitating real estate transactions, you really are our eyes and ears.

I often hear from people that they think that a suspicious matter report is like calling the police and reporting a crime. 

It isn’t. AUSTRAC receives thousands of SMRs each year and many turn out to have no link to crime at all.

Once you submit an SMR, it’s our job to analyse it and decide if action is needed.

Importantly, submitting a report doesn’t mean you have to stop the transaction. 

Banks and other financial institutions lodge suspicious matter reports as part of their everyday business. 

Sometimes they freeze accounts or stop providing services to a customer but in most cases the transactions are completed, because it is a suspicion – not actual proof of a crime.

The same will apply in real estate.

As we move to 1 July there are practical steps you can take to prepare.

Get familiar with the new Rules and AUSTRAC’s upcoming guidance and risk indicators. 

Scour the information already available. This includes our money laundering national risk assessment and the terrorism financing and proliferation financing national risk assessments as well as financial crime guides which provide information about specific crime types and indicators businesses should look out for. 

Start to understand what risks exist in your business and the methodologies available to money launderers so you can spot the red flags. 

Don’t rush into expensive technology purchases.

I know there are a number of operators out there trying to get businesses to buy their AML products by creating fear that we are expecting perfection on 1 July – I want to set the record straight – we will not penalise any businesses that are making genuine efforts to meet their obligations. 

We are focussed on helping businesses comply and helping practitioners understand what they need to do to address financial crime risks in their business.

While there is no problem using third parties to provide platforms and services – many of the big banks outsource – if you are thinking about taking this approach, it’s imperative that you do your research and make sure the provider is up to the job.

At the end of the day AML/CTF compliance is your responsibility.

Get your AML/CT program in place: you can use the starter programs which we will provide in January or you can develop your own. 

For typical small businesses in your profession, the starter program will outline what you must do and provide you with the materials you need to do it. 

We're working with peak bodies in each regulated industry to ensure that we develop a product that gives businesses in your sector the best start we can give them in developing their own programs and ensuring compliance on an ongoing basis. 

The starter programs are being developed in conjunction with business to ensure they marry up with industry processes – we want to make it as easy as possible to meet your obligations.

Train your staff on the program and internal processes so they are ready to engage with clients and report suspicious matters.

Each business must appoint an AML/CTF compliance officer who is fit and proper and suitably experienced for the size of the business. 

For small businesses that might be the owner, for larger businesses it should be a dedicated role.

Finally, enrol with AUSTRAC after 31 March and before 1 July. Put the date in your calendars and start the process as early as possible.

The key obligations you will have when the laws come into effect are:

• know your customer and why they are seeking your services, apply deeper checks for high-risk scenarios such as where a client wants to pay you cash for property. This might involve checking the customer’s source of funds or whether they are a politically exposed person. These obligations generate the intelligence that allows us to follow the money and disrupt criminal networks.
• If you develop a suspicion report it to AUSTRAC within 3 business days. Again, you’re not expected to prove wrongdoing.

Businesses that ignore their obligations or fail to enrol will face enforcement action.

Every dollar laundered is a dollar reinvested in harm.

The goal of the reforms is simple: to stop criminals exploiting legitimate business to wash their money.

This is not about adding unnecessary burden but about protecting your business, your community and Australia’s financial system.

We all have a role to play. 

Not just in real estate but in banking, law, accounting or crypto —in any industry providing high risk services—there is a responsibility to help protect Australia’s financial system from abuse. 

By working together, we can close the door on criminal infiltration, reduce harm and strengthen Austraia’s position as a safe place to do business.

Thank you.