Illicit funds, estimated in billions annually, stem from various illegal activities such as drug trafficking, tax evasion, cybercrime, and arms trafficking, among others. According to ministers.ag.gov.au, due to previous governmental inaction, Australia's AML/CTF regime falls short of international standards, posing risks of becoming a potential hub for money laundering. Notably, Australia is among a minority of jurisdictions that don't regulate tranche-two entities, which include lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious metals and stones.
This regulatory gap increases the likelihood of Australia being 'grey-listed' by the Financial Action Task Force (FATF), potentially harming the economy. The current government has initiated consultations for AML/CTF reforms, signalling a commitment to addressing financial system abuse, following a prolonged period of inaction.
The budget allocation will empower the Australian Transaction Reports and Analysis Centre (AUSTRAC) to implement the new regime and assist industries in fulfilling their obligations. It will also enable AUSTRAC to offer comprehensive education and guidance, particularly to newly-regulated entities. These reforms are crucial in improving law enforcement efforts against transnational, serious, and organised crime.
A recent report by Transparency International Australia (TIA) underscores the pressing need to address regulatory gaps, suggesting that substantial sums of illicit funds may be entering Australia from Cambodia, with a notable impact on the country's real estate market.
The joint report from TIA and KordaMentha reveals that between 2019 and 2023, 118 properties were acquired by Cambodian foreign individuals, totalling USD 110 million. Furthermore, in 2022 alone, over USD 516 million was transferred from Cambodia to Australia through Australian reporting entities. Of particular concern is the disproportionality between the funds flowing from Cambodia and the country's overall wealth. On average, the total transferred funds represent just under 1% of Cambodia's GDP.
The report highlights Cambodia's issues with human trafficking, money laundering, and organised crime. This influx of funds into Australia raises red flags, particularly concerning real estate, an issue previously flagged by AUSTRAC and other law enforcement agencies.
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