How the proposed new anti-laundering legislation would affect property sellers
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Towards the end of last month, the Attorney-General’s Department announced a public consultation on the proposed reforms to the existing Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
The reforms aim to modernise the AML/CTF regime in line with international standards and boost protection of Australian businesses and sectors against exploitation by organised crime by expanding existing laws to capture additional ‘high-risk’ entities. This includes lawyers, accountants, trust and company service providers, AND real estate agents.
However, the real estate sector has raised severe concerns about how this new legislation could affect people wanting to sell a home and other real estate property. The representative body of Australia’s real estate professionals, REIA (Real Estate Institute of Australia) highlights the legislation would make Australia’s real estate system even more complex and expensive for Australians to navigate.
REIA’s President Hayden Groves warns the proposals would only increase regulation and costs in exchange for very little community benefit.
“The Australian Government is now saying home buyers will have to go through additional identity checks and real estate transactions supervised by both the Australian Federal Police and the AUSTRAC (Australian Transaction Reports and Analysis Centre) to prove you are not a money launderer when you are simply trying to buy a home,” he points out.
Mr Groves believes this effectively turns real estate agents into “a quasi-workforce” for the two agencies.
“Obviously, if suburban real estate agents are now required to report every home buyer to authorities and do the AFP and AUSTRAC’s job for them, this cost will ultimately be worn by those involved in the transaction,” he says.
“As if buying a house is not challenging enough in Australia in 2023, the government wants it to be even more difficult and expensive for both home buyers and sellers.”
REIA refers to the 2021 inquiry that showed the AFP and AUSTRAC admitted on record that collecting surveillance information would not increase any useful surveillance.
Furthermore, the representative body points out that in New Zealand, the cost to business to implement Gatekeeper transactions, has been estimated at between $30,000 to $100,000 per real estate agency.
Mr Groves told Smart Property Investment that whilst the intent is understood, the benefits are underwhelming and unproven.
There are already many identity checks through the conveyancing and financing of real estate purchases; there are currently at least 14 verifications of identity (VOI) of property buyers by both banks and lawyers. Additionally, any cash transaction in Australia over $10,000 triggers an automatic report to the Australian Taxation Office (ATO).
Mr Groves says the proposed legislation would increase affordability challenges for Australians by increasing transaction costs, and adds “we need less red tape, not more.”.
“The Australian government’s response to the inquiry into the efficacy of Australia’s AML/CTF regime would do nothing for Australian consumers, and a comprehensive cost-benefit analysis to support the proposal must be undertaken,” he concludes.
Read REIA’s full press statement on the issue here.
Read more about the reforms, and give feedback here. The consultation closes 16 Jun 2023.
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