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Australia a money laundering hotspot

Lachlan Maddock
— 1 minute read

Weaknesses in Australia’s money laundering laws have turned the country into a safe haven for “significant quantities of illicit funds”, according to the Tax Justice Network.

While Australia was ranked 48th in the world for financial secrecy – slightly improved from its 2018 position – it still plays host to large amounts of dark money, according to a new report from the Tax Justice Network.

“Despite its relatively low ranking on the Financial Secrecy Index, a number of cases demonstrate that Australia undoubtedly hosts significant quantities of illicit funds from outside the country,” it said.

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The report cites the example of Yeo Jiawei, who was convicted in Singapore of money laundering and obstructing justice as part of the 1MDB scandal, using a Seychelles-based company for a series of property purchases in Australia worth at least $6 million.

In an unrelated case, the AFP seized $4.2 million in property from an unnamed Chinese national as part of an investigation into offshore funds allegedly being laundered in Australia by Chinese nationals. 

The losses are partly due to the failure to extend money laundering laws to real estate agents, accountants, and lawyers. And while it’s impossible to quantify the exact amount of money lost, government programs – including Project Wickenby, which saw 77 people charged – often recover billions of dollars.

In 2007 the federal government proposed draft legislation to extend AML provisions to those agents, but the legislation was never implemented. The government consulted on new provisions again in 2017, but despite strong support – and little opposition from businesses at the time – no public progress has been made.

However, the federal government has made strong progress on clamping down on corporate tax avoidance, with new legislation forcing multinational enterprises with more than $1 billion globally to provide their financial details on a country-by-country basis to the ATO. 

“The world has started to win the fight against financial secrecy, and that’s good news for everybody,” said Alex Cobham, chief executive of the Tax Justice Network. 

“Financial secrecy has kept drug cartels bankable, tax abuse feasible and human trafficking profitable – but the majority of countries are now making it clear that this is not the world we want.”

 

Australia a money laundering hotspot
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