Berlin-based Transparency International (TI), an international non-government organisation that aims to combat corruption and prevent criminal activities arising from corruption, recently released a report that analysed money laundering loopholes in four countries.
Entitled Doors Wide Open: Corruption and Real Estate in Four Key Markets, the report said that the governments of Australia, Canada, the United Kingdom, and the United States needed to close glaring loopholes to prevent the corrupt elite from “laundering the proceeds of grand corruption in their local real estate markets.”
“Governments must close the loopholes that allow corrupt politicians, civil servants and business executives to be able to hide stolen wealth through the purchase of expensive houses in London, New York, Sydney and Vancouver,” said José Ugaz, chair of Transparency International.
Ugaz noted that the four aforementioned countries’ failure to deliver on their anti-corruption commitments exacerbated corruption in the nations where the elites originated from, ensuring that the common people languished in poverty while the elites were able to enjoy lives of luxury.
“Not only do expensive apartments in New York, London or Sydney raise the social status of their owners and allow them to live in luxury, they are also an easy and convenient place to hide hundreds of millions of dollars from criminal investigators, tax authorities or others tracking criminal behaviour and the proceeds of crime,” said an official release.
TI’s warning comes after The Australian revealed in January that financial intelligence officials were investigating more than $3.3bn in suspect transfers by Chinese investors – including $1bn invested in property – in Australia last year.
Transparency International noted that identifying the beneficial owners that stand behind legal entities, trusts, and other arrangements is still not the norm in the property industry. Laws in Australia do not require real estate agents, lawyers, accountants, or any other persons involved in the real estate closings to identify the beneficial owner of their customers.
While Australia has safeguards on foreign investment, they aren’t designed to prevent money laundering. While banks and financial institutions are required to monitor activity, other parties involved in the deals aren’t required to submit reports on suspicious transactions.
This loophole has allowed foreigners to purchase expensive real estate in Australia—some of which may have been the direct result of money laundering.
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