Each year, around $3 trillion AUD of global GDP is laundered, representing between 2% and 5% of the world’s economic output. These illicit funds are generated from crimes such as corruption, drug and human trafficking, child exploitation and more. Organised criminal groups play a central role in laundering, while terrorism financing often involves moving funds through legitimate financial channels to support extremist groups.
To combat these threats, the Financial Action Task Force (FATF) was created in 1989. FATF provides a global framework of recommendations that countries adopt to detect and deter money laundering and terrorism financing. Today, 39 countries follow these standards.
Australia has been a FATF member since 1990. The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act was introduced in 1996, initially covering the financial sector, with the intention of later expanding to “tranche 2” (T2) entities such as real estate agents, lawyers, accountants, and dealers in precious metals and stones.
Australia is one of the last few FATF member countries to extend the legislation to T2 entities. FATF had warned that inaction would leave Australia vulnerable, and any delays may result in the country being ‘grey listed’. Grey listing carries serious economic consequences. IMF research shows affected countries experience an average 7.6% decline in capital flows.[1]
The cost of money laundering in Australia
The Australian Institute of Criminology (AIC) estimated that serious and organised crime cost the Australian community $60.1 billion in 2020–21.[2] Among the sectors most exposed, real estate and gambling are frequently used to launder large sums of money, particularly by organised criminal syndicates. Property is especially attractive because it offers:
Recent cases highlight these vulnerabilities. In early 2023, the Australian Federal Police seized 20 properties in Sydney linked to the Long River money laundering syndicate, charging seven individuals for laundering nearly $229 million.[3]
Why real estate professionals are key
Real estate professionals are uniquely positioned to detect red flags in property transactions, such as:
With proper training and reporting mechanisms, real estate salespeople could act as the first line of defence in stopping criminals from exploiting the property market.
Including real estate under AML/CTF laws would:
No real estate professional wants their work to be used for illegal purposes. By extending AML/CTF obligations to the sector, Australia can make its property market more transparent, secure, and resilient against organised crime.
Explore the Impact of AML/CTF on Real Estate
Download your free AML/CTF Guide for Real Estate now to learn how the AML/CTF legislation will affect real estate.
References
[1] International Monetary Fund, “The Impact of Gray-Listing on Capital Flows: An Analysis Using Machine Learning”, IMF Working Paper, Mizuho Kida and Simon Paetzold, 2021.
[2]Morgan A 2024. Money laundering and the harm from organised crime: Results from a data linkage study. Special reports. Canberra: Australian Institute of Criminology. https://doi.org/10.52922/sp77628
[3]https://www.afp.gov.au/news-centre/media-release/seven-syndicate-members-charged-allegedly-laundering-almost-229-million