From casinos to houses: Why Australia remains a money laundering haven

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As the inquiry into the Star casino draws to a close, here’s a question: where did all the laundered money go?

Did the millions, possibly billions, of cash ‘washed’ through Star casino end up being spent on property, helping push up already record houses prices, or was it invested into cash intensive businesses, such as bars and nightclubs, or into goods such as luxury cars or jewellery? Ditto the money laundered through casinos in Melbourne and Perth.

The Star inquiry, like the inquiries into Crown’s Perth and Melbourne casinos, has focused on the question of the suitability of the company to retain its licence, and whether it enabled money laundering, organised crime, fraud and foreign interference.

So far, individual accountability among senior management and directors for the failures to report illegal activity at Crown and Star has been limited to their resignations, which some experts say doesn’t go far enough to bring about change.

While the Star inquiry is in its final weeks, and still to hand down its findings, what it and the Crown inquiries have confirmed is that Australia has a poor reputation internationally for fighting the estimated “tens of billions” in criminal money laundered nationally every year.

In March, a federal Senate inquiry handed down a report that found Australia was a laggard on the world stage in meeting its international obligations set down by the Financial Action Task Force (FATF) to combat money laundering. Moreover, the Senate report warned that Australia’s economy and banking system faced higher costs – in terms of accessing international capital and to its reputation – if anti-money laundering legislation and counter-terrorism financial laws were not strengthened.


It was a view supported by the Australian Banking Association, which told the Senate inquiry that as a result of Australia being rated as non-compliant by the FATF in certain areas, Australian banks already had to provide further information and assurance to overseas investors that the banking system was secure, robust and that it took its obligations seriously.


Australia’s federal government has been talking about strengthening the country’s anti-money laundering and counter-terrorism financial laws since 2015, when it first came under criticism from the FATF. The latter is the global money laundering and terrorist-financing watchdog, which sets international standards for fighting illicit transactions. Australia was one of the founding members of the FATF.

In 2015, the FATF noted Australia’s anti-money laundering and counter-terrorism financial laws, which apply to casinos, banks, money remitters and other gambling service providers, failed to extend to lawyers, accountants, real estate agents, trust and company service providers. And they still don’t.

Neil Jeans, principal of anti-money laundering consultant Initialism, told the Senate inquiry that Australia, Haiti and Madagascar are the only nations out of 195 that haven’t acted to apply anti-money laundering laws to lawyers, accountants, real estate agents, trust and company service providers.

Neil Jeans, pictured at the Crown Inquiry. Jeans is one of Australia’s leading anti-money laundering experts.

The US and China, which were also outliers, according to Jeans, have commenced the implementation process to include those professional services firms under such laws.


The Australian Federal Police and the Australian Criminal Intelligence Commission (ACIC) have said there is evidence that legitimate services such as the establishment of trust and company structures, including the use of nominee directors, can allow criminals to conceal the true ownership of their dirty funds and property.

‘We still don’t require real estate agents to know who they’re dealing with. We do think that Australian properties have been used to launder money.’

Derwent Coshott, University of Sydney

The argument is that by including lawyers, accountants and real estate professions under anti-money laundering laws, alongside banks and casinos, enforcement agencies, such as the AFP, the ACIC, and financial intelligence regulator AUSTRAC and the Australian Tax Office, would have greater powers to trace the beneficial ownership of illegal funds.

“We don’t require accountants to know who they’re dealing with before they’re setting up a trust structure, which could very easily be used to launder money, and similarly for lawyers,” says Derwent Coshott, an expert on trust law and money laundering at the University of Sydney.

“We still don’t require real estate agents to know who they’re dealing with. We do think that Australian properties have been used to launder money.

“By having secondary professions do the customer due diligence work, and report into AUSTRAC, when there are suspicious matters, you will be able to catch a lot of this. We want to extend those obligations to those secondary professions, and pretty much every other country in the world has.”

Coshott says the failure to extend such anti-money laundering laws to secondary professions is one of the reasons why Australia has received its worst ever score on Transparency International’s global corruption index, where one of the measures is the ability to combat transnational corruption.


Still, a problem with the anti-money laundering laws, which already apply to casinos and banks, is that they rely largely on self-regulation and reporting.

The failure of that self-regulation is evident in the inquiries into Crown and Star, and also in the fines applied to some of Australia’s major banks for breaches of the 2006 Anti-money Laundering and Counter-terrorism Financing Act.

In 2020, Westpac was ordered to pay a $1.3 billion fine by AUSTRAC.

The Star inquiry has focused on the suitability of the company to retain its licence, and whether it enabled money laundering, organised crime, fraud and foreign interferenceCredit:Louise Kennerley

One way to address the problem of self-regulation is to establish a beneficial ownership register that can be accessed by enforcement agencies. “It provides authorities with another way to find out information, which is independent of organisations and professionals self-reporting,” says Coshott.


If Australia does not extend anti-money laundering laws to secondary professions, then the argument is that conditions continue to exist that allow money laundering to thrive.

Concerns have been raised by Australia’s Law Society, the Real Estate Institute of Australia, and accounting bodies about the increased regulatory burden such anti-money laundering laws would impose, and the risk to client privilege.

In some jurisdictions, such as Canada, the Law Society there has imposed a variety of client identification and verification rules. It also has trust accounting rules, which require that trust accounts be reconciled every month, report annually and undergo regular audits to mitigate money laundering risks. However, the law enforcement agencies there can’t compel lawyers to produce privileged information or documents.

“We fix AUSTRAC, or we come up with some other way to stamp out money laundering.”

Federal independent MP Andrew Wilkie

If the federal government doesn’t prioritise the issue of strengthening money laundering laws, then states and territories could go it alone in tackling the problem, which is what a commission has recommended in Canada.

Last week, a commission focused on money laundering in Canada’s British Columbia, issued a series of recommendations for that province’s government to tackle the problem after arguing there had been a failure at the federal government level.

One of the primary criticisms in that Canadian report was of the ineffectiveness of that country’s regulator FINTRAC, the Canadian version of AUSTRAC, which has the responsibility for receiving and analysing information about money laundering threats and communicating the information to law enforcement.


The commission’s report, written by Canadian Supreme Court Justice Austin Cullen, recommended that British Columbia develop its own dedicated provincial money laundering intelligence and investigation unit, if it were to have any success in the fight against money laundering. It also recommended the creation of an anti-money laundering commissioner, who would have oversight of the province’s response to money laundering.

One of the other criticisms in the Canadian report was that money laundering is rarely afforded the priority it requires, and it does not fit easily into one sector or ministry. Canada has also had significant issues with money laundering in casinos and in real estate.

There are already signs that some Australian states are going it alone. The NSW government has since said it’s working on unexplained wealth laws, following a warning by the NSW assistant Police Commissioner Stuart Smith last December that the nation was losing the fight against organised crime.

Unexplained wealth laws would allow enforcement agencies to compel a person to produce information concerning the provenance of a particular asset. For example, this could apply to the source of funds used to purchase a house. If a person can’t produce information on how they acquired the funds to buy an expensive house, then the asset could be forfeited to the state. Another benefit of wealth orders would be to discourage foreign corrupt officials from moving their illicit wealth to NSW through the purchase of property or other assets.

In British Columbia, Cullen identified the real estate and luxury good sectors as being highly vulnerable to money laundering, and included a recommendation that all cash transactions over $10,000 in the province’s luxury goods sector be reported.

“It’s not just casinos, probably the second-best way to launder money in Australia is through poker machines,” says federal Independent MP Andrew Wilkie. Credit:Alex Ellinghausen

Federal independent MP Andrew Wilkie says a strong political will is required to oppose and deter money laundering. “We can’t assume that the investigations into Crown and Star Entertainment are the end of the matter in Australia,” says Wilkie, who has called for a federal casino regulator.

The Crown and Star inquiries were sparked by investigations by The Sydney Morning Herald and The Age journalist Nick McKenzie. On Tuesday, Crown received a conditional licence to allow its Sydney casino to open for gambling, after an 18-month delay.

“We supposedly have an anti-money laundering regulatory agency in AUSTRAC, and AUSTRAC have shown themselves to be completely and utterly useless,” says Wilkie. “So otherwise we fix AUSTRAC, or we come up with some other way to stamp out money laundering. It’s not just casinos, probably the second-best way to launder money in Australia is through poker machines. Money will follow the path of least resistance.”

University of Sydney’s Coshott agrees. “We’re never going to get rid of money laundering. The problem is that certain destinations become more attractive than others.”

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