Criminal syndicates using drug money to buy property, adding to overheated housing market

Criminal syndicates are using dirty money to launder through property purchases, adding to the overheated Australian housing market.

International crime syndicates were adding to the overheating of Australia’s real estate market, outbidding genuine legitimate buyers to secure homes to launder dirty money.

Financial intelligence and law enforcement agency the Australian Transaction Reports and Analysis Centre (AUSTRAC) has told parliament it had detected evidence of organised home buying racketeering by criminal elements.

Tasmanian Senator Nick McKim asked AUSTRAC chief executive Nicole Rose if she could confirm if the activity was driving prices up and forcing Australians out of the property market.

She said she could not confirm that as a general statement but “we believe that is occurring in specific areas with specific properties”.

Senate Estimates, Legal and Constitutional Affairs, in Parliament House in Canberra. AUSTRAC's CEO Nicole Rose appeared before the committee. Picture: NCA NewsWire / Gary Ramage

“But yes Australian real estate is an attractive wealth gathering area where people are attracted to certainly not just live but invest and laundered money we know has contributed to the purchase of some of those properties,” she said, adding the criminal assets confiscation team was looking at such acquisitions regularly.

AUSTRAC national manager Brad Brown said in looking at criminal threats to the nation’s banking system and its vulnerabilities, threats to the real estate industry emerged.

“We determined the average person that is purchasing real estate would actually be at a disadvantage where they are potentially competing against a person who is looking to utilise criminal proceeds and does not have the same limits to which a normal customer, you and I, may face,” he said.

A Melbourne proprety seized last year by the AFP over a fraud and trafficking case. Picture: Supplied

“Certainly law enforcement in Australia, the Australian Federal Police and State and territory law enforcement, have seized real property – as in dwellings – that has been purchased with the proceeds of crime.”

It is understood some of the suspicious criminal laundering through the property market included apartments in Sydney, Melbourne and Queensland, notably the Gold Coast, and large swathes of rural properties. Criminal syndicates, including the Italian Mafia ‘Ndrangheta and Asian triads, use the properties to hide and or launder moneys usually from their trafficking of drugs or other contraband and criminal activity.

AUSTRAC told the committee there were suspicions around numerous purchases but declined to comment about specific recent purchases including Nigerian money used to buy huge farms and investments by some buyers from China through multiple layers of offshore trusts as detailed in the “Pandora Papers”.

This luxury $4.5 million Dover Heights property in Sydney’s Eastern suburbs and $250,000 Mercedes Benz S63 AMG Coupe were last year seized by the AFP in relation to an ABF investigation.

The leaked Pandora Papers uncovered by the International Consortium of Investigative Journalists (ICIJ) earlier this month exposed millions of documents of secret offshore accounts revealing how world leaders, billionaires, business leader and celebrities hide their money. About 400 Australians are listed in here.

It is not illegal to have money offshore but there are issues around tax.

AUSTRAC chasing money laundering through suspicious property purchasing. Picture: Supplied

Mr Rose confirmed she had a number of analysts working on the Australian Taxation Office serious financial crime task force looking into Pandora revelations.

The Australian property market has soared during the past 18 months by 20 per cent and higher in some quarters as low interest drive demand particularly from investors.

Speaking at an earlier parliamentary hearing, Commonwealth Bank chief executive Matt Comyn urged a review.

“We think it would be important to take some modest steps sooner rather than later to take some of the heat out of the housing market,” Mr Comyn said.

“I think it would be prudent to act sooner rather than later.”

Originally published as Criminal syndicates using drug money to buy property, adding to overheated housing market