Australians ‘stung twice’ by scammers ploughing crime proceeds into property

Aussies are being stung twice by Asian scammers online – and real estate agents, lawyers and accountants are enabling it.

Asia-based crime syndicates scamming victims out of billions of dollars a year are laundering some of those proceeds through Australian real estate. Picture: Luke Duggleby/Redux

Australians are being stung twice by Asia-based crime syndicates who are scamming victims out of billions of dollars a year and laundering some of those proceeds through Australian real estate, contributing to escalating house prices that are locking younger generations out of the market.

Forensic investigations managing director Cem Ozturk said a crackdown on money laundering through casinos in Australia had prompted scammers to search for alternative avenues to whitewash their stolen billions, with a new focus on property, trading houses and cheap loans to unsuspecting small businesses.

“Across the board, Australian property is well known as a good place to launder money,” the Sydney-based Asia-Pacific and Australia executive said.

“This is why there is a lot of ­interest in Australian property. This is why the value of Australian property grows.

“(Illicit) money is flowing out of developed countries, and then back into developed countries to wash it.”

Australians lost $2.74bn to ­online scams last year alone, much of that activity run out of Southeast Asia which has become the global centre of online fraud.

Sprawling scam compounds – many of them using trafficked and slave labour – operate with near-impunity in ungoverned spaces across the region, such as strife-torn Myanmar and dozens of under-regulated special economic zones across Laos, Cambodia and The Philippines.

An alleged scamming centre know as Gate 25 sits inside Myanmar’s Kayin State, on the border with Thailand. Picture: Luke Duggleby/Redux

In 2022, more than $516m was transferred from Cambodia – a known centre for online scam centres and a regional money-laundering hub for criminal ­activities in China, Thailand and Myanmar – into Australia, representing almost 1 per cent of the country’s GDP.

The report warned Australian real estate was a highly attractive money-laundering vehicle because cash transactions were “commonplace in the industry”, enabling large sums to be moved with relative ease.

“In NSW, Queensland and Victoria, more than a quarter of transactions for property or land were settled with cash in the first quarter of 2023,” it said.

Foreign nationals are not ­allowed to buy existing housing in Australia unless they have permanent residency, live in the country as temporary residents, or meet other Foreign Investment Review Board criteria such as having a child living here.

But many buyers are able to get around those rules through offshore trust and shell company arrangements.

The federal government recently announced moves to plug regulatory gaps that have made Australia so attractive for money-launderers by introducing so-called Tranche 2 rules. It also announced an extra $166.4m in its May budget for financial watchdog Austrac to address money laundering.

Austrac CEO Brendan Thomas. Picture: Natalie O'Brien

Transparency International Australia chief executive Clancy Moore.

The proposed new rules would require lawyers, accountants, ­auditors, real estate agents, and gem and antique dealers to do more customer due diligence and report suspicious transactions to the Australian Transaction ­Reports and Analysis Centre.

An Austrac spokesman said Australia was seen as “an attractive destination for criminals to launder their money through real estate”, and it was working closely with the Attorney-General’s ­Department to consult industries ­affected by the new regime.

Transparency International Australia chief executive Clancy Moore said the reforms were long overdue but also urged the government to do more by imposing sanctions, travel bans and asset freezes on leaders of Southeast Asian criminal networks.

“These organised crime networks are hurting Australians through financial scams, which often target the elderly and vulnerable, and by stashing the ­proceeds of crime into residential and commercial properties in our major capital cities,” Mr Moore said.

“There is significant evidence that criminals from Russia, China and across Southeast Asia are washing their dirty money in Australia’s real estate sector and are sometimes enabled, knowingly or unknowingly, by estate agents, lawyers and accountants.”

Damian McMeekin, ANZ’s former global head of security and now diligence and compliance senior counsel with Kroll, said Australia’s Foreign Investment Review Board needed more resources and authority to monitor spiralling foreign applications for Australian real estate.

“FIRB has become a regulator perhaps inadvertently and not necessarily with the authority and resources to satisfy that role,” Mr McMeekin said.

“It requires periodic review to ensure it … addresses demonstrated gaps, weaknesses and workarounds while sustaining Australia’s desirability as an investment destination and realistically accommodating changing economic, social and consequent political factors.

“This is especially relevant to critical infrastructure investments and the increasing scale of investment from state-owned and unfamiliar sources. But it ­applies equally to sensitive sectors including real estate.”