Luke Papendrea of Griffith Real Estate says new questions you may be asked when buying a home are the result of law changes. Photo: Oliver Jacques.
If you’re buying a home and your real estate agent starts asking where your money came from, hold fire before telling them to mind their own business.
New anti-money laundering laws that came into effect on 1 July mean agents and other professionals involved in property transactions now have new obligations to help prevent their services being used to move or hide the proceeds of crime.
The changes bring agents, lawyers, conveyancers, accountants and other businesses under Australia’s anti-money laundering and counter-terrorism financing regime for the first time. The laws require affected businesses to have systems in place to assess risks, conduct customer checks, keep records and report suspicious activity to financial crime regulator AUSTRAC when required.
For ordinary buyers and sellers, that means more questions about their identity, the nature of a transaction and, where appropriate, the source of their funds or wealth.
Real estate agents who spoke to Region warned the new rules could put innocent buyers and sellers in an awkward position – after all, not everyone wants to admit their deposit came from mum and dad.
“As agents, we don’t really want to be asking you personal questions,” Luke Papendrea of Griffith Real Estate said.
“But we are now obligated to do so under the law. From a buyer’s perspective, we can’t force you to answer questions, but if you don’t, it could trigger a response from the authorities.
“We can also face consequences as agents if we don’t do proper checks.”
Depending on the services involved in a property transaction, buyers and sellers may deal with several professionals who have their own obligations under the new regime.
That could mean being asked the same personal questions over and over again.
“They expect us to collect the data, then the solicitor must take the same data and then the accountant has to do a check as well,” Col McIntyre of Canberra’s McIntyre Real Estate said.
“It’s a bit of overkill; a lot of us are having to do the work of government for them.
“Ideally, it should be left to the solicitor at the point of exchange.”
Col McIntyre says he understands the changes but described the process as “overkill”. Photo: Michelle Kroll.
Australia’s property market has long been identified as vulnerable to money laundering. AUSTRAC says the reforms are intended to make it harder for criminals to exploit professional services and legitimate businesses to launder money, while strengthening Australia’s ability to detect and disrupt financial crime.
But real estate agents warn the changes will add to the cost of buying and selling houses – costs that will inevitably be passed on to clients.
Nevertheless, the new rules do not mean every property buyer or seller will automatically face an extensive investigation. The framework is risk-based, meaning the level of checking can depend on the circumstances of the customer and transaction.
But where a business has reasonable grounds to suspect money laundering or other reportable activity, it may have to submit a suspicious matter report to AUSTRAC.
Agents can face serious consequences for failing to spot and report suspicious transactions, with non-compliance fines reaching up to $33 million for corporations and $6.6 million for individuals per breach.
Original Article published by Oliver Jacques on Region Riverina.
