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Australia at risk of becoming a haven for Russian cash due to weak money laundering laws

Some experts believe that Australia is at risk of becoming a haven for cash belonging to oligarchs who are seeking to avoid sanctions. At present, the country is only one of three (alongside Haiti and Madagascar) that are yet to commit to bringing lawyers, accountants, and real estate agents under the umbrella of anti-money laundering and counter-terrorism finance laws.

June 8, 2022
KYC News
Fintech
KYC
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Some experts believe that Australia is at risk of becoming a haven for cash belonging to oligarchs who are seeking to avoid sanctions. At present, the country is only one of three (alongside Haiti and Madagascar) that are yet to commit to bringing lawyers, accountants, and real estate agents under the umbrella of anti-money laundering and counter-terrorism finance laws (AML-CTF). 

Country could be placed on the ‘gray list’

Australia first promised to bring those professions into the AML-CFT system eight years ago. However, it has failed to do so. As a result, the government now faces a race against time to take action before global authorities put Australia on the ‘gray list’ of countries that don’t meet international standards. If Australia is placed on the gray list, it would damage the country’s banks and make it harder for Australian companies to raise money overseas.

Within the country, some believe that Australia is now vulnerable to exploitation by sanctions-busters. This is because a significant proportion of the gatekeepers in the country are not required to know who their customers are.

The failure to bring lawyers, accountants, and real estate agents into the AML-CTF regime is “a neon sign flashing above the continent of Australia saying ‘haven for criminal money laundering’,” according to Deborah O’Neill, a Labor Senator who has been active in a Senate committee inquiry into the adequacy of Australia’s AML-CTF laws.

However, lawyers in the country and the Law Council of Australia have voiced their concerns about the proposals and are strongly opposed.

Will Australia change its laws?

In Australia, rumors are still circulating that the home affairs minister, Karen Andrews, might rush to put legislation before parliament. However, the changes are complex and there are only a handful of sitting days left in the Australian parliament before the next election.

“The government has been clear in condemning the actions of the Russian government and is committed to a strong and effective sanctions regime, including ensuring that ill-gotten gains and other sanctioned wealth is effectively targeted by Austrac,” a spokesperson for Andrews said.

“As our economy recovers from the pandemic it’s important we consult with stakeholders and take the time to get further reforms right.”

However, if FATF evaluators don’t believe that Australia is moving in the right direction, the country could be placed on the gray list. Countries on this list (such as the Cayman Islands and Yemen) have “strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing”.

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