The Australian Transaction Reports and Analysis Centre (AUSTRAC) recently announced increased scrutiny of Chinese investment flows into Australia. AUSTRAC is an Australian government agency, which oversees the compliance of businesses with Australia's anti-money laundering and counter-terrorism financing regime (AML/CTF regime).
The announcement represents part of a renewed push by key Australian regulators to discourage the flows of illicit funds into Australia, with a particular focus on China as the largest source-country of approved foreign investment flows into Australia currently. Notably, the announcement was also timed to coincide with the Australian Government's request for submissions from industry stakeholders on its proposed reforms to strengthen Australia's foreign investment framework.
AUSTRAC's focus areas
As part of the regulators' renewed push, AUSTRAC has agreed with the Australian Tax Office and the Foreign Investment Review Board, that Australian residential investment is a mutual area of priority.
In addition, according to AUSTRAC's announcement, the financial intelligence sharing arrangements between Australian regulators are designed in part to tackle "a small number of individuals… [who] continue to attempt to circumvent both Chinese and Australian controls around investment."
Finally, AUSTRAC's announcement notes that a statutory review into Australia's AML/CTF regime is currently underway, with a number of recommendations under consideration that relate to the current and future regulatory requirements of designated non-financial businesses or professions (such as lawyers, accountants, trust and company service providers, real estate agents and jewellers). This is no doubt in response to renewed interest in Tranche Two of the AML/CTF regime and the Financial Action Task Force's recommendations regarding the regulation of the real estate (amongst other non-financial businesses) industry in Australia during its mutual evaluation of the regime late last year.
It is important for Chinese investors, Australian financial service providers with clients in China, and Australian businesses operating in the non-financial industries listed above, to understand and consider the likely effect of this increased scrutiny by key regulators into Chinese investments flows generally, and in the area of residential investment more specifically, on their businesses.
Please contact us if you require any assistance with your AML/CTF program, your AML/CTF obligations generally or with your submission to the Australian government on its proposed reforms to Australia's foreign investment framework.
Click here to view AUSTRAC's announcement.