Sydney’s crim reality: Chinese buyers use black market cash to snap up luxury homes

Foreigners are buying and renovating luxury Sydney properties and paying in cash. Law enforcement agencies have warned the Turnbull government that foreigners buying homes with “suitcases stuffed with cash” could be laundering money likely connected to serious crime.

Revenue and Financial Services Minister Kelly O’Dwyer said the phenomenon was one of the reasons behind her decision to ban cash payments of more than $10,000.”The new cash limit will prevent all buyers, including overseas buyers, from using cash when they purchase a property,” she said.
“Large cash payments are not just an issue of tax fraud, they also allow organised criminal enterprises to wash their cash in the legitimate economy.”

A March 2017 report by Transparency International, which targets corruption, claimed: “In Australia, 70 percent of Chinese buyers pay in cash and they represent the largest proportion of foreign purchases in the country.” Cash used to buy properties, Ms O’Dwyer said, was often a product of “proceeds of crime.” Board of Taxation chairman Michael Andrew told The
Saturday Telegraph that during his investigations into the black economy “people have boasted about building an entire house for cash”.

“There is anecdotal evidence of large cash payments, and we have also received information from industry associations about these trends,” said Mr Andrew, also chairman of the Turnbull government’s Black Economy Taskforce.

“There was certainly some evidence (of cash payments) in the apartment market. It’s probably more prevalent in owner-builders. We’re seeing a lot of people pay cash to contractors.” Institute of Public Accountants senior tax adviser Tony Greco, who also sits on the Board of Tax advisory panel, said foreigners were not allowed to bring millions of dollars in cash into Australia.
“It’s hard to imagine people stumping up with suitcases full of cash that most individuals spend a lifetime saving up for, yet it’s not uncommon according to Lendlease that overseas apartment buyers pay cash for a purchase price of an apartment,” he said.

“Overseas buyers are not technically allowed to bring a large amount of currency into the country without disclosing this to Customs onentry. AUSTRAC technically collects data on every transaction greater than $10,000 so these types of transactions should show up on their radar.”

The Paris-based Financial Action Task Force on Money Laundering warned as early as April 2015 that “China, Singapore and the United Arab Emirates were seen as major source, destination, and/or transit jurisdictions for proceeds of crime laundered into and out of Australia … Large amounts are suspected to be laundered out of China into the Australian real estate market.”

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Produced by Thomson Reuters Accelus Regulatory Intelligence 01-Jun-2018
Published 28-May-2018 by NewsRoom

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