A new report by Transparency International, called 'Doors wide open: Corruption and real estate in four key markets', identifies 10 areas of law and supervision that enable money laundering to flourish in a nation's real estate sector.
The report looks at the extent to which Australia, Canada, the US, and the UK are vulnerable to the 10 weaknesses, and concluded that Australia had deficiencies in all 10 areas, making it the worst performer overall. Canada had deficiencies in four areas, the US in nine, and the UK in one.
The 10 weaknesses identified in the report that enable money laundering to flourish are:
- Inadequate compliance with international anti-money laundering rules.
- Identification of the beneficial owners of legal entities, trusts and other legal arrangements is not the norm.
- Foreign companies have access to the real estate market with few requirements or checks. (Australia is the only country that has checks on foreign investment, but these are not designed to prevent money laundering.)
- Over-reliance on due diligence checks by financial institutions.
- Insufficient rules on suspicious transaction reports and weak implementation.
- Weak or no checks on politically exposed persons and their associates.
- Limited control over professionals who can engage in real estate transactions: no “fit and proper” test.
- Limited understanding of and action on money laundering risks in the sector.
- Inconsistent supervision.
- Lack of sanctions.
Download Transparency International's report 'Doors Wide Open' here.
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