Australia has become "a playground for organised crime" with illicit funds being laundered with help from financial, real estate, professional services and other legitimate businesses, Attorney-General Mark Dreyfus has warned.
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"Each year, trillions of dollars are generated from illegal activities such as drug trafficking, tax evasion, people smuggling, cybercrime, and arms trafficking," Mr Dreyfus told the National Press Club on Tuesday.
"Australia is falling short of meeting the standards required to combat criminal abuse of our financial system, and is at increased risk of becoming a haven for money laundering."
The Albanese government allocated $166.4 million in the May budget to implement reforms to extend Australia's anti-money laundering and counter-terrorism financing regulations to "tranche 2" entities, such as lawyers, accountants and real estate agents.
![Attorney-General Mark Dreyfus is cracking down on money laundering. Picture by Sitthixay Ditthavong Attorney-General Mark Dreyfus is cracking down on money laundering. Picture by Sitthixay Ditthavong](/images/transform/v1/crop/frm/234480217/f39218df-a5a6-4914-bd25-605b23e7ded0.jpg/r0_532_5200_3467_w1200_h678_fmax.jpg)
Mr Dreyfus said there was a "critical need" for the reforms, after the Australian Transaction Reports and Analysis Centre (AUSTRAC) published a risk assessments on Wednesday showing that criminals are still using cash, luxury goods, real estate, domestic banks, casinos and remittance services to launder funds in Australia.
"Opposing these reforms means aiding and abetting the criminal abuse of our financial system by drug traffickers, people smugglers, terrorists, and those who exploit and abuse children," he said.
'Reputation consequences' if Australia does not act to prevent money laundering
Courgette restaurant owner James Daniel Mussillon last year pleaded guilty to money laundering, perjury, making false evidence, general dishonesty and obtaining property by deception.
Agreed facts showed Mussillon laundered $361,941 for a drug dealer by receiving money from that man's cannabis trafficking enterprise, then paying it back to him in fake "wages" between 2016 and 2021.
The Commonwealth Director of Public Prosecutions has secured more than 240 convictions for all money-laundering offences over the last four years, with its criminal assets confiscation task force seizing assets worth more than $352 million last year.
"Real estate accounted for 65 per cent of those assets," Mr Dreyfus said.
He said while enforcement was important, reform was needed to "prevent these crimes from occurring in the first place" and prevent Australia from being "grey-listed" or subjected to increased monitoring by the global financial watchdog the Financial Action Task Force.
"This could have serious economic and reputational consequences," he said.
Grey-listed countries face increased monitoring from the Paris-based intergovernmental group, which was formed to address deficiencies in national systems to counter money laundering and terrorism financing.
It has been critical of Australia's failure to extend anti-money-laundering regulations, which apply to financial, gambling, remittance, digital currency exchange providers and bullion sectors, to tranche 2 entities.
"Despite these clear warnings that our economy is at risk of being exploited by criminal gangs and terrorists, the former government dragged its heels and failed to do anything of substance for the entire nine years it was in office," Mr Dreyfus said.
He said a "simplified and expanded regime" would close "the gaps that we know increasingly sophisticated professional criminal organisations can exploit", while being easy for small businesses to navigate.
AUSTRAC chief executive Brendan Thomas told the National Press Club that money launderers saw Australia as "a great place to do business" with drawcards including a "well-developed financial services sector [and] strong real estate market".
Drug offences were the single largest source of money laundered in Australia, he said, with "significant money" also laundered from tax and revenue crimes, government-funded programs such as the NDIS, proceeds of illicit tobacco sales and the global proceeds of scams.
Illicit drug sales alone generated at least $12.4 billion a year in Australia, he said, while tax fraud was estimated to involve more than $1 billion a year.