Money Laundering in Australian Real Estate: Common Methods & Red Flags
- March 04, 2025
- 4 Mins Read
Real estate agents and property developers in Australia are among the tranche II entities that will be covered in the amended Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) law starting July 2026. This infographic discusses some of the common methods of money laundering in the Australian real estate sector and their associated red flags.
Structuring of Funds in Real Estate Purchases
Structuring involves deliberately dividing funds into small amounts below the reporting thresholds to avoid regulatory scrutiny.
Red Flags of Structuring of Funds in Real Estate Purchases
If multiple cash amounts below the AUD 10,000 reporting threshold are deposited in different bank accounts or branches for loan amount repayment, then that should be a red flag for the structuring of funds.
Misusing Professional Service Providers for ML in the Real Estate Sector
Professional service providers, such as real estate agents, conveyancers, or Trust and Company Service Providers (TCSPs), can be misused for money laundering in the real estate sector as they are the gatekeepers who can assist criminals in misusing legal financial and corporate systems for the purpose of money laundering by complicating the whole process.
Red Flags Indicating Misuse of Professional Services
If, for instance, multiple cash deposits are made into an account that is later withdrawn by or transferred to real estate firms, conveyancers, or legal trust accounts within a short period of time, then that can be considered as a red flag indicating money laundering activities by misusing professional service providers.
Disguising Illegitimate Funds as Rental Payment as a Real Estate Money Laundering Method
Criminals disguise illegitimate funds by making it look like they are paying rent payments. This can be done by depositing fake rent into an account to legitimise the money.
Red Flags Indicating Use of Illegitimate Funds as Rental Payment for Money Laundering
Real estate agents or property developers in Australia seeking to prevent the use of illegitimate funds as rental payments should be aware of the red flags, like if the Rental payments are made months in advance, that too in cash, then such behaviour should be treated as a warning sign.
Involving Third Parties for Money Laundering in the Property Sector
Criminals may involve third parties like family members, friends, or close associates in purchasing properties instead of directly getting involved, so there is no direct connection between the criminal and the property.
Real Estate Red Flags of Money Laundering Involving Third Parties
Some of the real estate red flags of money laundering through third parties include cash deposits for a property coming from an unusual source, like a third party, at a later stage of the business relationship where the customer purchasing the property is hesitant in providing information about the third party.
Distorting the Valuation of Real Estate Property as a Money Laundering Technique
Criminals often distort the actual value of a property by using undervaluation or overvaluation techniques with the help of the buyer or seller on the official documents while settling the actual price by cash payments. This way, money can be parked into the property without regulatory scrutiny.
Detecting Money Laundering in Property through Distorted Valuation
If a customer is willing to purchase or sell a real estate property at an unreasonably high or unreasonably low price without any concern for the return on investment, then that can be a red flag for real estate agents and property developers, indicating money laundering activities by distorting the valuation of the property.
Improvement or Renovation of Real Estate Property for Laundering Money
Criminals use cash payments for the improvement and renovation of real estate to layer and integrate the illicit funds and gain from the increased price of the property post renovations.
Red Flags in Real Estate Transactions Concerning Improvement or Renovation of Real Estate Property
Red flags in real estate transactions concerning improvements or renovation of real estate property can include customers purchasing a low-valuation property and spending a very high amount in cash for renovating or making improvements to that property before reselling it without any significant profits.
Investment by Foreign Entities in Real Estate as a Money Laundering Tactic
Criminals who may be residing out of Australia may misuse the Australian real estate sector to evade scrutiny from their domestic regulatory authorities.
Money Laundering Warning Signs in Investment by Foreign Entities in Real Estate
When dealing with overseas customers, real estate agents and property developers should be aware of some of the common warning signs, such as if the customer is a foreign entity or non-resident entity for tax purposes who resides in a high-risk jurisdiction and the customer’s only connection with Australia is by way of ownership of the real estate property. Real estate agents and property developers should stay vigilant against such warning signs.
Key Takeaways from AML Australia on Preventing Money Laundering in Real Estate
While there can be innumerable warning signals indicating money laundering in Real Estate, the reporting entities in the real estate sector, such as real estate agents and property developers, can identify to prevent the risk of financial crimes to their business.
It is also important to understand the common methodologies in which criminals operate to effectively spot red flags for money laundering.
With this infographic, real estate sector participants can learn about the methods of money laundering and their corresponding red flags.