By Scott McLintock and Ryan Nobili

Australia sells itself as a rules-based haven founded on stable politics, a strong legal system, robust banks and a resilient property market. Those features are national strengths, but they also help explain why AUSTRAC has described the country as an “attractive destination to store and integrate criminal proceeds”, partly because of its strong real estate sector.

That tension sits at the heart of this article. Have we built a world-class property market that also performs a second, shadow function, absorbing illicit and opaque capital through gaps that remained open for too long?

The answer does not require Australia to be labelled the money laundering capital of the world. The more important point is that, for years, the property market has displayed many of the features criminals look for: high-value assets, stable prices, complex ownership structures, professional gatekeepers outside the full reach of anti-money laundering laws, and limited visibility over who ultimately controls a transaction.

From 1 July 2026, that gap begins to close. Under the Tranche 2 reforms, certain non-financial businesses and professionals, including real estate professionals, lawyers, accountants, conveyancers, trust and company service providers, and dealers in precious metals and stones, will have new Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) compliance responsibilities. For those sectors, this is no longer just a policy debate. It is a live compliance issue with practical obligations to know customers, verify beneficial ownership, assess risk and report suspicion.

This article explores:

• how property can be used to place, layer and integrate illicit funds;
• why Australia’s regulatory settings created a gatekeeper gap around real estate;
• whether short-term accommodation platforms may add a further monetisation layer; and
• why this matters in a housing market already under severe affordability pressure.

The hypothesis is not that money laundering alone caused Australia’s housing crisis. It is that illicit and opaque capital may be one under-examined source of demand in a market where even marginal pressure can have outsized consequences.

Why property works so well for laundering

Money laundering is the process by which criminal proceeds are disguised, moved or integrated so they can be used as apparently legitimate wealth. In practice, laundering is less about making money disappear and more about giving it a credible story.

Property is one of the most effective assets for that purpose because it can solve several laundering problems at once. It can absorb large amounts of value in a single transaction, sit inside familiar legal and commercial structures, generate income, appreciate over time, and be explained away as ordinary investment activity.

Real estate can also be used at each stage of the laundering process^[1]:

• Placement: illicit cash or structured deposits are introduced into the financial system to fund a property purchase.
• Layering: trusts, companies, nominees and professional intermediaries are used to distance the asset from the source of funds and obscure the true controller.
• Integration: the property is then held, rented, renovated, refinanced or sold, allowing illicit funds to re‑enter the economy as seemingly legitimate wealth.

AUSTRAC has described money laundering through real estate as an established method in Australia, pointing to the ability to buy with cash, disguise beneficial ownership and rely on the relative stability of property prices. That combination allows large amounts of value to be moved into a socially accepted asset class and later converted into rental income, refinancing proceeds or capital gains.

That is what makes property so powerful. It does not merely hide money. In a rising market, it can grow it.

The gatekeeper gap: Where Australian regulation has fallen behind

For more than a decade, domestic and international assessments have identified professional “gatekeepers” as a recurring structural weakness in Australia’s AML framework. Lawyers, accountants and real estate agents can, wittingly or unwittingly, provide the legitimacy, structure and concealment needed to move illicit funds into property.^[2]

AUSTRAC’s 2024 National Risk Assessment sets these issues out plainly:

• It identifies the “persistent involvement of professional service providers” in establishing complex structures and banking arrangements that conceal wealth.^[3]
• It also notes that the absence of AML/CTF obligations for some designated non-financial businesses and professionals left those providers not subject to the same due diligence, reporting and supervision requirements as regulated entities under the AML/CTF Act.
• Real estate agents have historically sat outside the AML/CTF regime.

This is the gatekeeper gap. While financial institutions may process the transaction, the people arranging the acquisition, structuring the ownership, advising on entities, negotiating the sale or managing the asset have historically not been subject to the full AML/CTF framework. That matters because property laundering is often enabled not by one suspicious transfer, but by professional services, complex structures and plausible commercial explanations.

The Financial Action Task Force (FATF) has criticised this weakness for years, repeatedly urging Australia to close gaps around designated non-financial businesses and professionals. Transparency International has made the same broader point, noting that real estate can facilitate laundering where ownership is obscured through companies or trusts, and professionals involved in the transaction are not required to conduct meaningful due diligence.^[4]

AUSTRAC’s real estate assessments identify common laundering methods including nominee buyers, loan facilities repaid with illicit cash, under- and over-valuation schemes, rapid resales, structured deposits, rental income used to legitimise funds, and complex corporate or trust structures that obscure beneficial ownership.

Without effective obligations on the professionals closest to the transaction, the system may see the payment but miss the story behind it: who is really buying, whose money is being used, why the structure exists, and whether the transaction makes commercial sense.

From safe deposit box to income stream: how short-term letting can monetise hidden wealth

If property functions as an efficient store of value for illicit capital, the next question is what happens once it is embedded in the system. Laundering does not necessarily end at acquisition.

AUSTRAC has long identified rental income as a way to legitimise illicit funds after acquisition. Property does not need to be sold to integrate proceeds; it can be monetised over time, providing an ongoing explanation for cash flow.

This is where short‑term accommodation models warrant closer scrutiny. The point is not that platforms or hosts are inherently suspect, but that short-term accommodation may amplify vulnerabilities already present in the property market.

Online platforms enable high-volume, short-term and often cross-border transactions with flexible pricing and limited visibility into whether activity reflects genuine demand. Unlike long-term leasing, income fluctuations can be explained by seasonality, tourism patterns, event-driven demand or platform algorithms.

In practical terms, this creates a plausible mechanism for revenue washing, where apparently legitimate rental income may be generated through activity that is artificial, circular or commercially manipulated. Examples could include bookings that do not reflect genuine occupancy, or pricing disconnected from market reality. Those income streams may still incur platform fees and taxes, making them easier to present as legitimate business activity.

The detection challenge is significant. The information needed to test suspicious patterns may sit across platforms, payment processors, banks, tax records and property ownership data. Unless those data points can be connected, activity that is unusual in substance may still appear ordinary in isolation.

None of this means every short-term rental, empty apartment or high-performing listing is suspicious. The vulnerability lies in how difficult such activity can be to verify at scale.

When dirty money competes with ordinary buyers

Illicit or opaque capital does not behave like ordinary household demand. It may be indifferent to interest rates, unconcerned with rental yields, and content to park money rather than house people. It can add demand without adding households, inflate prices without increasing supply, and help turn homes into stores of value rather than places to live.

This is significant in a market already under severe affordability pressure. Money laundering did not cause Australia’s housing crisis. The drivers of affordability are broader and better known, including supply constraints, population growth, tax settings, planning failures and the cost of finance. But illicit or opaque capital introduces a different kind of demand, one not governed by household need, borrowing capacity or conventional investment logic.

Australia’s dwelling stock is now valued at around $12.8 trillion[5]. That scale makes property attractive to legitimate investors, but also to anyone seeking to store and legitimise large amounts of wealth. In a higher interest-rate environment, genuine owner-occupiers are constrained by serviceability and borrowing limits. Buyers less sensitive to those constraints, particularly those using large cash components, may continue bidding where ordinary buyers cannot.

Without drawing a simplistic causal line, it is difficult to ignore the possibility that some resilient property prices reflect demand that is not playing by normal economic rules. Even if that demand is small relative to the overall market, it can still matter on the edges, especially in high-value segments, tightly supplied locations, or markets where prices are already stretched.

The risk is not that criminals discovered something new. It is that regulation and scrutiny may once again have arrived after the market architecture was already built.

Tranche 2 Reforms: the beginning of scrutiny, not the end of risk

For years, Australia acknowledged the money-laundering vulnerability in real estate while delaying the reforms now known as “Tranche 2”. That is now changing.

In May 2024, the Australian Government opened second-stage consultation on reforms to extend the AML/CTF regime to certain high-risk “Tranche 2” services. The AML/CTF Amendment Bill 2024 passed Parliament in November 2024, and the resulting Amendment Act means businesses providing those services will be regulated by AUSTRAC from 1 July 2026.

The practical effect is significant. Under Tranche 2, these gatekeepers will be required to verify customers, understand beneficial ownership where relevant, report suspicious matters to AUSTRAC, implement risk-based AML/CTF compliance programs, maintain records, and be subject to AUSTRAC supervision and enforcement.

These measures will not eliminate laundering, but they should make property laundering harder to execute, riskier to scale and more visible to detect. Stronger AML/CTF controls should increase friction for anonymous or complex buyers, generate better intelligence about beneficial ownership and suspicious transaction patterns, and deter some illicit demand by increasing the likelihood of detection, restraint and confiscation.

The impact will depend on capability, judgment and enforcement. Criminals adapt, and without sustained scrutiny, illicit activity may shift into more complex structures, other asset classes or less visible parts of the market.

For years, Australia recognised the money laundering risk in property, but the regulatory response lagged behind. Tranche 2 should begin to close that gap by making ownership, source of funds and suspicious transaction patterns harder to ignore.

But the real test is whether Australia’s property market becomes less comfortable with opacity. Tranche 2 will not solve money laundering or affordability on its own, but it may begin to change what the market is prepared to accept.

If Australia wants housing to feel more like homes and less like hiding places, the question cannot stop at whether the buyer can pay. The better question is whether the money makes sense.

References

[1] AUSTRAC Money Laundering in Australia National Risk Assessment (page 10)

[2] AUSTRAC Money Laundering in Australia National Risk Assessment (page 42)

[3] AUSTRAC Money Laundering in Australia National Risk Assessment (page 4)

[4] Doors wide open: corruption and real estate in… – Transparency.org

[5] Australian Bureau of Statistics Total Value of Dwellings, March Quarter 2026 | Australian Bureau of Statistics