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$2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

antimoneylaunderinglaw.com

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Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#11

Post by jamhan »

In Australia we were supposed to have tranche 2 ("covering real estate agents, lawyers, accountants, car dealers and others") of the anti-money laundering regulations introduced over 10 years ago. As this article details, it is "comically" overdue: http://www.smh.com.au/business/banking-and-finance/slated-an...

While political parties can wallow in the extra taxes garnered from sky-rocketing real-estate prices and sizable party donations they have no incentive to introduce this second tranche.

For example, any party in power in New South Sales will keep its budget in the black simply from "stamp-duty" taxes collected on real-estate transactions.

The Foreign Investment Review Board was and is a farce and that's how the government likes it.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#12

Post by uiri »

TaylorSwift wrote: post #3

What's wrong with keeping the proceeds in China?

It needs to be invested. Chinese cultural attitudes around investing tend to favour real estate. Chinese real estate is too risky given the communist government's propensity for eminent domain and the possibility that they would confiscate it on the basis of corruption. That leaves foreign real estate in countries perceived to have sound government, rule of law and low barriers to entry for foreign investors.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#13

Post by a_bonobo »

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job.

The government looks the other way since building is one of the last big job creators now that the mining boom is over. For example, there is a government body for foreign investment breaches (rules like you're not allowed to buy 'used' property if you don't have permanent residency, but I've personally talked to quite a few Chinese students whose parents did that for them) but it has never once initiated court action [2].

So everybody profits in the short term - Chinese corruption can move 'dead' money out of the country, Australian government gets to present itself as a job creator. Except young Australians, who have to rent and cannot rely on real estate property for their retirement.

In the long term, the bubble is going to pop and then you have dead cities with empty high rises falling apart (but then again, people have been saying for at least 10 years that the bubble is going to pop any day now and it's still inflating)

[1] Contains no numbers: http://www.smh.com.au/comment/grey-money-from-china-helps-bl...

[2] http://www.abc.net.au/news/2014-11-27/foreign-buyer-rule-enf...

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#14

Post by coupdejarnac »

TaylorSwift wrote: post #3

What's wrong with keeping the proceeds in China?

Rule by law.

Reasons for moving money and children abroad: diversification of investments, security, prestige, less pollution, schools.

Source: dated wealthy Chinese women.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#16

Post by kspaans »

a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

    Except young Australians, who have to rent and cannot rely
    on real estate property for their retirement.
This is orthogonal to the money laundering, but what's stopping the young people from investing for their retirement? Houses are not the only way to build savings.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#17

Post by a_bonobo »

kspaans wrote: post #16
a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

Except young Australians, who have to rent and cannot rely on real estate property for their retirement. This is orthogonal to the money laundering, but what's stopping the young people from investing for their retirement? Houses are not the only way to build savings.

That's true, the Australian system of superannuation is actually pretty great, your job pays a portion of your income into your super which gets invested for you, you have some choice as to where it gets invested (high risk vs. low risk etc.)

However what I fear is that if the super isn't managed well, inflation hits, or you just don't build up a large enough investment the high rental prices in Australia will eat up the majority of your investment returns.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#18

Post by an_account_name »

kspaans wrote: post #16
a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

Except young Australians, who have to rent and cannot rely on real estate property for their retirement. This is orthogonal to the money laundering, but what's stopping the young people from investing for their retirement? Houses are not the only way to build savings.

Because you still have to pay rent - if you could buy, your housing costs would be earning equity.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#19

Post by NeutronBoy »

kspaans wrote: post #16
a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

Except young Australians, who have to rent and cannot rely on real estate property for their retirement. This is orthogonal to the money laundering, but what's stopping the young people from investing for their retirement? Houses are not the only way to build savings.

Property investment in Australia has a huge amount of subsidies that make it an extremely lucrative investment category compared to things like shares.

If you get into the property market, you can count on capital gains tax benefits and negative gearing against any other income you have. Additionally, other benefits that are means-tested often exclude property (at least primary residences).

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#20

Post by nradov »

TaylorSwift wrote: post #3

What's wrong with keeping the proceeds in China?

In many parts of China it's effectively impossible to actually purchase residential real estate. Buyers actually only get a 70-year lease (could vary up or down) which is pointless if you want to preserve wealth for your descendants.
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