China’s state broadcaster CCTV has launched an attack on one of the country’s most powerful government controlled financial institutions – the Bank of China, accusing it of money laundering in Australia, via the Australian Significant Investor Visa Program.
Australia’s Significant Investor Visa program offers an accelerated pathway for wealthy investors to gain permanent residency by investing $5 million in the Australian economy.
There are over 1,200 applicants either approved, or in the pipeline for approval for the Significant Investor Visa, with an estimated $6 billion of proposed investments in Australia. A significant amount of the funds being invested in Australia through the program have been used to fund new residential housing developments in major Australian cities, particularly Sydney and Melbourne.
Chinese and other Asian investors have been a major force in driving the price of dwellings in Sydney and Melbourne to high levels. If the Chinese were to suddenly curtail their buying, then the Australian dwelling market would almost certainly suffer a considerable setback.
Under the Labor government, only a small number of Significant Investor Visas’ were granted, whereas the Liberal government is ramping up its approved of the Visa’s.
Under China’s stringent foreign exchange law, citizens are only allowed to send $US50,000 or $A53,000 abroad per year. Australia has been repeatedly been mentioned as the destination of “grey money” coming out of China in relation to Australia’s significant investor visa program.
“We don’t care where your money is from or how you earn it, we can help you get it out of the country”, a Bank of China employee told CCTV. “We don’t care how black your money is or how dirty it is, we will find ways to launder it and shift it overseas for you,” according to a detailed CCTV investigative report.
CCTV undercover footage clearly shows the Australian national flag on a Bank of China stand at a busy immigration show, advertising Australia as an important destination for investors. Social media posts from major media outlets about the story prominently feature a picture of a map of Australia
A senior manager with one of the big four Australian banks told the CCTV reporters that the Bank of China was crucial to the bank’s migration business. “The money is very safe and will leave the country in a very grey channel. The Bank of China is the same as an underground bank [a Chinese term for black market operators that launder money],” he told CCTV.
We have just seen development land in Melbourne and Sydney with building permits double in price on the back of frantic Asian buying, funded by Chinese banks.
The risk of the curtailing of the Significant Investor Visa program leading to a significant downfall in the residential property market cannot be discounted, and even the possibility of the end of the program leading to a technical recession must be acknowledged.
We will be watching to see whether Chinese regulators turn off the money flow that is funding the Australian real estate market.
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