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Uncomfortable questions coming

Lawyers involved in conveyancing will need to ask “uncomfortable questions” of their clients under much talked about new anti-money laundering (AML) measures.

Widely anticipated Tranche 2 reforms of Australia’s anti-money laundering legislation will add lawyers, real estate agents and accountants to those already regulated under the AML disclosure regime.

And that will mean thousands of property professionals will be required to find out much more about their clients in future – and be prepared to blow the whistle on suspicious investors.

It will be one of the biggest issues facing lawyers over the next few years, according to new Queensland Law Society Chief Executive Officer Matt Dunn, who highlighted the workload and ethical challenges facing the industry during an in-depth interview with Australian Conveyancer magazine.

“Probably the biggest issue is Tranche 2 of the anti-money laundering, counterterrorism financing reforms,” he told the triSearch-powered publication.

Both the contract formation element and negotiation-for-sale would catch a lot of real estate agents and legal practitioners, he said.

“You’ve got to do all sorts of things, including making reports on suspicious matters to the regulator,” he added.

“That will be quite a big issue.

“In the conveyancing space, it will force us to ask a lot more questions about clients and do a lot more due diligence than we’ve ever done – really understanding where the client’s money is coming from.

“Asking lots of questions will be uncomfortable and, in some cases, not met well by clients.

“It is going to be a really big and difficult transition for the profession to make – and it will cost a lot too.

“Because that will be a lot of additional work that will need to be done and it’s got to be paid for somehow.”

Tackling the issue of cyber crime – which is costing the Australian economy an estimated $29 billion a year – he acknowledged it was already having a big impact on the profession.

And it will have even more of an impact as “governments take more and more measures to try and deal with cyber crime and cyber fraud – which is really huge as an issue here in Queensland”.

But he does see a possible upside if banks’ pay ID systems stand up as an effective defence.

Talking about the read out loud, read back requirements that insurers have, he said: “That is always a bit of added burden for law practices.

“But it is an effective tool stopping claims, picking up frauds and things that have gone wrong.

“Hopefully the move in the banking system to the new Pay ID might be a way of being able to try and marry up both the identity and the bank account details.

“The fact that we’ve had a banking system based just on numbers and not on a name or an identity for a very long time has meant that this structural weakness is being exploited by cyber criminals.”

When it comes to the potential around artificial intelligence, the jury is still out as he admits: “We’re not yet sure how that’s going to change things.”

And while the prospect of a fully automated property sale might be possible, it is not necessarily the best outcome.

He said: “If you could ever get to the point where you had a generative AI tool that was creating a smart contract on the block chain, then maybe the entire process of conveyancing and the sale of property could end up being automated – from one end to the other.

“I don’t know if that’s probably the best result for people.”

To read the full interview and much more, subscribe free to Australian Conveyancer.

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