Australia is at risk of becoming destination priority one for laundering money if the nation's financial crime laws are not brought into line with the rest of the world.
Policy hawks have claimed Australia's inability to broaden anti-money laundering and counter-terrorism finance laws to include non-financial companies is leaving the country exposed to an influx of tainted funds linked to organised crime.
The rhetoric that Australia is a laggard in AML/CTF laws was expressed by a litany of witnesses during a senate inquiry on Tuesday, which is determining if current regulation is able to combat an increased threat in financial crime.
Labor senator Deborah O'Neill flagged money laundering was costing the economy upwards of $50 billion a year, with funds linked to drug and sex trafficking and child exploitation being legitimised domestically.
"This is quite significant for Australia as an international global citizen that we come to the party and catch up to the game," Senator O'Neill said during the hearing.
The committee also heard during the hearing Australia's inflated property prices were attracting money laundering attention.
Police Federation of Australia chief executive Scott Weber said the real estate sector has become lucrative way to legitimise tainted cash.
"If you have ill-gotten cash, you can go to a real estate agent, get conveyance with the lawyers and there is no punitive measures," Mr Weber said.
"That is a great way to launder it through a corporation, through a business and actually have it in a ... sound investment, which makes it extremely difficult for law enforcement agencies to take back of them if it is done through those mechanisms."
The scrutiny of Australia's AML/CTF laws comes off the back of revelations money has been laundered through some of nation's largest public companies such as Westpac and Crown Resorts.
Australia currently is not compliant with global standards set by Financial Action Task Force.
The non-compliance list also includes Haiti and Madagascar and partly based off non-financial and professions such as accountants and lawyers not being monitored by AML/CTF laws.
Australia's AML/CTF laws are regulated by AUSTRAC.
The Australian Banking Association flagged it is critical the federal government adopts tranche two reforms which would broaden regulation oversight.
ABA director Aidan O'Shaughnessy said compliance with FATF's standards would assist in simplifying financing for banks with overseas partners.
Mr O'Shaughnessy noted the laws governing financial crime have not changed since its implementation in 2006, despite huge technology changes over the past decade, including the rise of opaque dark web transaction exchanges which use cryptocurrency.
"It is vital that Australia addresses gaps in the Australian AML/CTF regime as identified in the FATF Mutual Evaluation Report," the ABA said in its submission to the committee.
"The alignment of the Australian regime to international standards will only enhance the ability of banks and Australian law enforcement agencies to detect, deter and disrupt financial crime."
CPA Australia said broadening the regulation would create excessive cost for smaller businesses.
AML/CTF expert Neil Jeans said there is a lack of political appetite in addressing the lagging laws.
"There has been limited action to address those weaknesses," he said.
"We know that we have been non-compliant for the longest and we have done nothing about it."
The committee is expected to hear from the Reserve Bank, AUSTRAC and Australian Criminal Intelligence Commission on Wednesday.