The properties include houses in the Melbourne suburbs of Glen Waverley and Southbank, and part of a commercial facility in Oakleigh South, the AFP said.
The Australian government has been granted by the Victorian Supreme Court three properties from a Chinese national after a joint money-laundering investigation with China, police said on Saturday.
The Melbourne real estate was owned by a 32-year-old Chinese national who had been using an assumed name and had relocated to the Caribbean, the Australian Federal Police (AFP) said in a statement on their website.
A two-bedroom apartment, a five-bedroom house and a property that used to house a supermarket were collectively valued at $4.2 million and will be sold.
The proceeds will be used for law enforcement initiatives, the AFP said.
It's the first forfeiture action under the Joint Agency Arrangement on economic crime cooperation between the Australian Federal Police and the People’s Republic of China's Ministry of Public Security
China's Ministry of Public Security had asked for Australia's help in 2016 to identify two Chinese nationals whom Beijing said defrauded money from investors.
Police say the pair laundered the money by setting up shell companies to buy Australian real estate, jewellery and vehicles.
The assets were frozen in November by the AFP Criminal Assets Confiscation Taskforce as part of an investigation into offshore funds.
The Supreme Court of Victoria ordered the forfeiture of the three properties on Friday.
"Today marks six months since the first restraining order was obtained and, in the absence of proceedings commenced by the respondent, the assets were officially forfeited to the Commonwealth," the AFP said on Saturday.
"This operation further highlights the AFP’s relationship with the MPS and ongoing close collaboration," the AFP said.
Australia has long co-operated with China in an effort to crack down on money launderers.
In 2017, Australian police assisted China’s “Operation Fox Hunt” to snare suspected corrupt officials from China who fled overseas or had hidden assets offshore.
In November, the AFP said there had been three separate investigations since October 2018 into Chinese nationals creating shell companies in Australia to launder money and evade tax.
By December, the investigations had resulted in the freezing of more than $15.7 million worth of assets as proceeds of economic crime from China, the AFP said.