Security & Fraud

Real Estate Money Laundering May Hit $1.6T A Year Globally

Governments around the world have a new front in their fight against money laundering: real estate.

According to a report in Mansion Global, a growing list of money laundering suspects from China to Venezuela are facing allegations that they are using money acquired illegally to purchase real estate properties in some of the world’s most expensive markets, spending more than $10 million a pop to acquire these homes in upscale, tony neighborhoods across the globe. Money laundering through real estate is about $1.6 trillion a year, reported Mansion Global, citing data from Accuity, a global risk and compliance company. Patrick Hinchin, vice president of commercial strategy at Accuity, said in the report that money laundering through real estate is becoming more common in Australia, America and the U.K.

Brigitte Unger, a professor at the Univerity of Utrecht in the Netherlands, is part of a fact-finding panel for Canada’s British Columbia on how to handle the increase of untraceable real estate purchases in Vancouver that are tied to crime syndicates and market abuse. Unger told Mansion Global that the real estate industry needs to be on the outlook for real estate money laundering. “Real estate has always been a favorite asset for criminals through which they would launder their money,” she said. According to Unger, bad guys tend to purchase properties in cities where the housing market retains its value and typically use a shell company or a business associate to make the real estate deal. The property will typically be rented out or remodeled with the bad money and then sold off for profits.

The U.S. too has been a target for real estate money laundering and to combat that FinCEN, the U.S. Treasury Department’s investigative unit, reissued a directive late last year to reduce the amount required by title companies to find  people at shell companies that are making purchases with more than $300,000 in cash or via digital tokens. The rule applies to all title companies that deal in markets that have luxury real estate including  Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco and Seattle, noted the report.

As for the U.K., the report noted that in 2018 legislation was introduced that calls on foreign owners to identify who they are. The rule has not been enacted yet, noted the report. The aim of the law is to discover who the true owner of a property is. The registry is slated to be made public by 2021, noted Mansion Global.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.