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  • Writer's pictureJerry Ipsen, CFE, MBA

Common Red Flags of Money Laundering in Real Estate

Updated: Jul 1, 2023

Money laundering real estate red flags, include:

  • Investors using multiple banks to stay under reporting thresholds.

  • Sales conducted in cash with no mortgage lenders involved – in places like Miami and Manhattan, over 60 percent of real estate transactions of $2m+ made by international investors are cash transactions.

  • A large disparity between the buyer’s income and the value of the property

  • Purchases where the ultimate beneficial owner is not clear.

  • A third party making the property purchase (known as a nominee purchaser).

  • A large geographical distance between where the investor is currently located and where they are buying property.

  • Properties purchased using “loan back” – money is deposited in an offshore bank account and borrowed back by a shell company, the owner of which happens to be the person who controls the offshore bank account.

  • If the property is used as a physical base for other criminal activity, including if the property is being sublet – according to a webinar hosted by the Financial Action Task Force (FATF) on real estate money laundering.

  • Other suspicious signs include sales between known criminals, ex-criminals, family members of criminals and/or politically exposed persons (PEPs).

Excerpts used in this post were resourced from the article “Understanding Money Laundering in Real Estate” provided by ComplyAdvantage.




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