Real Estate and Money Laundering
Often viewed as a popular means to “wash” funds because large amounts of money can be laundered in one transaction, a report by Global Financial Integrity (GFI) found that more than $2.3 billion was laundered through US real estate from 2015 to 2021.
Money laundering through real estate integrates illicit funds into the legitimate financial system while also providing the criminal with a relatively “safe” property investment. This can include the purchase of houses, apartments, office space, factories, hotels, vineyards, etc.
With that said, the price of real estate is fairly easy to manipulate, and with collusion, the property can be over- or undervalued. In fact, gatekeepers in the sector – realtors, property developers, mortgage advisors, brokers, etc. – have sometimes been found to be complicit and accept financial compensation to turn a blind eye to real estate money laundering. In the US, professionals involved in real estate closing and settlements are not currently required to adhere to AML and CTF programs and regulations.
Excerpts used in this post were resourced from the article “Understanding Money Laundering in Real Estate” provided by ComplyAdvantage.com. The article goes on to provide several examples of money laundering as it applies to real estate along with “red flags” and other methods of conducting due diligence.