Global money laundering in focus: Real Estate Reviewed by Momizat on . [caption id="attachment_5439" align="alignnone" width="615"] Real estate is a significant end resource available to the modern day launderer – in money launderi [caption id="attachment_5439" align="alignnone" width="615"] Real estate is a significant end resource available to the modern day launderer – in money launderi Rating: 0

Global money laundering in focus: Real Estate

Real estate is a significant end resource available to the modern day launderer – in money laundering parlance, it constitutes the end of the cycle whereby illicit cash is “integrated” into the economy at large.

Real estate is a significant end resource available to the modern day launderer – in money laundering parlance, it constitutes the end of the cycle whereby illicit cash is “integrated” into the economy at large.

By Chris Weston, CEE Consulting Group

A number of recent articles have cast a light on the widespread use of real estate as a haven for “funny money” rather than just for the rich and wealthy to reside in.

On July 28, British Prime Minister, David Cameron gave a speech in Singapore that foreigners must not be allowed to buy UK homes with “plundered or laundered cash” as part of a “UK inspired” global effort to defeat corruption. He further vowed to expose the use of “anonymous shell companies” to buy luxury UK properties.

This follows a 2014 report by the anti-poverty organisation One that an estimated USD 1 trln (GBP 600 bln) a year is being taken out of poor countries and millions of lives are lost because of corruption.

The week prior to the Cameron speech saw the British National Crime Agency head state that foreign criminals were pushing up house prices in the UK by laundering billions of pounds through the purchase of expensive properties. It is understood that more than 100,000 UK property titles have been registered to overseas companies, with more than 36,000 properties in London alone owned by offshore firms.

About GBP 122 bln of property in England and Wales is believed to be currently owned by offshore companies.

A recent report by Global Witness drew attention to a £147 mln property empire in London`s Baker Street (home of the character Sherlock Holmes) linked to a former Kazakh secret police chief accused of murder and money-laundering. The properties were acquired by essentially anonymous shell companies originating in the British Virgin Islands.

As a result, the British government says it intends to publish Land Registry data later this year, setting out which foreign companies own land and property in England and Wales. It will also consider forcing a foreign company bidding for a government contract to “publicly state who really owns it.”

But London is hardly alone in this regard.

Vienna has become a major location for ousted oligarchs, particularly in the light of the Crimean annexation and Ukraine-Russian conflict, reportedly leading real estate prices to increase by 30 percent in some areas of Vienna in 2014.

In particular, the Kyiv Times reported in February 2015 on a number of homes located outside Vienna belonging to corrupt officials from the Yanukovych government

In recent months, law enforcement from Canada, the US and China have all focused attention on the West Canadian city of Vancouver as a hub for money laundering, particularly by corrupt Chinese government officials and organized crime groups.

In one investigation underway, U.S. and Chinese investigators suspect that money for a Vancouver homes purchase came from an embezzlement scheme that was just one part of a massive USD 114 mln corruption and bribery operation that nearly crippled the China Grain Reserves Corporation, also known as Sinograin.

A similar picture is also unfurling in other desired locations such as New York, Miami and Sydney.

Real estate is a significant end resource available to the modern day launderer – in money laundering parlance, it constitutes the end of the cycle whereby illicit cash is “integrated” into the economy at large.

Given the fundamental importance of real estate as a vital means of wealth for the wider population, as well as those who rely on real estate for their income – from real estate agents, bankers, notaries to firms making and selling household furnishings, and the deep unpopularity politicians face with falling house prices, it remains to be seen whether the modest proposal for the “disclosure” of beneficial ownership interests will be sufficient to curb real estate`s popularity for the rich and wealthy money launderer.

Photo courtesy of Revisorweb (Wikimedia Commons).

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