Real estate can be an attractive channel for criminals wishing to launder illicit funds for a number of reasons.
Criminals can purchase a property using illicit funds.
The ultimate beneficial ownership of real estate can also be easily concealed.
The Money Laundering and Terrorist Financing (ML/TF) risks associated with real estate include:
- The use of third parties to buy and sell properties;
- Manipulating property values (that is, criminals buy and sell real estate at a price above or below market value);
- The use of complex company structures and multiple accounts to disguise the real purpose of a property transaction and disguise its true ownership; and
- Buying and leasing properties, but providing the tenant with illicit funds to pay the rents.
The commercial real estate businesses must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.