Embezzlement of money from abroad, recourse to front companies and specialized lawyers: all this is part of the American real estate market, where in the 13% of cases during the last five years, illicit means came from ‘Sub-Saharan Africa, according to a report published in early August.
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Money coming from abroad is often spent to buy back American villas, concluded the authors of a report by the NGO Global Financial Integrity (GFI) and the Financial Transparency Coalition working group, which was published in the beginning. August. The document mentions 13% of the cases identified in the United States, where it was found that the illicit money came from sub-Saharan Africa. This area is preceded by Asia, with 21% of cases, and Latin America, involved in 54% of procedures.
The US real estate market is an important sector where cases of money laundering are increasing, believe analysts Lakshmi Kumar and Kaisa de Bel, who are behind the report. They give in particular the figure of 88%, the rate of real estate that would have been acquired in the United States between 2019 and 2020 through an intermediary.
In addition, the study details that in more than half of the cases, politically exposed persons were involved. At the head of the first five countries from which these personalities come is Nigeria, preceded by Malaysia, Guatemala, Venezuela and Mexico.
With regard to cases of money laundering in Canada, the Congo, Chad and Malaysia are mentioned.
Advices
At the end of this analysis, the authors give recommendations to minimize the number of money laundering cases. Among other things, they propose that real estate agents be required to identify the beneficial owner of a residential real estate purchase, when the property agents are not involved in the transaction. In addition, the study points out that there should be a requirement to identify the natural persons behind real estate purchases made by front companies such as real estate title insurance companies.
A necessary reform
The conclusion that analysts draw from this 100-page report is that money laundering on this scale is possible in the United States because of legal loopholes in current US regulations. Therefore, the authors believe that the latter requires reform.
They examined 125 cases of money laundering through the purchase of real estate in the United States, Canada and the United Kingdom.
Additionally, the authors found that at a minimum, in the context of cases reported over the past five years, more than US $ 2.3 billion has been laundered through US real estate, including millions through other assets like art, jewelry and yachts. Finally, the use of limited companies and complex corporate structures remains the number one typology of money laundering, according to this report.
The NGO believes that the change and adaptation of regulations in the United States could now lead to the reduction of money laundering in the country, a phenomenon that undermines the financial system.
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