http://www.huanyuju.com/articles/governments-around-the-world-are-tackling-money-laundering-in-real-estate-121904?tesla=y&tesla=y

Criminals love luxury real estate, and governments around the world are scrambling to find ways to stop them from scooping up addresses in their most renowned cities.

Over the past year, a laundry list of suspects ranging from Chinese gambling rings, a Venezuelan television executive, and a banking official from Azerbaijan have been accused of using their ill-gained financial proceeds to purchase properties at some of the most exclusive addresses in the world—a C$22 million (US$16.8 million) gabled mansion nestled in upscale Shaughnessy, Vancouver; a US$8.85 million four-bedroom penthouse on Riverside Boulevard on the west side of Manhattan, and a £11.5 million (US$14.7 million), five-bedroom property in the tony London neighborhood of Knightsbridge. 

Money laundering through real estate is a growing, worldwide problem, estimated to have reached US$1.6 trillion a year, reports Accuity, a global risk and compliance company with headquarters in Illinois that issues findings on the state of the industry.

"It was becoming increasingly apparent in countries such as Australia, America, and the United Kingdom that a number of assets were being purchased, possibly linked to political or criminal activities where money laundering was about to occur," said Patrick Hinchin, Accuity’s vice president of commercial strategy, in a telephone interview.

And that is one thing the real estate industry needs to keep an eye out for, said Brigitte Unger, a professor at the University of Utrecht in the Netherlands and an international expert on money laundering. "Real estate has always been a favorite asset for criminals through which they would launder their money," she said.

Ms. Unger sits on a fact-finding panel for Canada’s British Columbia on how to manage the influx of untraceable real estate purchases in Vancouver tied to organized crime and market abuse that has made property prices soar in the city. Often, criminals purchase real estate in a favored city where the housing market holds high value using a shell company or a trusted business associate, then they either rent the property or remodel using criminal funds and sell it for a profit, Ms. Unger said.

The U.S. has long been a target for real estate money laundering. To curb this growing phenomenon, FinCEN, the U.S. Treasury Department’s investigative arm, reissued an expanded directive in November which lowered the financial amount required by title companies to identify all the people at shell companies making purchases in cash above $300,000 or in cryptocurrency. In previous orders, title companies had to report different amounts according to city and the orders didn’t include cryptocurrency. This order evenly applies to all title companies in Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco and Seattle—directly affecting buyers of luxury real estate.

This FinCEN directive won’t discourage criminals coming to the U.S., said Washington, D.C.-based attorney Ross Delston, an anti-money laundering expert who has advised governments around the world. They instead will just have to buy real estate outside of the target area, take out a small loan or not use a title insurance company, he explained.

In an email response FinCEN’s spokesperson said they have nothing to add beyond the publicly available information on the order, but he did send along research saying that after their program requiring LLC owners purchasing luxury real estate to identify themselves was started in Jan. 2016, all cash purchases dropped by 70%.

Around the world, governments have tried a variety of policies to stem the purchase of luxury properties by criminal enterprises. Many of the countries profiled have seen a massive rise in money being laundered in real estate and have taken action. Here’s a snapshot of money laundering rules governments use to manage real estate purchases around the world.

A worldwide leader in the crackdown on money laundering in real estate, in 2018, legislation was introduced in Parliament that requires foreign owners to identify themselves. The bill, which was targeted at finding out who ultimately is the true owner of the property, has not yet been passed, but the registry is supposed to be made public by 2021. Owners who don’t comply with the directive could be sent to prison for two years and fined. Additionally, in 2017, regulations were enacted requiring real estate agents to perform due diligence on their customers before entering into business with them.

The U.K. also enacted a new order, which went into effect on Jan. 31, 2018, that allows certain enforcement agencies to investigate individuals who may have obtained property or goods through connections to organized crime. In July 2018, this action was used against Zamira Hajiyeva, 55, wife of former Azerbaijan bank chairman Jahangir Hajiyev, requiring her to explain her purchase of luxury properties in London. Her next court hearings are scheduled for June.