2.2.1 Risks of the Real Estate Sector

يسري تنفيذه من تاريخ 16/6/2021

The real estate sector is attractive to criminals and other illicit actors for many of the same reasons that it is popular with legitimate investors: real estate is a fairly liquid market, with assets that generally maintain or appreciate in value over time. Like certain forms of gold and precious metals, and unlike stores of value such as currency and stocks, real estate can be enjoyed by the owner. Indeed, the purchase of luxury real estate may in fact be the ultimate goal of the money laundering process.

In addition, certain characteristics of the sector, while not in themselves illicit or undesirable, offer advantages for those seeking to launder funds and to move large values between individuals and across borders in a relatively short time:

	•	The sale or purchase of real estate is a normal, everyday transaction, and offers a simple, convenient explanation for the source of funds in a large transaction.
	•	Real estate transactions are typically high-value, allowing illicit actors to launder large sums in a single transaction.
	•	Real estate transactions of all kinds often take place between shell companies created for the sole purpose of owning real property. This practice makes it difficult to identity the true owner of the property. In addition, the ubiquity of this practice makes it difficult to distinguish licit from illicit transactions.
	•	The price of real estate is not fixed and is somewhat subjective, allowing illicit actors to inflate or deflate sales or purchase prices to better suit to their schemes.
	•	Real estate is frequently sold and re-sold in fairly quick succession, making it less suspicious when a criminal engages in similar behaviors in order to layer laundered funds.
	•	In some jurisdictions, the ownership of real estate gives the owners access to residency rights. Illicit actors may take advantage of these rights to expand their criminal networks to new jurisdictions, to escape criminal investigation in their home countries, and to hold assets offshore without alerting their home authorities.

The real estate sector may be abused at any stage of the laundering process

	•	Placement: A criminal may invest illicit funds into the sector through an initial purchase in cash.
	•	Layering: A criminal may conceal the true origin of illicit funds by selling and purchasing a number of properties, extending the distance between current assets and the original placement of the funds.
	•	Integration: A criminal may sell a property and invest the funds in stocks, using the paperwork from the sale to demonstrate an apparently acceptable source of funds.