2.2.3 Typologies

يسري تنفيذه من تاريخ 16/6/2021

Illicit actors may use a wide variety of strategies to launder the proceeds of crime through the real estate sector. Many of these strategies are not specific to the real estate sector and appear in a variety of contexts.

The following are some of the most common.

•	Placement of cash. There are a variety of ways that the real estate sector can be used to place the cash proceeds of crime.
	o	Perhaps the simplest is purchasing a property in cash and then selling it, with the purchase price paid via wire or bank cheque. The criminal can identify a clear source of funds for the funds received, and can proceed to layer them using other techniques.
	o	This basic typology is subject to a number of variations. A property owner may pay for renovations in cash that represents the proceeds of crime, thus increasing the property's value. When the property is sold, the purchase price will include the value of illicit funds spent on renovations.
	o	An illicit actor may receive a bank loan to purchase the property, and then pay the loan back early in cash, or make payments in cash.
	o	Real estate investments, such as rental properties, may also be cash-intensive businesses. In jurisdictions where it is common to pay rent in cash, these properties can be used to commingle licit with illicit funds.
•	Use of shell companies or other legal entities to obscure ownership. As discussed above, the use of shell companies—legal persons with no operations or employees—to hold real property is a common feature of real estate sectors all over the world. This practice facilitates investment and business (e.g. owning a shopping mall and collecting rent from tenants) and also preserves privacy (e.g. a prominent individual purchasing a home using a shell company to avoid her address becoming public knowledge).
	Despite the legitimate uses of this technique, however, it can also be used to hide ownership when the true owner is an individual who does not want to be linked to the purchase. This may include Politically Exposed Persons (PEPs) who are purchasing properties that are inconsistent with their known sources of wealth; individuals who have past convictions for proceeds-generating offenses or are associated with negative news; and sanctioned individuals.
	In place of or in addition to shell companies, illicit actors may use complex ownership structures, legal arrangements, and nominee arrangements to conceal their ownership interest in a real estate transaction. Please see the CBUAE's Guidance for Licensed Financial Institutions providing services to Legal Persons and Arrangements³ for more information on the risks of legal persons and arrangements.
•	Use of intermediaries to obscure ownership. Similarly, individuals who wish to hide their connection to a real estate purchase or sale may rely on professional intermediaries—such as real estate brokers, lawyers, and accountants—to engage directly with financial institutions. Such intermediaries may be directly complicit in the concealment and aware that the true identity of their customer would raise questions about the transaction. Or they may simply be following professional rules that mandate professional secrecy regarding their clients.
•	Manipulation of property values. Although real estate pricing is somewhat predictable, prices are sufficiently subjective to justify inflated or deflated pricing in service of laundering schemes.
	o	Two co-conspirators may arrange a sale of a property for a sum that does not represent its market value, with the difference being paid in cash: for example, the sale price is 20% higher than the market value, and the seller repays the buyer in cash. A purchase price higher than market value may be justified to authorities on the grounds that the property was perfect for the buyer's needs, or the buyer was anxious to complete the sale quickly. Similarly, a purchase price below market value may be justified on the grounds that the seller wanted a quick sale, or the property had structural issues.
	o	Illicit actors may conspire with corrupt officials or bank employees to inflate the assessed value of a property, facilitating these schemes.
	o	A criminal may also disguise illicit transfers as loans raised using the property as security. The higher the value of the property, the more money that can be laundered using this technique.
•	Sequential selling. The repeated selling of real estate by a group of conspirators, or by a single individual using multiple shell companies, in an attempt to separate the ultimate owner from the criminal proceeds originally used to purchase the property. In many cases, the same individual(s) will buy the property or sell the property multiple times.

³ Available at https://www.centralbank.ae/en/cbuae-amlcft.