Money laundering real estate red flags, include:
Investors using multiple banks to stay under reporting thresholds.
Sales conducted in cash with no mortgage lenders involved – in places like Miami and Manhattan, over 60 percent of real estate transactions of $2m+ made by international investors are cash transactions.
A large disparity between the buyer’s income and the value of the property
Purchases where the ultimate beneficial owner is not clear.
A third party making the property purchase (known as a nominee purchaser).
A large geographical distance between where the investor is currently located and where they are buying property.
Properties purchased using “loan back” – money is deposited in an offshore bank account and borrowed back by a shell company, the owner of which happens to be the person who controls the offshore bank account.
If the property is used as a physical base for other criminal activity, including if the property is being sublet – according to a webinar hosted by the Financial Action Task Force (FATF) on real estate money laundering.
Other suspicious signs include sales between known criminals, ex-criminals, family members of criminals and/or politically exposed persons (PEPs).
Excerpts used in this post were resourced from the article “Understanding Money Laundering in Real Estate” provided by ComplyAdvantage.
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