A weekend topic starting with the International Consortium of Investigative Journalists. “By using a database of over 100 publicly reported real estate money laundering cases in the U.S., United Kingdom and Canada, Global Financial Integrity says the U.S. has become a preferred destination for those looking to use real estate to stash illicit funds — making it a ‘Kleptocrat’s dream.’ ‘[Real estate] provides a really easy way to hide ill-gotten gains with little oversight and few questions asked,’ GFI policy director Lakshmi Kumar told the International Consortium of Investigative Journalists. ‘If you’re a criminal, why would you not choose a method that allows you to flaunt your wealth openly, but also hide its illicit nature.’”
“One of the biggest issues that the report cites is the use of geographic targeting orders as the U.S.’s primary tool to identify potential money laundering events. GTOs impose reporting requirements on real estate purchases, but only in narrowly targeted scenarios — large cash purchases by legal entities in specific geographic areas.”
“More than 60% of the U.S. cases examined in the report involved properties in at least one county not covered by a targeting order, which GFI says highlights the inadequacy of the system. ‘A lot of the money laundering cases we saw reported in the U.K. and Canada were really concentrated in what you’d call real estate hubs in the country,’ Kumar said. ‘In the U.S., that was not the case. It was spread far and wide.’”
“Another concern the report outlines is that the U.S. anti-money laundering regime is focused on residential purchases, when a significant portion of the cases GFI reviewed involve commercial real estate transactions. ‘Investment vehicles are one of the key methods in which to invest in commercial real estate in this country,’ Kumar said. ‘And private equity, venture capital [and] hedge funds have no [anti-money laundering] requirements — so that becomes a black box, because you don’t know who is bringing what money into this country and how.’”
The Real Deal on New York. “A missing Chinese national who helped buy a $30 million apartment at 432 Park Avenue also has ties to the purchase of a second unit in the building, property records indicate. A company affiliated with Whitney Duan purchased a 2,600-square-foot spread on the 80th floor of the building in 2016 for $19 million in cash, the records show. Three months earlier, another company connected to Duan purchased a condo on the 72nd floor for $30 million, financed by the $13.75 million loan she personally guaranteed. That unit, 72A, is now headed for foreclosure.”
“Duan appears to have transferred ownership interests in the two condo units from a pair of U.S. companies to two overseas entities, according to property records. Moving assets overseas is not illegal or even atypical for high-flying international buyers, but the extent of Duan’s involvement calls attention to the saga of a mysterious owner who is on the cusp of losing a $30 million apartment and can’t be found — or even identified.”
“The Billionaires’ Row and Lenox Hill condo units have both been listed for rent since they were last purchased. The 432 Park Avenue unit asked a staggering $78,000 per month, although attorneys for Maverick Real Estate told a Manhattan court that the apartment is unfurnished.”
From Better Dwelling in Canada. “Canadians are world-class when it comes to real estate… money laundering. Not just when it comes to laundering foreign capital, but the domestic stuff as well. That’s the take from the data shared by Global Financial Integrity (GFI). The Washington, DC-based anti-corruption organization found significant cash laundered through real estate. They only really scratched the surface of the numbers, but it’s pretty damning as is.”
“Sampling is a common and frequently used method statisticians use to project trends. An example of this would be unemployment statistics, which are used around the world. It gives a good picture of things, but not the whole picture. In this case, the data may skew the origin of money, since they’re only looking at newsworthy cases. However, partial data is a good starting point to explore what may be a much deeper trend.”
“Canada doesn’t know who bought billions worth of homes, or who borrowed the money to fund the purchases. It’s a great system, subject to no flaws, I’m sure. Canada is known for laundering money from countries with capital export controls. Places like China, Iran, and (to a lesser extent) India are a few of the big ones. In order to transfer money in excess of the capital controls, it needs to be laundered into the country. There’s even evidence of Canadian banks helping with this process.”
From ABC News in Australia. “The man in charge of the finances of Crown’s two Australian casinos was warned of multiple suspicious transactions which could indicate money laundering — but can not remember taking any action. The Perth Casino Royal Commission was told on Wednesday that Alan McGregor, with 24 years’ experience in the casino industry, was forwarded an email in October 2014 by former Crown legal boss Joshua Preston.”
“Counsel assisting the royal commission Patricia Cahill said Mr Preston wanted Mr McGregor’s advice about a Crown employee receiving a batch of deposits smaller than $10,000 and totalling about $100,000. All transactions of $10,000 and more must be reported to AUSTRAC, the Australian government agency which monitors financial crimes like money laundering. Ms Cahill said the email pointed out that the deposits were ‘still under the threshold but an opportunity for the bank to report as suspicious.’”
“Mr McGregor said he only learned that deposits smaller than $10,000 made into the Riverbank account had been aggregated into bigger amounts via the Bergin inquiry last year. He said he was ultimately responsible for financial transactions in the cage, a place in the casino where cash can be exchanged for gambling chips. But he could not explain why these deposits were aggregated by cage staff.”
“Ms Cahill: ‘So that was back in October 2020 and we’re now many months down the track. And what steps have you taken to get a more satisfactory answer to the question about who aggregated deposits in the Riverbank account and why?’ Mr McGregor: ‘I haven’t taken any steps.’”
From Bloomberg. “In an exclusive Singapore neighbourhood shaded with rain trees, a local tech billionaire plunked down US$95 million for a mansion. Near an upscale shopping district, a Taiwanese family with a grocery empire spent US$216 million for all the units in a condominium development.”
“That’s the kind of money sloshing around Singapore’s red-hot residential market this year. To be exact: S$32.9 billion (US$24 billion) spent in the first half alone — the city’s biggest frenzy in more than a decade and double what was recorded in Manhattan over the same six months. The ultra-rich are stuffing cash into luxury properties around the globe, and in few places is the trend as apparent as in Singapore. The boom in Singapore is reminiscent of 2007, when ‘well-heeled foreigners were lured by the glamour promised by two upcoming resorts and casinos,’ said Nicholas Mak, head of research and consultancy at APAC Realty Ltd unit ERA.”
“That flurry was tamed by the global financial crisis and property curbs. ‘The difference now is that there are more newly minted ultra-rich people, especially from China and India.’ When Hong Kong-listed Shun Tak Holdings unveiled its first residential project, Park Nova wasn’t just a showcase of the 54 luxury apartments. It was a display of buyers’ wealth as Rolls-Royce Cullinan and Ferarris descended upon the site, 10 minutes by foot from Singapore’s famous shopping belt Orchard Road.”
“‘I’ve never seen so many luxurious cars at one point,’ said Dominic Lee, head of the luxury team at Singapore-based PropNex Realty. ‘If you drove a BMW that day, you’d feel depressed.” All three penthouses were snapped up, fetching prices of as much as S$34.4 million. ‘For rich people, such prices aren’t a concern. If it’s a good buy, they would want it,’ Lee said, adding that the buyers were both local and foreign.”
“Similar to London, there’s another factor luring well-heeled foreign buyers to Singapore: Privacy. Buyers use trusts to conceal their identities from the public and even the government. For instance, banks can register themselves as the legal owner on behalf of the individuals. It complicates the burden on developers to screen prospective buyers for money laundering risks.”
“Barring any market shocks such as property curbs, however, Singapore’s housing frenzy is set to continue. ‘The market appears to be going on a Poseidon Adventure, sailing into a tsunami,’ said Alan Cheong, executive director of research at Savills Plc. ‘The tsunami turns out to be the liquidity that is keeping the market afloat. Hence, rather than capsizing, the party could continue.’”