Expect a greater focus on the use of real estate holdings as a vehicle for money laundering, Jennifer Shasky Calvery, director of the Treasury Department’s Financial Crimes Enforcement Network, said during a speech Wednesday in San Francisco.
A series of articles published by The New York Times in February uncovered the use of shell companies to purchase high-value real estate at the Time Warner Center in New York City. In response, a coalition of non-profit organizations, among them Transparency International, wrote to the Treasury Department in March, urging the repeal of a 2002 temporary exemption from certain provisions of the Patriot Act for the real estate industry. Those requirements would have forced real estate brokers and others to conduct due diligence checks on their customers.
Calvery said this flavor of money laundering “is not a new issue.” As a former prosecutor with the U.S. Department of Justice, focusing on transnational organized crime, investigations often focused on cases where foreign criminal organizations used their ill-gotten proceeds to purchase property. Many of the residences they purchased remained vacant. “Through our analysis of BSA reporting and other information, FinCEN continues to see the use of shell companies by international corrupt politicians, drug traffickers, and other criminals to purchase luxury residential real estate in cash,” she said