The Dirty Money Peril

Trillions - - Contents -

Vast sums of il­licit funds are be­ing laun­dered through real es­tate in the U.S., Canada, the UK and Aus­tralia, and gov­ern­ments are do­ing noth­ing about it ex­cept mak­ing such money laun­der­ing eas­ier in their own coun­tries while forc­ing other coun­tries to close their doors to money laun­der­ing.

The flood of drug money and stolen cash dis­torts real es­tate mar­kets, in­creases prop­erty taxes, drives work­ing class peo­ple from their homes and busi­nesses and poses grave eco­nomic risks from real es­tate bub­bles.

Trans­parency In­ter­na­tional re­cently re­leased a new re­port, Doors Wide Open: Cor­rup­tion and Real Es­tate in Key Mar­kets, in which it iden­ti­fies the ten main prob­lems re­lated to real es­tate and money laun­der­ing in the four coun­tries and makes rec­om­men­da­tions on how to ad­dress them.

“Gov­ern­ments must close the loop­holes that al­low cor­rupt politi­cians, civil ser­vants and busi­ness ex­ec­u­tives to be able to hide stolen wealth through the pur­chase of ex­pen­sive houses in Lon­don, New York, Sydney and Van­cou­ver,” said José Ugaz, Chair of Trans­parency In­ter­na­tional.

“The fail­ure to de­liver on their anti-cor­rup­tion com­mit­ments feeds poverty and in­equal­ity while the cor­rupt en­joy lives of lux­ury,” Ugaz added.

Real es­tate has long pro­vided a way for in­di­vid­u­als to se­cretly laun­der or in­vest stolen money and other il­lic­itly gained funds. Ac­cord­ing to the Fi­nan­cial Ac­tion Task Force (FATF), real es­tate ac­counted for up to 30 per cent of crim­i­nal as­sets con­fis­cated world­wide be­tween 2011 and 2013.

Not only do ex­pen­sive apart­ments in New York, Lon­don or Sydney raise the so­cial sta­tus of their own­ers and al­low them to live in lux­ury, they are also an easy and con­ve­nient place to hide hun­dreds of mil­lions of dol­lars from crim­i­nal in­ves­ti­ga­tors, tax authorities or oth­ers track­ing crim­i­nal be­hav­iour and the pro­ceeds of crime.

The anti-cor­rup­tion group found that de­spite anti-cor­rup­tion prom­ises by gov­ern­ment in the coun­tries cov­ered in the re­port, cur­rent rules and prac­tices have failed to de­tect and pre­vent money laun­der­ing in the real es­tate sec­tor. Strik­ingly, Aus­tralia, Canada and the U.S. rely al­most ex­clu­sively on banks to stop money laun­der­ing, even though a slew of mid­dle­men in­clud­ing real es­tate agents, ac­coun­tants, tax plan­ners, lawyers and oth­ers par­tic­i­pate in deal-mak­ing. This makes all-cash deals, which do not re­quire the in­volve­ment of a bank and which rep­re­sent a sig­nif­i­cant pro­por­tion of high-end sales made to over­seas in­vestors, es­pe­cially dif­fi­cult to track.

Only the UK re­quires that checks are made on peo­ple sell­ing real es­tate, to en­sure that taxes are paid. How­ever, the same checks by real es­tate agents are not re­quired on the buy­ers – where the high­est risk of money laun­der­ing ex­ists – leav­ing a gap­ing hole in the sec­tor’s de­fences against cor­rupt money.

The re­port also finds that off­shore com­pa­nies pose a se­ri­ous risk in all four coun­tries be­cause they are able to pur­chase prop­erty with­out need­ing to dis­close any in­for­ma­tion re­lat­ing to who ul­ti­mately owns and con­trols them to any gov­ern­ment au­thor­ity.

The Trans­parency In­ter­na­tional re­port falls grossly short in its ex­plo­ration of the prob­lem by ig­nor­ing the ele­phant in the money laun­der­ing room.

Hid­den in plain site in the heart of the Lon­don metropolitan area is the City of Lon­don Cor­po­ra­tion, the fi­nan­cial head­quar­ters for the world's crim­i­nal elite. It is kind of a semi-au­ton­o­mous city state where most of the world's il­licit money is con­trolled from and where a lot of money laun­der­ing starts.

The City of Lon­don Cor­po­ra­tion is only one square mile (2.59 km²) and not the 611 square mile (1,572 km²) Greater Lon­don Au­thor­ity, which gov­erns the greater city of Lon­don. About 9,000 peo­ple live in the Cor­po­ra­tion lim­its but over 300,000 work there. Most Brits are un­aware of its true na­ture and many don't even know it ex­ists as a sep­a­rate en­tity.

The cor­po­ra­tion has ex­isted for nearly 1,000 years and may be the world's oldest con­tin­u­ously-elected lo­cal gov­ern­ment au­thor­ity. It is gov­erned by the Lord Mayor, the Court of Al­der­men, the Court of Com­mon Coun­cil, and the Freemen and Livery. The UK Par­lia­ment has limited au­thor­ity over it and has re­peat­edly failed to re­duce the Cor­po­ra­tion's in­de­pen­dence and power.

It is the tail that wags the UK dog and also has tremen­dous in­flu­ence over the Bri­tish Com­mon­wealth and its nu­mer­ous se­cre­tive off­shore tax havens such as the Cay­man Is­lands, Ba­hamas, Ber­muda, Jersey, Isle of Man, etc.

Within the pro­tec­tion of the City of Lon­don Cor­po­ra­tion are the Mid­dle Tem­ple and the In­ner Tem­ple and two of the Inns of Court that are not gov­erned by the Cor­po­ra­tion. These are pro­fes­sional as­so­ci­a­tions for bar­ris­ters in Eng­land and Wales. Be­ing head­quar­tered in the heart of power and vast wealth of the Cor­po­ra­tion am­pli­fies their power and helps shield them from jus­tice.

From the City of Lon­don Cor­po­ra­tion, large in­ter­na­tional banks en­joy a cer­tain de­gree of im­mu­nity from na­tional laws be­cause they are tech­ni­cally 'off­shore' and can en­gage in trans­ac­tions they couldn't legally per­form else­where. This in­cludes money laun­der­ing, ma­nip­u­lat­ing mar­kets, fal­si­fy­ing ex­change rates, etc. The banks are also able to sim­ply man­u­fac­ture vast sums of money our of thin air by cre­at­ing loans and un­reg­u­lated fi­nan­cial in­stru­ments, such as de­riv­a­tives. The un­reg­u­lated de­riv­i­tates mar­ket is es­ti­mated by the Bank for In­ter­na­tional Set­tle­ments (an­other au­ton­o­mous fi­nan­cial en­tity) to be more than $500 tril­lion.

This mas­sive amount of un­reg­u­lated money equals great power to in­flu­ence gov­ern­ments and wage eco­nomic war. It en­ables the evil elite to re­main above any na­tional or in­ter­na­tional laws. It is the root of many of the world's prob­lems be­cause it gives the evil elite al­most un­lim­ited power and they use that power to fur­ther en­rich them­selves while dis­em­pow­er­ing ev­ery­one else.

One of the things they do with their power is cre­ate fi­nan­cial cri­sis, such as the sub-prime mort­gage scam, in which tril­lions of dol­lars were stolen and the econ­omy se­verely dis­rupted in many coun­tries. An­other thing they do is fund war and ter­ror­ism be­cause it is prof­itable and gives them more power over na­tional gov­ern­ments.

To di­vert at­ten­tion away from the root prob­lem, Trans­parency In­ter­na­tional makes the fol­low­ing fee­ble rec­om­men­da­tions for gov­ern­ments:

Re­quire all mid­dle­men to iden­tify and keep records of the real, ben­e­fi­cial own­ers of le­gal en­ti­ties, trusts and other le­gal ar­range­ments in real es­tate sales. Re­quire that both do­mes­tic and for­eign po­lit­i­cally-ex­posed-per­sons, their fam­ily mem­bers and close as­so­ciates pur­chas­ing prop­erty be au­to­mat­i­cally iden­ti­fied as high-risk clients. Ad­di­tional pre­ven­tive mea­sures such as en­hanced due dili­gence should be im­ple­mented.

Re­quire for­eign com­pa­nies that wish to pur­chase prop­erty to pro­vide ben­e­fi­cial own­er­ship in­for­ma­tion. This in­for­ma­tion should be kept in a cen­tral ben­e­fi­cial own­er­ship reg­istry and made avail­able to com­pe­tent authorities and the pub­lic in open data for­mat.

Re­quire real es­tate agents to reg­is­ter with a des­ig­nated pub­lic au­thor­ity for anti-money laun­der­ing su­per­vi­sion in or­der to op­er­ate in the real es­tate sec­tor, and be tested to show they know the rules. Anti-money laun­der­ing train­ing should be made com­pul­sory upon regis­tra­tion.

Gov­ern­ments and pro­fes­sional as­so­ci­a­tions should in­tro­duce rules re­quir­ing lawyers, ac­coun­tants and other pro­fes­sion­als who are not reg­is­tered with the rel­e­vant anti-money laun­der­ing su­per­vi­sor to be pro­hib­ited from en­gag­ing in real es­tate deals.

What re­ally needs to hap­pen is that the fi­nan­cial in­dus­try needs to be brought un­der the rule of law and reg­u­lated. It should not be al­lowed to ex­ist 'off­shore' out­side of any na­tional ju­ris­dic­tion. The City of Lon­don Cor­po­ra­tion should be ab­sorbed into the Greater Lon­don Au­thor­ity so that it can be prop­erly gov­erned in some demo­cratic fash­ion. The Bank of In­ter­na­tional Set­tle­ments should be placed un­der UN con­trol or dis­solved.

Un­der the Trump regime the sit­u­a­tion is wors­en­ing. The most crim­i­nal el­e­ments of in­ter­na­tional fi­nance have been given a high de­gree of con­trol over the U.S. fed­eral gov­ern­ment and reg­u­la­tions over the bank­ing in­dus­try are be­ing rolled back.

Don­ald Trump him­self has been re­peat­edly im­pli­cated in money laun­der­ing for the Rus­sian Jewish Mafia and pow­er­ful Ashke­nazi Jews run his var­i­ous en­ter­prises and are his key ad­vi­sors.

Now that in­ter­na­tional crim­i­nal bankers are firmly in con­trol of Wash­ing­ton, Amer­i­cans can ex­pect their banks to be­come more preda­tory and more likely to steal their money. The NAPC strongly rec­om­mends that its mem­bers do busi­ness with lo­cal banks they can trust and avoid the big banksters.

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