The Dirty Money Peril
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.