Money Laundering in Real Estate: How Scammers Operate
Tax havens, straw man… here are the scenarios with which the authorities have already been confronted and which should alert professionals in the sector.
Tens of thousands of suspicious transaction reports pile up on the desks of Tracfin agents, these super money laundering detectives. Among these confidential notes, only 178 come from real estate agents. However, the sector is a privileged target for networks to hide dirty money. Stories of scams. Purchase of property by a “Politically Exposed Person ”. Madame X approached a real estate agency in the south of France to buy an exceptional property for 3 million. Her husband, who lives like her in a country outside the European Union, will transfer the funds from his account located in a tax haven. Finally, after a declaration of suspicion and research by Tracfin agents, it turns out that Mrs X is the wife of a “Politically Exposed Person” (PPE): her husband is known in his country for having diverted from the money, as attested by the Financial Intelligence Unit of his country of origin. The couple is also subject to an asset freeze procedure.
Buying property with hidden money . Madame X, tenant of her apartment, receives a letter from her landlord informing him that he is going to sell his property. The young woman, unemployed and receiving unemployment benefits, clearly has no financial assets and is not able to respond to the purchase proposal of her owner. However, a few weeks later, they come to an agreement and the owner grants him, via three IOUs, a loan worth 385,000 euros, an amount below the market price. Alerted by the real estate agency, Tracfin agents quickly discovered large cash deposits in the tenant's bank accounts, which did not match her income or her tax return. She is suspected of income concealment and tax evasion.
Purchase of property on behalf of a third party . A 21-year-old maintenance technician visits an apartment offered for sale at 490,000 euros. He explains that he will finance his project without a loan, but with own funds. During the visit, an older woman, who accompanies him, leads the discussion, gets excited and asks the real estate agent if part of the sale can be paid for in cash. Informed, Tracfin agents quickly realized that the assets and income of the young maintenance technician did not correspond to the financing terms.
On the other hand, the accounts of her companion and her husband, managers of a vehicle import-export SME, are suspicious. Large amounts are debited from the company's account and then credited to their personal account. And their tax declaration proves that they reduce their turnover. Tracfin's investigation will show that the maintenance technician was a "straw man" used to screen and allow the couple to invest with sums embezzled from the company.
The term "money laundering" would originate from the laundry chain used by Al Capone: the "Sanitary Cleaning Shop" in 1928 which served as a legal front for its illicit activities.
(Alfonso Capone in Italian) said Al Capone, born in Brooklyn (New York) on January 17, 1899 and died in Miami Beach (Florida) on January 25, 1947, is one of the most famous American gangsters of the twentieth century. Nicknamed "Scarface" ("Scarred"), he made his fortune in the trafficking of contraband alcohol during prohibition in the 1920s.
Alphonse Capone
Real estate at the heart of money laundering in France
Bercy is putting pressure on real estate agents to raise more questionable files.
Too many shady real estate deals still fall through the cracks.
It is a sieve into which dirty money, organized crime and even terrorists infiltrate. The real estate sector and its million annual transactions escape the radar of the super financial detectives of Bercy. In this cutting-edge service in charge of "processing intelligence and taking action against clandestine financial circuits", called Tracfin, better results are demanded. And in particular a very clear improvement in the collaboration of those who see everything that is happening: real estate agents. The procedure is simple: in the event of suspicion, they are required to send a note to the Tracfin agents. But what are the profiles at risk? A memo that has just been updated and will be presented this Tuesday to professionals draws a robot portrait of the customer to be wary of.
Officers risk a heavy fine
They have been supposed to monitor, verify, alert for 20 years. Yet very few real estate agents do. In 2017, out of the 70,000 suspicious transaction reports received by Tracfin, only 178 came from real estate agents. A ratio of 0.25%! Bankers and insurers are by far the top of the class, with 80% of declarations. So real estate agents should roll up their sleeves. Behind the scenes, agents from the Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF) are on the lookout. And control! "A professional who has not alerted Tracfin during a suspicious sale risks a heavy fine, up to 5 million euros, and a temporary ban on exercising," warns Virginie Beaumeunier, its general manager.
"A real estate agent is not paid to do that"
Invited this Tuesday to discuss their obligations, real estate agents defend themselves. "I'm not sure that we can do better, loose Laurent Vimont, head of the Century 21 network. A malicious person who seeks to launder money does not go through an agency: you have to show a white leg , give his identity papers as well as information on the financing which can be a source of complication. »Would money laundering in the real estate sector be exaggerated by Tracfin? Eric Allouche, the director of the ERA network, does not go that far. “It is normal to fight against money laundering. "However, the network boss is annoyed by these" heavy red tape "that is imposed on professionals. “Making a declaration of suspicion takes time, requires work,” he lists. However, a real estate agent is not paid to do that, he has to run his agency. "
Each note can initiate an investigation
But all the networks recognize that training could improve the system. "Especially with the high turnover in our sector, we are not immune to having a poorly trained real estate agent who, seduced by the lure of money, forgets to make a statement", recognizes Fabrice Abraham, the president of the Guy Hoquet network. But what good is this espionage around the corner? To dismantle networks. Each note can launch an investigation, or complete an ongoing investigation. Last year, the 70,000 declarations made it possible to transmit 2,700 files to justice, the tax administration or the various intelligence services. Often the result is the dismantling of money laundering networks.
By / Aurélie Lebelle