Common AML Schemes: Real Estate

Money laundering and financial crimes pose large risks to financial firms, both from a reputational and regulatory perspective. However, these schemes can take many forms making it difficult for firms to do their due diligence to protect themselves and their investors.

We’ve put together a series of the most common forms of money laundering and financial crimes and what firms can do to combat each one.

Money Laundering & Real Estate

Money laundering is the process of disguising the proceeds of criminal activity as legitimate funds, in an effort to conceal their illicit origin. One way that individuals may try to launder money through real estate is by using the property as a vehicle to transfer the illicit funds.

For example, an individual may purchase a property using illicit funds, and then sell the property at a later date for a higher price. By doing so, the individual may be able to make it appear as though the profit from the sale was the result of a legitimate real estate investment, rather than the proceeds of criminal activity. Another way that real estate may be used for money laundering is through the use of shell companies or trusts. These entities may be used to purchase properties on behalf of individuals or groups who wish to conceal their ownership, or the true source of the funds used to purchase the property.

Real estate can also be used to launder money through the use of mortgage fraud. In this type of scheme, an individual may use false or misleading information to obtain a mortgage on a property, then use the proceeds of the mortgage to purchase the property with illicit funds. By doing so, the individual may be able to conceal the true source of the funds used to purchase the property.

It is important to note that money laundering is a serious criminal offense and is strictly prohibited. Financial institutions and real estate professionals are required to implement robust anti-money laundering (AML) policies and procedures to detect and prevent such activities. Individuals who engage in money laundering may face significant legal consequences, including fines and imprisonment.

Read about other common AML schemes

• Account takeover
• Business email compromise
• Environmental, social, and governance (ESG)
• Investment Companies

How we help

ACA’s AML and Financial Crimes practice offers advisory services and solutions to assist financial services firms in addressing threats and regulatory obligations associated with financial crime. We work with investment advisers and broker-dealers, among others, to assess risk, develop policies and procedures, and perform independent tests and gap analyses.

Our support can incorporate our ComplianceAlpha® regulatory technology and managed services to help your firm meet its data screening, ongoing monitoring, remediation and reporting needs.

Reach out to your ACA consultant, or contact us to find out how ACA can help you meet your AML requirements. 

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