Transparency International has identified the United States as highly susceptible to money laundering through its real estate sector.
Despite the country’s advanced law enforcement capabilities, factors such as the ease of concealing property ownership through anonymous companies contribute to this susceptibility.
Transparency International in the report titled ‘Opacity in Real Estate Ownership (OREO) Index’, assessed 24 major economies to determine which jurisdictions make it easiest to hide illicit money through real estate investments.
The ranking is based on two key factors: the availability of real estate ownership data and the strength of anti-money laundering regulations in the sector.
Argentina, Australia, Brazil, Canada, China, England & Wales, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Mexico, Norway, Panama, Russia, Singapore, South Africa, South Korea, Spain, Turkey, the United Arab Emirates and the United States were the countries that were assessed.
The report identifies the United States, Australia, and South Korea as the worst-performing countries among the 24 assessed.
This is mainly due to the absence of anti-money laundering regulations for key professionals in real estate transactions, making these jurisdictions highly vulnerable to money laundering through property investments.
Transparency International’s assessment found that in some of the worst-performing jurisdictions—Australia, China, England & Wales, Japan, Türkiye, and the UAE—properties can be purchased without any oversight body.
In Russia and the UAE, real estate transactions can be conducted entirely in cash, creating significant loopholes for corrupt individuals to anonymously hide illicit funds without any oversight or scrutiny.
“We have known for a long time that real estate is a magnet for dirty money,” Maira Martini, chief executive officer of Transparency International, said.
“And yet, the OREO Index shows that countries, including those that have recently reformed their systems, still have major gaps in their systems. It is no wonder that real estate markets are bursting with dirty cash, making cities around the world unaffordable.”
The report found that no country achieved a perfect score. However, South Africa, the only African nation on the list, ranked as the best-performing country among the 24 jurisdictions assessed by Transparency International.
South Africa’s strong performance was attributed to the government’s efforts in collecting extensive data on real estate transactions, enforcing strict regulations against money laundering, and implementing “fairly decent” anti-money laundering rules for the real estate sector.
Ms Martini added, “While progress has been slow, the OREO Index also shows that international anti-money laundering standards can have an impact. We urge standard-setter bodies such as the Financial Action Task Force and global fora such as the G20 to develop new policies and guidelines to help countries address remaining loopholes.”
