Three ways to stop money laundering through real estate

Three ways to stop money laundering through real estate

Around the world, buying property is a favourite method for the corrupt to launder their ill-gotten gains.

When corrupt officials take large bribes, embezzle funds or otherwise steal money from the countries they are meant to serve, the money usually has to be cleaned before it can be enjoyed. As well as offering the trappings of luxury and symbols of status, property bought with dirty money can be sold, effectively disguising the corrupt origins of the funds. In some places in particular, it is easy to hide the real owner of a property: anonymous companies can be used to purchase property, meaning even law enforcement don’t know who owns the house next door.

Doors wide open: corruption and real estate in four key markets (2017)

Read More

Rich countries are often the recipients of illicit investment. According to our research, at least £4.4 billion (US$5.5 billion) worth of property in the UK has been bought with suspicious wealth. In Germany, around US$30 billion of money with unclear origins entered the real estate market in 2017 alone. In Canada, at least CAN$20 billion (approx. US$15 billion) appears to have entered the housing market in the Greater Toronto Area over the past 10 years without oversight from anti-money laundering authorities.

Investigative journalists and law enforcement investigations have exposed how corrupt officials take advantage of loose regulation of the property market.

Zooming in on West Africa highlights some shocking examples. In 2017, Teodorín Obiang, the Vice-President of Equatorial Guinea, which has one of Africa’s highest poverty rates, had his €107 million (US$118 million) mansion in Paris confiscated after he was found guilty by a court in France of money-laundering and embezzlement. President Obiang, Teodorin’s father, currently hosts Yahya Jammeh, the exiled former president of The Gambia, who together with his associates stole nearly US$1 billion from state resources during his time in power. Jammeh and Obiang owned luxury mansions next door to each other in Maryland, USA.

James Ibori, former governor of Delta State in Nigeria between 1999 to 2007, was sentenced to 13 years in prison after admitting fraud of nearly £50 million (US$66 million). The judge in the case said that this figure is ludicrously low and that the real amount may be in excess of another £200 million (US$245 million). Ibori used shell companies in multiple secretive jurisdictions to move the funds, which ended up in property and luxury goods around the world.

The glitzy foreign mansions of presidents and high-powered officials might make the headlines, but that’s not the entire story. In Zambia, in southern Africa, mystery surrounds the ownership of 48 apartments in the capital, Lusaka. There are suspicions that they are being used to hide money stolen through corruption.

However, there are concrete measures that make it significantly more difficult for the corrupt to stash their dirty money in property.

Asset Declarations

More transparency about what public officials own makes it harder for them to secretly amass wealth in office through corrupt practices. At the very least, it allows activists and the media to ask, “How did you afford that mansion on your public salary?”

Money Laundering 101 | Part 1: Asset Declaration

Public declarations of assets before and after officials are in office should be universal practice. In Sri Lanka, we’ve worked with members of parliament to take historic steps towards such disclosures becoming the norm.

Regulating gatekeepers

Real estate transactions are rarely between just the buyer and seller. Agents, banks and brokers all play their role, and have opportunities to stop corrupt money entering the market. In Ibori’s case, his London-based solicitor helped him set up the elaborate company structures that allowed him to siphon money out of the state coffers.

Money laundering through real estate is much harder when these professions act with integrity and are required to conduct checks on the real owner and the source of funds. They should have access to all the information they need, and should face consequences for not flagging suspicious transactions.

Money Laundering 101 | Part 2: Gatekeepers

Land Registers

Finally, a central register online that simply shows who owns what property would go a long way to creating greater accountability over the origins of money in the market, particularly when it includes the names of real beneficiaries of the property. This would make investigations by journalists and civil society much easier, and also help law enforcement join the dots as they pursue cases.

Money Laundering 101 | Part 3: Land Registers

For any press enquiries please [email protected]


Support Transparency International

Support Us

Power for Nigeria’s people

Bribery in electricity supply ruins livelihoods, but Nigeria’s residents are speaking out.

The terrible consequences of police corruption in South Africa

What do we do when those mandated to protect us are serving other interests than public safety and security? In South Africa, police corruption leaves the public exposed to high rates of crime, and causes distrust of the police service while allowing crime to flourish.

Why do DRC citizens report such high levels of corruption?

People's experiences with corruption in the DRC are far worse than in most other African countries. Why is corruption so prevalent in the DRC, why is bribery so commonplace and why do two thirds of citizens feel powerless?

Announcing the theme for the 19th edition of the International Anti-Corruption Conference (IACC)

Designing 2030: Truth, Trust & Transparency

Protecting Africa’s wildlife from corruption

When they deliberate over amendments to the global wildlife trade regime, CoP18 must address impunity for illegal timber trafficking in Africa as a matter of high priority.

How the US can help Mongolia get to grips with corruption

A series of bi-lateral meetings and a proposed trade agreement present an opportunity for the US to promote rule of law and an independent judiciary in Mongolia.

Blood diamonds and land corruption in Sierra Leone

A community in Sierra Leone has created powerful short videos documenting their experiences of corruption, forced evictions and a botched resettlement programme at the hands of a multinational diamond mining company.

Countries must be more transparent when investigating transnational corruption

Supervisory and justice systems should be transparent and accountable so that the public can assess their performance.

Resilient institutions

Reducing corruption is an important component of the sustainable development agenda, and one that all state parties have an obligation to address. Although corruption is often thought of as a ‘third-world problem’, institutions in the Global North play an important role in the corruption cycle, and are therefore an essential part of the solutions.

In whose interest? Political integrity and corruption in Africa

What accounts for the wide disparity in peoples’ perceptions of the integrity of elected representatives in different countries? In this piece, we will to look at various forms of political corruption, how they manifest in African countries and what can be done to promote political integrity.

Why rather

Real Lives, Real Stories: Nepal

This story is part of Real Lives, Real Stories, a series written by staff from our national chapters in the Asia Pacific region. Stories…

The 5 best Netflix series about corruption (that aren’t House of Cards)

Everyone knows House of Cards as the Netflix show about corruption, but over the last few years, the popular streaming service has…

Follow us on Why rather