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But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got i

by vl 5y ago

But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got it from.

hef19898 5y ago
That seems to explain it rather good (not that I would be able to tell, but it real estate money laundering is problem): https://www.icij.org/investigations/fincen-files/a-kleptocrats-dream-us-real-estate-a-safe-haven-for-billions-in-dirty-money-report-says/ https://www.icij.org/investigations/fincen-files/a-kleptocra... That is an interesting bit from the lined article: "One of the biggest issues that the report cites is the use of geographic targeting orders as the U.S.’s primary tool to identify potential money laundering events. GTOs impose reporting requirements on real estate purchases, but only in narrowly targeted scenarios — large cash purchases by legal entities in specific geographic areas."
kccqzy 5y ago
With a mortgage certainly the bank will ask where your down payment comes from. But do all-cash buyers really get asked where the money comes from?
- heurisko 5y ago
  In the UK at least, solicitors will ask where the money came from to comply with anti money laundering regulations. https://www.theguardian.com/money/2013/feb/20/cash-buyer-solicitor-paperwork https://www.theguardian.com/money/2013/feb/20/cash-buyer-sol...
jb827 5y ago
I reckon flipping houses and renovating is one way - Buy an older house. Spend dodgy money into some serious renovations. Sell house for <original price> + <cost of renovation>. Money washed.
mejutoco 5y ago
I imagine you can pay some extra in cash to get the property while the official price is lower, but still realistic. You are then getting an asset that you would otherwise not get, using cash in part.
refurb 5y ago
When I bought recently, I wasn't asked the source of my downpayment as long as I could show I had the funds going back at least 3 months. I presume they do some sense check against income sources (i.e. if you have $300k down payment, but only make $30k/yr and you're 25, they'll ask where it came from), but otherwise if it was "seasoned" (you could show you had such funds over some time period), they didn't dig further. Now that's much more scrutiny than lenders were showing back in 2007. Back then, if you had cash in a bank account, all good. In terms of laundering, it's basically passing money through enough legitimate transactions as to conceal the source. So let's say you have $1M in money from illegal activities. If you can get it into a foreign bank account, you could transfer it to the US, buy a house, sell 2 years later. If anyone asked where the money came from you've got a few years history of legitimate investments.
eurasiantiger 5y ago
It’s typically done at the construction stage, with high-rise buildings and other assets more valuable than a family home. Banks or other lenders are typically involved. Here’s one example. https://newrepublic.com/article/143586/trumps-russian-laundromat-trump-tower-luxury-high-rises-dirty-money-international-crime-syndicate https://newrepublic.com/article/143586/trumps-russian-laundr...

by vl 5y ago

But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got it from.

hef19898 5y ago

That seems to explain it rather good (not that I would be able to tell, but it real estate money laundering is problem): https://www.icij.org/investigations/fincen-files/a-kleptocrats-dream-us-real-estate-a-safe-haven-for-billions-in-dirty-money-report-says/ https://www.icij.org/investigations/fincen-files/a-kleptocra... That is an interesting bit from the lined article: "One of the biggest issues that the report cites is the use of geographic targeting orders as the U.S.’s primary tool to identify potential money laundering events. GTOs impose reporting requirements on real estate purchases, but only in narrowly targeted scenarios — large cash purchases by legal entities in specific geographic areas."

kccqzy 5y ago

With a mortgage certainly the bank will ask where your down payment comes from. But do all-cash buyers really get asked where the money comes from?

heurisko 5y ago
In the UK at least, solicitors will ask where the money came from to comply with anti money laundering regulations. https://www.theguardian.com/money/2013/feb/20/cash-buyer-solicitor-paperwork https://www.theguardian.com/money/2013/feb/20/cash-buyer-sol...

jb827 5y ago

I reckon flipping houses and renovating is one way - Buy an older house. Spend dodgy money into some serious renovations. Sell house for <original price> + <cost of renovation>. Money washed.

mejutoco 5y ago

I imagine you can pay some extra in cash to get the property while the official price is lower, but still realistic. You are then getting an asset that you would otherwise not get, using cash in part.

refurb 5y ago

When I bought recently, I wasn't asked the source of my downpayment as long as I could show I had the funds going back at least 3 months. I presume they do some sense check against income sources (i.e. if you have $300k down payment, but only make $30k/yr and you're 25, they'll ask where it came from), but otherwise if it was "seasoned" (you could show you had such funds over some time period), they didn't dig further. Now that's much more scrutiny than lenders were showing back in 2007. Back then, if you had cash in a bank account, all good. In terms of laundering, it's basically passing money through enough legitimate transactions as to conceal the source. So let's say you have $1M in money from illegal activities. If you can get it into a foreign bank account, you could transfer it to the US, buy a house, sell 2 years later. If anyone asked where the money came from you've got a few years history of legitimate investments.

eurasiantiger 5y ago

It’s typically done at the construction stage, with high-rise buildings and other assets more valuable than a family home. Banks or other lenders are typically involved. Here’s one example. https://newrepublic.com/article/143586/trumps-russian-laundromat-trump-tower-luxury-high-rises-dirty-money-international-crime-syndicate https://newrepublic.com/article/143586/trumps-russian-laundr...