Real Estate: Where Russian Sanctions Go To Die

There is nothing, absolutely nothing, that NATO countries won't do to punish Russian oligarchs for their support for Putin. To do otherwise is not an option. It's a moral imperative.
Well, they'll do anything short of cutting into profits for the super wealthy that have invested in real estate.

“Thanks to international pressure and the economic restrictions that more than 30 countries have imposed on Russia for its brutal war against Ukraine, sanctioned Russian elites are increasingly left with fewer options for moving and hiding their ill-gotten wealth,” Himamauli Das, the acting director of the Financial Crimes Enforcement Network, said in a statement. “FinCEN is committed to exposing the channels that Russian elites, oligarchs and their proxies may use to move or hide funds.”

And if you believe that I've got a bridge to sell you. The reality is that financial regulators and financial law enforcement is both outgunned and has their own institutions fighting against them.

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That’s because there is very little the government can do to find out who owns what real estate in the U.S., which has become a “destination of choice” for money launderers throughout the world, said Louise Shelley, the director of the transnational crime and corruption center at George Mason University, who has been an expert witness about how Russian money is laundered through real estate.

At a minimum, from cases reported in the last five years, more than $2.3 billion has been laundered through U.S. real estate, including millions more through other alternative assets, like art, jewelry and yachts, according to a report in August by Global Financial Integrity, a nonprofit group that researches illicit money flows.
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Experts say oligarchs can benefit from major disclosure loopholes in private equity and luxury goods.
“There’s this misunderstanding that you can just go out and seize these mansions, seize these yachts. For so many of them, it’s a complete black box,” said Casey Michel, the author of “American Kleptocracy: How the U.S. Created the World’s Greatest Money Laundering Scheme in History.”
“The U.S. provided all the tools of anonymity the oligarchs needed,” he said, and there’s no immediate executive action Biden can take to fix it.

The first thing everyone needs to understand is that international money laundering isn't something that is being done in some hot, third-world nation. The 2nd most popular destination for laundering money in the entire world is the good 'ol U.S of A.
We are a nation of tax havens and tax loopholes.

While the same is true to some extent of other nations with federal systems, and of the intricate financial network of the United Kingdom and its overseas territories, the United States offers unparalleled opportunities for concealment, lax enforcement, and legal obfuscation.

It doesn't matter that those states are mostly Republican states, because the only color that matters here is green. Plus, while those states are the entry points into the U.S. of dirty money, most of that cash goes elsewhere. An extremely large chunk of it winds up in the most popular way to launder money in the world - real estate.
This mountain of dirty overseas cash is having all sorts of negative impacts on working class families at home.

America’s cities are being bought up, bit by bit, by anonymous shell companies using piles of cash. Modest single-family homes, owned for generations by families, now are held by corporate vehicles with names that appear to be little more than jumbles of letters and punctuation – such as SC-TUSCA LLC, CNS1975 LLC – registered to law offices and post office boxes miles away. New glittering towers filled with owned but empty condos look down over our cities, as residents below struggle to find any available housing.

All-cash transactions have come to account for a quarter of all residential real estate purchases, “totaling hundreds of billions of dollars nationwide,” the Financial Crimes Enforcement Network – the financial crimes unit of the federal Treasury Department, also known as FinCEN – noted in a 2017 news release. Thanks to the Bank Secrecy Act, a 1970 anti-money-laundering law, the agency is able to learn who owns many of these properties. In high-cost cities such as New York, San Francisco, Los Angeles and Miami, it’s flagged over 30% of cash purchases as suspicious transactions.

Those billions of dirty dollars that are buying up housing is having a devastating effect on the working class in this country.
Of every possible type of investment, real estate is the preferred method for laundering money. A report called Acres of Money Laundering: Why U.S. Real Estate is a Kleptocrat’s Dream came out two years ago.
Limited Liability Companies (LLCs) shield property owners from personal liability while obscuring their identities.

The World Bank found that the U.S. was the preferred destination for corrupt politicians from around the world to set up companies to move or hide dirty money, and that this is “especially troubling given the huge number of legal entities formed in the United States each year – around ten times more than in all forty-one tax haven jurisdictions combined.”
...Even when inquiries came from clients that were similar to a front for terrorism or for those that should have raised a corruption risk, clients were on-boarded. The evidence suggests that company service providers are not interested in who you are or what you might be doing, and current U.S. laws do not require them to be. You have to provide less information to obtain a library card than incorporate a company in every U.S. state.

Guess what? These massive loopholes for laundering dirty money haven't been plugged by Democrats or Republicans. In fact, almost no one is talking about them at all.

Not that the U.S. is entirely alone in this regard. Yesterday the news revealed that Europe has failed to inconvenience the ability of Russian oligarchs to buy real estate on the French Riviera.

Late last year, however, the Court of Justice of the European Union (CJEU) ruled that the public can no longer access data regarding companies’ real owners, making the already overwhelming task of uncovering hidden assets all the more difficult.

It's curious how all of these nations that are telling their citizens that they must sacrifice (through enormous energy bills, inflation, etc.), while at the exact same time they are making it EASIER for Russian Oligarchs to launder money in their nations.

Just weeks after Cyprus launched its provisional public register, investigative journalists uncovered a network of shell companies controlled by a man likely acting as a sanctioned Russian banker’s proxy.

However, we’re now hearing reports that Cyprus has stopped processing requests for information in light of the ruling, joining seven other countries that have already shut down public access to their registers.

It's almost enough to make someone think that the sanctions aren't about crushing the Russian economy.
It's almost enough to make someone think that this anti-Russian hysteria is hypocritical and about something entirely different than defending democracy. Like maybe a reserve currency status.
It's almost enough to make a person think that massive profits from energy companies might have something to do with our support for Ukraine with tens of billions of dollars worth of arms that we don't bother to track.

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@gjohnsit I have heard today!
Thanks for bringing it!

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"We'll know our disinformation program is complete when everything the American public believes is false." ---- William Casey, CIA Director, 1981

@on the cusp
Bad take after bad take

Markos wants to tell "his story".

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@gjohnsit

who grew up to be a big dick. The irony of the #1 rule at DKos, “don’t be a dick”, was never more contested than by Markos himself, even though many tried their best.

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@janis b

And succinct, Janis. Thanks for the chuckle!

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Rhett Butler contemptuously reminded Southern secession hot heads “There’s not a cannon factory in the whole South.”

It is not until the tide goes out that you discover who has been swimming naked.

janis b's picture

@snoopydawg

It's either I mock him or throw something in outrage.

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@gjohnsit On a more positive not Kos hasn't celebrated miners getting black lung all week that I've noticed.

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janis b's picture

is flowing through real estate. I know people living in Dubai who’ve had to move recently because their rent was increasing by 50%, primarily due to wealthy Russians moving in or buying up.

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