When dirty money needs a bath, real estate is the luxury spa. Property doesn’t ask questions.

Here’s how criminals use property to clean and park dirty money:

🏢 Shell company purchases - anonymous entities buy property through layers of companies, trusts, and nominees. No mortgage means no lender scrutiny. The asset quietly appreciates while illicit funds rebrand themselves as “real estate investment”.

💵 All-cash transactions - large cash purchases sidestep lender due diligence entirely. FinCEN found that in some U.S. metro areas, 42% of flagged all-cash real estate buyers were already linked to previous suspicious activity reports. Coincidence? Hardly.

🔄 Property flipping for integration - buy low with dirty cash. Renovate. Sell high through legitimate channels. The profit exits as documented capital gains. One flip can turn criminal proceeds into tax-declared wealth.

🌍 Cross-border layering - funds hop jurisdictions before landing in property. A bribe moves from Africa to the Caribbean to a Miami condo – each transfer adding opacity, each step complicating enforcement.

🏗️ Development schemes - construction projects absorb large sums fast. Illicit funds mix with legitimate investor capital. When units sell, everyone gets paid – and dirty money emerges indistinguishable from clean returns.

📈 Value storage and sanctions evasion - property holds value across borders and political regimes. For kleptocrats and sanctioned individuals, a luxury apartment is often safer than a bank account that can be frozen overnight.

The scale is staggering.

Between 2020 and 2024, U.S. financial institutions filed over 17,000 suspicious activity reports tied to real estate – representing more than $53 billion in suspicious transactions. Treasury Secretary Janet Yellen summed it up bluntly: the best place to hide and launder ill-gotten gains is actually the United States. Globally, real estate features in roughly 25% of money laundering cases. Studies suggest illicit property investment can inflate local housing prices by up to 7.5%^[ref].

Advice – spotting some of the red flags

- For AML and compliance teams - Watch for all-cash purchases via opaque entities, especially in luxury markets. Difficult-to-verify beneficial ownership should trigger enhanced due diligence. Multiple property acquisitions in short timeframes by related entities deserve attention.

- For real estate professionals - Know your client – not just the company name on the contract. Be cautious with buyers who rush to close, show little interest in property details, or rely on complex payment structures. Third-party funding and reluctance to meet in person are warning signs.

- For regulators and policymakers - The U.S. remains the only G7 country where real estate professionals are not subject to comprehensive AML obligations. FinCEN’s expanded rules for non-financed purchases are a start - but enforcement is where the real test lies.

Real estate doesn’t just hide money. It legitimizes it.

And that legitimacy comes at a price - inflated housing markets, empty neighborhoods, and global financial stability quietly undermined by unchecked illicit finance.