Links to trade in luxury goods and TBML operators exposed in GFI’s report on real estate money laundering

Money launderingYachts, private jets, horses, cars, jewellery, high-end watches and art are amongst the assets traded to enable kleptocrats, criminals, sanctions evaders and corrupt government officials to execute global money laundering schemes according to a new report published by Global Financial Integrity (GFI).

The report focuses mainly on US real estate as a preferred destination to hide and launder proceeds from illicit activities. But Acres of money laundering: Why US real estate is a kleptocrat’s dream also makes it perfectly clear that money launderers routinely choose to trade in luxury goods to disguise ill-gotten gains while some of the world’s biggest trade-based money laundering (TBML) schemes have finished up funding real estate purchases.

Real estate analysis

Analysing 125 cases reported between 2015 and 2020, GFI’s calculations reveal that at least US$2.3 billion was laundered through the US real estate sector in 56 cases.

The Washington-based think-tank focused on illicit trade, money laundering, illicit financial flows and corruption reckons that during the same period at least US$1.1 billion was laundered through real estate in the UK in 34 cases and US$626.3 million was similarly laundered in Canada in 35 cases.

Luxury goods

But the report points out that these calculations only reflect the value of the real estate assets that were part of the money laundering schemes and many of the reported cases included money laundering through the purchase of big-ticket items such as yachts, private jets, horses, cars, jewellery, high-end watches and art.

Since 2016, the U S Department of Justice has filed a series of forfeiture suits seeking to seize over US$1.7 billion of such assets.

Zong’s TBML scheme

The report cites the case of Kenneth Zong who helped the Iranian government transfer US$1 billion to various businesses and individuals around the world and laundered US$10 million through real estate purchases in North America.

Zong allegedly concocted a scheme involving money banked by Iranians in Dubai that he would then remit to South Korea and then to several countries, including the US and Canada.

False documents

To make the scheme seem legitimate, Zong allegedly engaged in TBML, at the same time defrauding South Korean banks, by submitting false documents purporting to show that Iranian companies were doing legitimate business with Korean companies.

Based on these false documents, Zong and fellow conspirators succeeded in unlawfully transferring approximately US$1 billion of Iranian-owned funds out of South Korea and into the world’s financial markets.

Modi’s US$1.7 billion fraud

GFI’s report also looks at how South Asia’s largest TBML fraudster, fugitive jeweller Nirav Modi ,invested stolen funds in New York real estate.

Modi, who is wanted in India for a US$1.7 billion bank fraud and TBML scheme, contrived with family members to transfer the New York properties to a trust established by his sister for the benefit of his wife and children.

GFI’s report, Acres of money laundering: Why U S  real estate is a kleptocrat’s dream, can be found here.

Categories: Trade Based Financial crimes News

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