Property fraud and money laundering

Paul, to start us off, can you tell us just how big an issue money laundering is in the real estate sector today?

Yeah.

So it's important to say outright, and not particularly satisfying to hear, but the true amount is unknown, uh [chuckles], unfortunately.

So criminals are, of course, they're trying to hide as much money as possible into the real estate sector, and some of it does get uncovered.

That's mostly when cases are prosecuted, when they go to court.

But it's estimated that officials only uncover a very small amount of the money that criminals actually do funnel into real estate.

To kind of give a few figures just so we have a, a bit of an idea, a US study from a couple of years back estimated that at least 2.3 billion was laundered through America between 2015 and 2020 into the country's real estate sector.

That came from analyzing just about 100 cases.

So the real amount was likely much, much higher.

So- To kind of sum it up, I guess, we're not 100% sure as to, you know, the exact figures involved, but the problem almost certainly runs into billions and billions of dollars per year in big markets like the US, and it's also a major problem in other countries like the UK, Canada, Australia, where again, it's likely, you know, you're talking billions of dollars.

Wow, that's, that's huge.

And I guess it's important to say that when we're looking at real estate fraud here, what we're really talking about is money laundering within the real estate industry.

Because presumably, given the scope of the sector, crime within it can take many forms, large and small.

Can you explain to me how that happens and how and by whom?

Yeah.

So there are a couple of different ways that criminals buy real estate.

One of the most common ones, I suppose, is that they would conceal their identities in some way.

So this could be done using a company or a trust.

So essentially, instead of the criminal looking to go to a mortgage broker or something themselves and using their, their kind of own identity, they will instead set up a business called Legitimate Property Investments Incorporated, or something like that.

So the property then would be bought in the company's name and not in the criminal's name.

So that's a very common way that criminals would look to kind of funnel money into the real estate sector.

Then another very common one as well is by using fraudulent documents to get a mortgage.

This is something which has been on the rise seemingly in the past couple of years, especially with technology making it much easier to falsify these documents.

So this could be financial statements or, like, a tax assessment.

Essentially, criminals are falsifying them in some way and then using those to get mortgages, and then kind of buying properties that way.