Money laundering is a crime in which a party that has made a lot of money through illegal means seeks to conceal the nature and source of the funds by using them in another transaction that, at first glance, appears to be legitimate. Government agencies and professional groups say that people often try to conceal ill-gotten money through the real estate industry.
The National Association of Realtors identifies three stages of money laundering in real estate. The first is called placement: The party introduces illegally acquired money into the financial system through small deposits or purchases of money orders or other financial instruments. Next is layering, in which the party disguises the origin of the money through other transactions. Finally, the integration stage returns the money to the original party’s control.
For example, a man might have acquired $10 million through the illegal sale of drugs. He then introduces the money into the financial system through purchasing financial instruments and making a number of bank deposits that are in amounts small enough that they won’t attract too much attention from the authorities. The man adds layers of complexity to his ownership of the funds by creating shell companies that are listed as the owners of the funds. Later, he integrates the funds by pooling some of the financial instruments to make a down payment on a house.
This is just one simple example. Money laundering schemes can be highly complex, and they may involve real estate transactions at any of the three stages.
Professionals in the financial sector and the real estate industry are required to watch out for indications of money laundering when they help customers with transactions, but since some money laundering schemes are so complex, it can be easy to miss the warning signs. It’s also possible to flag a transaction as suspicious when in fact it is legitimate.
People who are accused of money laundering have the right to a defense. Since these cases are so complex, it can be crucial that they seek out help from an attorney with experience analyzing and presenting the intricate evidence in money laundering cases.