The Financial Crimes Enforcement Network (FinCEN) issued an alert for the commercial real estate sector, stating potential investments may be used by Russian elites, oligarchs, their family members, and their entities to evade sanctions.
In an agency assessment, it was found these individuals and their proxies are likely attempting to evade sanctions by exploiting vulnerabilities in the U.S. commercial real estate market. The relative stability of this market and the high value of commercial real estate properties can generate a steady income and store large amounts of wealth. Commercial real estate transactions involve complex financing methods and opaque ownership structures, causing diminished transparency that can facilitate bad actors’ hiding of illicit funds in these types of investments.
“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,” FinCEN Acting Director Himamauli Das said in a release.
“FinCEN is committed to exposing the channels that Russian elites, oligarchs, and their proxies may use to move or hide funds,” he added. “Today we are identifying red flags and typologies in commercial real estate transactions that financial institutions can use to remain vigilant in monitoring, detecting, and reporting suspicious activity that may be indicative of sanctions evasion by sanctioned Russia elites, oligarchs and their proxies.”
The agency wanted to remind financial institutions of their Bank Secrecy Act reporting obligations. It stated this new alert coincides with the U.S.’s efforts to isolate sanctioned Russian individuals from the international financial system, and the Department of the Treasury’s endeavors to increase transparency in the real estate market to prevent corrupt elites and other illicit actors from hiding ill-gotten funds.
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