WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) has issued an alert to financial institutions on potential investments in the U.S. commercial real estate sector by sanctioned Russian elites, oligarchs, their family members, and the entities through which they act.
The alert lists potential red flags and typologies involving attempted sanctions evasion in the commercial real estate sector, and reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations.
“The new alert complements ongoing U.S. government efforts to isolate sanctioned Russian elites, oligarchs, and their proxies from the international financial system, and is part of a broader effort by the U.S. Department of the Treasury to increase transparency in the U.S. real estate market to prevent corrupt elites and other illicit actors from hiding their ill-gotten wealth,” the FTC said.
‘Exploiting Vulnerabilities’
FinCEN said it has assessed that sanctioned Russian elites and their proxies are “likely attempting to evade sanctions by exploiting vulnerabilities in the U.S. commercial real estate market. Commercial real estate transactions routinely involve highly complex financing methods and opaque ownership structures that diminish transparency in a way that can allow bad actors to hide illicit funds in commercial real estate investments. Additionally, the relative stability of the U.S. commercial real estate market and the high value of commercial real estate properties can provide illicit actors with a way to generate a steady income and store large amounts of wealth.”
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