Feds Say Money Laundering Rare in Residential Real Estate
WASHINGTON -- Money laundering is not common in the residential real estate industry and most of those involved in the practice are not affiliated with real estate-related business, according to a U.S. Treasury Department report.
About 20% of the complaints contained in suspicious activity reports filed with the department involved money laundering or structuring. Of those 20%, 11% involved other illicit activities such as tax evasion, fraud and identity theft.
Reports of suspicious activities flattened in the last year, after increasing from 2002-2005, according to the report by the department's Financial Crimes Enforcement Network. The analysis attributes the earlier rise to the increase in residential real estate activity, stemming from lower mortgage rates.
The report also predicted that the shift away from adjustable-rate mortgages will have a mixed impact on future levels of financial irregularity in the residential real estate market. "Though the refinancing of these loans would probably not pose as high a level of risk for loan fraud and money laundering as would new loans, such a wave of refinancing could correlate with an increase in suspicious activity report filings reporting money laundering associated with the residential real estate sector," the report concluded.
The network conducted its analysis by randomly picking 1,095 of the 195,253 suspicious activity reports filed in 2006. Of those reports, 747 involved residential real estate and 151 of those involved structuring or money laundering.