- Use of complex loans or credit finance.
- Use of non-financial professionals.
- Use of corporate vehicles.
- Manipulation of the appraisal or valuation of a property.
- Use of monetary instruments.
- Use of mortgage schemes.
- Use of investment schemes and financial institutions.
- Use of properties to conceal money generated by illegal activities.
Interesting as well, is the FATF's identification of the use of cash in a real estate money laundering transaction. FATF suggests that the purchase of 'high-value properties' is one way in which large sums of money is integrated into the 'legal financial system'.
With some areas of London registering up to 80% of property sales to cash buyers, these buyers are seen to be helping to 'prop up the housing market' and in so doing the wider UK economy.
But given the amount of cash transactions, and the eagerness of estate agents and property industry to to transact in cash, it may well be that the UK is perhaps one of the easiest jurisdictions in which to launder money through real estate. The FATF points to nameless 'jurisdictions' that have observed 'a marked increase in demand for high denomination banknotes'. FATF believes that the real estate sector is 'a key contributing factor' in the increase in this demand, as the 'black economy tends to grow during a property boom.' In 2010 the UK government banned the sale of 500-euro notes in the country, with the Serious Organised Crime Agency (Soca) establishing the 500 euro note at 'the heart of money laundering'.
At current exchange rates, the 500 euro note is worth about £430 - eight times more than the £50 note which is the most common high value sterling denomination.
If a drugs gang collects up to £1m in twenties from its clients on street corners, those notes will weigh more than 50kg - about 50 bags of sugar. The equivalent in 500 euro banknotes weighs just over 2kg.
Most of these transactions are conducted international with big money; according to FATF they are increasingly difficult for law enforcement to trace:
The marginal efforts by law enforcement agents and Euro governments will most probably take a while to have the desired effect. The solution for governments may be a 'cashless society' but that appears a long way off from happening, with resistance from consumer advocacy groups, privacy groups and others and no doubt if the cashless society eventually does become a success by then the typical criminal entrepreneur will certainly have found a way to beat the system.