Apparently there is a lot of this in the Vancouver market in BC, Canada:
> In their review of the sector, the Expert Panel estimated that more than $7 billion in dirty money was laundered in B.C. in 2018, and between $800 million and $5.3 billion was laundered through the real estate market, raising housing prices by an estimated 5%.
Canada's utopian conditions for most types of crime are something of an open secret. Most of these crimes then rely on Canada's national industry - money laundering - to clean the money or move it out of the country.
Anyone interested in the tip of the iceberg should read Wilful Blindness by Sam Cooper. And that's relatively old. And mostly just the CCP's part. You still have a rich diaspora of organized crime operating in virtually every corner and geography of Canada, including First Nations, some of which are conveniently located in just the right places to facilitate smuggling of all things between the US and Canada.
And the absoltue best part? It's almost guaranteed that this involves even the Prime Minister's Office. Or at least it seems very clear Trudeau has something to hide due to his absolutely willingness to sacrifice all things in order to avoid a public inquiry into CCP election interference.
Hey now, there is still a part of Canada that makes an honest living (at least until the feds finish destroying the oil industry) money laundering is more an eastern and west coast pass time
This will be a significant boost to London, already home to vast amounts of money laundering via real estate, all facilitated by well established networks involving thousands of middle class professionals and the UK's crown dependencies with convenient secrecy laws, nominee directors etc. to conceal beneficial ownership. 70% of the apartments in most premium developments are owned offshore, many with concealed ownership -- 11% of all of the properties in Westminster alone.
I recommend the following books by Oliver Bullough:
Doesn’t solve the problem of LLCs owning property. I buy a property with an LLC. I then sell the LLC to another individual. Property remains owned by the LLC. No title transfer tax, no fees, etc.
Prop 13 in California. Its purpose was to lower the tax burden on commercial real estate in perpetuity, and they did this by throwing in a bone for Grandma.
Title transfer/recordation is taxed in lots of jurisdictions, this is a tax loophole that only people savvy enough to buy properties with LLCs can use.
This is highly dependent on which state you're in though.
Off the top of my head: value is tied to appraisal which happens during a sale. Land values wouldn't change to reflect local demand and this could depress tax revenue. You'd probably be able to get away with some foolishness regarding the building condition.
> The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill-gotten gains.
Almost good enough. How about we make it harder for non-citizens to buy any homes too? Citizens should get first pick of any dwelling. Many countries do this, even in the west, and it would go a long way in stopping the crazy house prices in the west/southwest. It could even be extended to give preference to people who have established residency in a region. My original low COL hometown was overrun during the California exodus and housing jumped 3x in 5 years. The average house is now well over 6x average income. No resident could dream of affording even the shittiest starter home in this double-whammy environment.
If we’re talking about ideal housing policies, why not extend it to say that individuals seeking primary residence should get priority over investors or secondary purchasers. AirBNB operators are just as predatory if not more in these markets than non-citizens.
How would you implement "get priority"? I think there's already some prioritization in terms of being easier to get loans for a primary residence, and better tax treatment, etc.
But I'm not sure how you'd prevent an investor from outbidding an individual looking to buy a primary residence. You'd have to force the seller to accept a worse offer, and even if such a law was passed I don't think it would survive scrutiny from the courts.
> It could even be extended to give preference to people who have established residency in a region
How do you propose establishing residency if you cannot buy a house? Be forced to rent even if you can buy a house?
Basically what you’re proposing if citizens not being able to have mobility in the country. If you’re born in the economic centers or scenic places, good for you, but in case you were born in middle of Montana, good luck because you can’t go anywhere else.
No, no need to rent. The solution is pretty trivial, and even battle-tested because the problem has already been solved for mortgages (lenders really care whether a piece of property is your primary residence) and for income tax (your primary residence really matters).
Simply require people to attest that they are purchasing the property as their primary residence, with significant penalties for fraud. You can make enforcement and public accountability even easier by ublishing both owner info and a boolean "is_primary_residence" flag in every county's plat maps/parcel database.
I suggest lawmakers could additionally add an x-month grace period, for x =~ 3*<average time on market for like properties in the past 12 months>, which allows people to have a generous period of overlapping ownership while they are moving. Perhaps even allow an auto-appeal process that adds x more time if you can show that you listed the property for sale at around the assessed value and had no offers within say 10% of your asking price.
I say a worse problem than foreigners buying real estate is large private equity groups like Blackstone buying up homes across the country and turning them into rentals.
Exactly. I could give a fuck who owns the houses in an area, as long as it's lots of individuals vs a single mega-corp that can then singlehandedly influence inventory and pricing.
I think it's more like foreign private equity firms, local private real estate investment trusts, local private equity firms, foreign individuals with money that came from _somewhere_, and then local individuals with boomer parents' money, depending on country, area, and age group perhaps.
Even better would be stopping any entity other than a real person from owning residential property. Companies can invest in and profit from commercial real estate.
This would likely over time make apartment complexes the number one thing built in residential zones, since there's probably no way to not have companies/businesses owning apartment complexes.
…in certain areas which could generally be characterized as “urban”, meaning outside of census agglomerations or whatever they call them in Canada, houses are fair game.
> It could even be extended to give preference to people who have established residency in a region
Not consistent with the Constitution. If you take a peek at the Privileges and Immunities clause of Article IV and the associated case law you will see we are all allowed to move to new States and be on “equal footing” with residents of that state after a reasonable delay.
There are an unbelievable number of homes in my area that are "investor"-owned empty shells. Walking down the street on a quiet night, I can hear smoke detectors beeping low battery alarm every 3 seconds or so. I'd say about 25% of the properties are this way. These aren't massively-expensive things either. 300-500k range in TX market.
I'd be nervous owning property in a market like that. When times get tough markets like that will get hit hard as investors pull out.
I'm going to take a wild guess, are you in the suburban Houston area? I've got friends and family there and they've mentioned the same thing. I thought they might be exaggerating but I keep hearing it from different sources. I never hear the same thing about DFW or Austin.
> I'd be nervous owning property in a market like that.
A major reason for living in the HTX suburbs is to make the cost of the home so irrelevant that you don't worry much about the surrounding market conditions. If you are 100% WFH tech employee and your employer isn't a raging asshole, this is tantamount to turning on economic cheat codes.
When a home is so cheap to start with, you can start saving for the next step much sooner. Even if I lost half the value in this home, I would be fine. I'd be pissed, but it wouldn't dramatically alter the strategic path I have planned on.
i'm currently wandering the nyc streets around evenings, making notes about the buildings with the largest concentrations of dark windows in areas i want to live in
someone realizing they cant sell a 'hot' property is probably my best bet at getting an affordable 'starter apartment'...
that's fantastic! for a second i was thinking facetiously about zipping a camera-equipped drone up and down the streets as fast as it can to hoover this up automatically...
but you could probably get an entire city's worth of information at once using a private small craft at altitude with a good lens?
this would be an expensive capture, but if there are enough people interested, the costs could be split...
Real estate is not that big of a money laundering channel. It's mostly the most unsophisticated mobs.
The absolute majority of laundry is happening in 100% legal banks, and investment funds. Any baddie who can launder few billion dollars, can buy a bank completely legally.
> Real estate is not that big of a money laundering channel.
I don't have numbers but I'll suggest that even if real estate is a small fraction of all money laundering (and I agree with you about banks), if even a percent or two of manhattan real estate supply is held up in schemes that could make a big impact on price. I know AirBnB always catches blame for skyrocketing rent, while in any city they represent a vanishly small portion of housing stock, for sure outnumbered by vacant units. [actually it occurs to me that renting units for exorbitant prices on airbnb to ghost clientele would be a decent money laundering scheme, no?]
(For example, in San Francisco there are ~5000 listings on AirBnB [0], while ~40,000 homes sit vacant [1], for a population of what, 800,000 ?)
So a small change in housing supply can have a big effect on cost of housing, which is why I expect people are clamoring for a crack down.
This crackdown is targeted at the Middle Kingdom. With the pandemic behind us and Russia at war, the political environment is finally right to turn this on. It can be considered an escalation in the cold war/trade wars
It is not, or, if it is, it's completely not serious.
As I said in the other comment, the majority of global money laundering happens in banks, and investment funds completely legally. And it's also happening primarily in US because US financial markets are world's largest.
Why to go after money laundry clients, when they should really go after the bank laundry owners?
Western governments never needed KYC AML for that, because they already knew perfectly well who is laundering money and where.
Chinese and Russian mafia members lived openly in the West in tens of thousands for decades, and its absolutely impossible that no Western counterintelligence agency ever checked them. The ill famed Andrei Guriev literally lived in Vauxhall.
If US government was serious about Chinese/Russian infiltration of American financial system, Blackrock would've been sent to Guantanamo years ago. I find it absolutely implausible that the White House don't know it.
> 7% of GTO reports identified individuals or entities connected to ongoing FBI cases
So... 93% of people had their privacy violated for no reason. And that was with the current highly targeted measure. When it is applied to all real estate purchases it'll be more like 99.9%. But sure, we should be willing to give anything to satisfy a handful of "transparency activists" who don't do anything besides complain all day (read about the scandals at Transparency International and you'll find that perhaps these people are not the saintly do-gooders they are reported to be).
No, >99.9% of people will never have their privacy violated because they aren't afforded the ability to hide their ownership. Check out your county's plat maps -- if you own property, you're probably in there.
TBH? I don't think anonymously owning land should be allowed, full stop. If you want police and courts to recognize your arbitrary stat-granted right over a piece of dirt, then own up to what you own.
There is a difference between there being a record of it in some county's database and a team of Treasury department and federal law enforcement members scrutinizing the sale (and being given additional records on it from the intermediaries involved).
Readit News
> In their review of the sector, the Expert Panel estimated that more than $7 billion in dirty money was laundered in B.C. in 2018, and between $800 million and $5.3 billion was laundered through the real estate market, raising housing prices by an estimated 5%.
https://www2.gov.bc.ca/gov/content/housing-tenancy/real-esta...
Anyone interested in the tip of the iceberg should read Wilful Blindness by Sam Cooper. And that's relatively old. And mostly just the CCP's part. You still have a rich diaspora of organized crime operating in virtually every corner and geography of Canada, including First Nations, some of which are conveniently located in just the right places to facilitate smuggling of all things between the US and Canada.
And the absoltue best part? It's almost guaranteed that this involves even the Prime Minister's Office. Or at least it seems very clear Trudeau has something to hide due to his absolutely willingness to sacrifice all things in order to avoid a public inquiry into CCP election interference.
All Canadians should read it. It should be part of the high school curriculum.
I recommend the following books by Oliver Bullough:
Moneyland https://www.amazon.co.uk/Moneyland-Thieves-Crooks-Rule-World...
Butler to the World https://www.amazon.co.uk/Butler-World-Britain-Empire-Found-e...
and, by Tom Burgis
Kleptopia https://www.amazon.co.uk/Kleptopia-Dirty-Money-Conquering-Wo...
and this YouTube video
https://www.youtube.com/watch?v=4n3txSCoKn0
This is highly dependent on which state you're in though.
Almost good enough. How about we make it harder for non-citizens to buy any homes too? Citizens should get first pick of any dwelling. Many countries do this, even in the west, and it would go a long way in stopping the crazy house prices in the west/southwest. It could even be extended to give preference to people who have established residency in a region. My original low COL hometown was overrun during the California exodus and housing jumped 3x in 5 years. The average house is now well over 6x average income. No resident could dream of affording even the shittiest starter home in this double-whammy environment.
But I'm not sure how you'd prevent an investor from outbidding an individual looking to buy a primary residence. You'd have to force the seller to accept a worse offer, and even if such a law was passed I don't think it would survive scrutiny from the courts.
How do you propose establishing residency if you cannot buy a house? Be forced to rent even if you can buy a house?
Basically what you’re proposing if citizens not being able to have mobility in the country. If you’re born in the economic centers or scenic places, good for you, but in case you were born in middle of Montana, good luck because you can’t go anywhere else.
Simply require people to attest that they are purchasing the property as their primary residence, with significant penalties for fraud. You can make enforcement and public accountability even easier by ublishing both owner info and a boolean "is_primary_residence" flag in every county's plat maps/parcel database.
I suggest lawmakers could additionally add an x-month grace period, for x =~ 3*<average time on market for like properties in the past 12 months>, which allows people to have a generous period of overlapping ownership while they are moving. Perhaps even allow an auto-appeal process that adds x more time if you can show that you listed the property for sale at around the assessed value and had no offers within say 10% of your asking price.
Leave houses for people.
https://www.cmhc-schl.gc.ca/professionals/housing-markets-da...
Not consistent with the Constitution. If you take a peek at the Privileges and Immunities clause of Article IV and the associated case law you will see we are all allowed to move to new States and be on “equal footing” with residents of that state after a reasonable delay.
Dead Comment
I'm going to take a wild guess, are you in the suburban Houston area? I've got friends and family there and they've mentioned the same thing. I thought they might be exaggerating but I keep hearing it from different sources. I never hear the same thing about DFW or Austin.
A major reason for living in the HTX suburbs is to make the cost of the home so irrelevant that you don't worry much about the surrounding market conditions. If you are 100% WFH tech employee and your employer isn't a raging asshole, this is tantamount to turning on economic cheat codes.
When a home is so cheap to start with, you can start saving for the next step much sooner. Even if I lost half the value in this home, I would be fine. I'd be pissed, but it wouldn't dramatically alter the strategic path I have planned on.
someone realizing they cant sell a 'hot' property is probably my best bet at getting an affordable 'starter apartment'...
https://www.movesmartly.com/articles/condo-units-sitting-emp...
but you could probably get an entire city's worth of information at once using a private small craft at altitude with a good lens?
this would be an expensive capture, but if there are enough people interested, the costs could be split...
Deleted Comment
The absolute majority of laundry is happening in 100% legal banks, and investment funds. Any baddie who can launder few billion dollars, can buy a bank completely legally.
I don't have numbers but I'll suggest that even if real estate is a small fraction of all money laundering (and I agree with you about banks), if even a percent or two of manhattan real estate supply is held up in schemes that could make a big impact on price. I know AirBnB always catches blame for skyrocketing rent, while in any city they represent a vanishly small portion of housing stock, for sure outnumbered by vacant units. [actually it occurs to me that renting units for exorbitant prices on airbnb to ghost clientele would be a decent money laundering scheme, no?]
(For example, in San Francisco there are ~5000 listings on AirBnB [0], while ~40,000 homes sit vacant [1], for a population of what, 800,000 ?)
So a small change in housing supply can have a big effect on cost of housing, which is why I expect people are clamoring for a crack down.
[0] https://web.archive.org/web/20210720175121/https://www.magni...
[1] https://www.sfgate.com/bayarea/article/how-many-vacant-homes...
Deleted Comment
As I said in the other comment, the majority of global money laundering happens in banks, and investment funds completely legally. And it's also happening primarily in US because US financial markets are world's largest.
Why to go after money laundry clients, when they should really go after the bank laundry owners?
Western governments never needed KYC AML for that, because they already knew perfectly well who is laundering money and where.
Chinese and Russian mafia members lived openly in the West in tens of thousands for decades, and its absolutely impossible that no Western counterintelligence agency ever checked them. The ill famed Andrei Guriev literally lived in Vauxhall.
If US government was serious about Chinese/Russian infiltration of American financial system, Blackrock would've been sent to Guantanamo years ago. I find it absolutely implausible that the White House don't know it.
So... 93% of people had their privacy violated for no reason. And that was with the current highly targeted measure. When it is applied to all real estate purchases it'll be more like 99.9%. But sure, we should be willing to give anything to satisfy a handful of "transparency activists" who don't do anything besides complain all day (read about the scandals at Transparency International and you'll find that perhaps these people are not the saintly do-gooders they are reported to be).
TBH? I don't think anonymously owning land should be allowed, full stop. If you want police and courts to recognize your arbitrary stat-granted right over a piece of dirt, then own up to what you own.