Weak US Disclosure Rules Conceal CRE Owned by Russia's Oligarchs

Before officials can seize the US CRE assets of Russia’s oligarchs, they’ll need to identify who owns what—a task made much more difficult by lax disclosure regulations that have made the United States the global “destination of choice” for money laundering for decades.

Experts believe that Russian oligarchs have parked a significant portion of their wealth in CRE properties in the US in purchases that are easier to conceal than the high-profile luxury mansions and superyachts President Biden vowed to seize in his State of the Union address this week.

According to Louise Shelley, director of the transnational crime and corruption center at George Mason University, the government does not have the tools it needs to identify the oligarchs’ CRE assets in the US.

In an interview with NBC News, Shelley said a 2020 law passed by Congress to give the US Treasury the power to stop “tax evaders, kleptocrats, terrorists and other criminals” from using anonymous shell companies to hide assets is not strong enough to compel the exposure of CRE transactions.

The 2020 law requires sellers to “self-report” information, including the assets’ true owners, to a new federal database that will be shared by law enforcement, national security officials and financial institutions.

“There’s not teeth in the regulations in terms of making realtors report, and there’s not been enough emphasis on commercial real estate,” Shelley told NBC. “It’s all about oligarchs’ buying real estate for themselves.” 

Shelley called the US the global “destination of choice” for money laundering.

After the fall of the Soviet Union in 1991, Russia’s rising oligarchs began moving billions of dollars into overseas bank accounts. When the Patriot Act in 2001 required the disclosure of major banking transactions, the oligarchs moved their money into real estate and luxury goods hidden through shell companies.

In addition to luxury condos in Manhattan and Miami, an avalanche of Russian money has been used to scoop up property in cities across the US. According to reports, at one point, a Russian oligarch became the biggest landlord in downtown Cleveland.

According to Global Financial Integrity, a nonprofit that tracks the flow of illicit money, more than $2.3 billion has been laundered through US real estate during the last five years.

 Because GFI bases its estimate on reported cases, the actual amount is much higher. In an interview with FOX Business on Wednesday, Manhattan Borough President Mark Levine estimated that Russian real estate holdings in NYC exceed $1 billion.

US intelligence agencies estimate that the total amount of wealth that has been siphoned out of the Russian economy by Putin and his cronies and parked overseas is measured in trillions of dollars, with Putin’s personal stash estimated at more than $100 billion.