The United States has been ranked among the countries that are most susceptible to money laundering through the real estate sector despite its advanced law enforcement capabilities, according to a recent report published by Transparency International.

In the report titled ‘Opacity in Real Estate Ownership (OREO) Index’, Transparency International assessed and ranked 24 leading countries in the world in terms of economy to determine the jurisdictions that are most easy to hide dirty money under the guise of real estate investment.

Argentina, Australia, Brazil, Canada, China, England & Wales, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Mexico, Norway, Panama, Russia, Singapore, South Africa, South Korea, Spain, Turkey, the United Arab Emirates and the United States were the countries that were assessed.

According to the report, the United States, Australia and South Korea are the worst-performing nations among the 24 countries, largely due to their lack of anti-money laundering regulations for professionals involved in real estate transactions, leaving the jurisdictions very accessible to launder money through real estate.

Countries on the OREO Index scored over 10 based on two metrics: the scope and availability of real estate data and the strength of anti-money laundering legal frameworks for the real estate sector, with 10 jurisdictions scoring below five.

Transparency International’s assessment revealed that properties can be purchased in the worst-performing jurisdictions, which include Australia, China, England & Wales, Japan, Türkiye and the UAE without any oversight body, allowing transactions to be conducted with no scrutiny. 

In Russia and the UAE, real estate transactions can even be done in cash, ensuring unlimited loopholes for corrupt individuals around the world to anomalously hide their loot without being subjected to any scrutiny.

“We have known for a long time that real estate is a magnet for dirty money,” Maira Martini, chief executive officer of Transparency International, said. And yet, the OREO Index shows that countries, including those that have recently reformed their systems, still have major gaps in their systems. It is no wonder that real estate markets are bursting with dirty cash, making cities around the world unaffordable.”

Meanwhile, the report noted that no country had a perfect score in the assessment. However, Transparency International ranked South Africa, the only African country on the list, as the best-performing nation among the two dozen jurisdictions that were assessed.

South Africa’s high performance was due to the government’s efforts in collecting broad data on real estate transactions and thoroughly regulating the sector for money laundering and its ‘fairly decent’ anti-money laundering rules targeting the real estate sector.

However, access to the country’s real estate data is still a difficult process, which is also not available to foreign citizens, putting the brakes on follow-the-money investigations. 

Ms Martini added, “While progress has been slow, the OREO Index also shows that international anti-money laundering standards can have an impact. We urge standard-setter bodies such as the Financial Action Task Force and global fora such as the G20 to develop new policies and guidelines to help countries address remaining loopholes.”