Money Laundering via Property by Kleptocrats is a big problem that hurts us all.
The problem is manifold. It hurts the countries the money comes from, passes through and ends up in.
Money Laundering is a process that seeks to abuse the anonymity of ‘fiat currency’ in order to break the chain of evidence of financial crime so as to both hide the proceeds and the perpetrator. Closing the process through the purchase of residential property by offshore companies and trusts becomes an act of ‘hiding in plain sight’ while poisoning the neighbourhoods it happens in. When Kleptocrats do it and help others to do it, they get many advantages including the forced inattention of the crime fighters closest to the evidence, the collaboration of agencies afraid to speak out and diplomatic, trade and financial inertia from countries wishing for quiet lives and easy profits.
Clearly, it is a problem for the people and the state from which the assets are stolen. Corruption begets poverty and yet more corruption. Corruption and poverty act to reinforce one another. They are very hard to remove from a culture once they take hold. One has only to watch the struggles of the south of Italy to see all of this in action.
Money laundering is, as a crime, both well recognised and well facilitated. Often, both are done in simultaneously by jurisdictions. ‘Fencing’ of stolen property is a recognised as a crime everywhere. The transmission of the proceeds of kleptocracy through ostensibly honest agencies, brokerages and institutions is ‘fencing’ made more odious by the size of the amounts, the volume of transactions and hypocrisy of legitimate and legitimised companies and agencies doing it. It damages the people and the economies where it happens by both, eroding the tax base and disproportionately rewarding those who participate in it.
The money causes problems in those countries where it ends up, as well. It raises prices to artificial levels against the interests of the residents of the country, the tax paying, voting and law-abiding residents. It further raises prices by reducing the supply of properties available to these residents. On the flip of the coin, it damages the neighbourhoods and districts where it happens by eroding the tax base and economic activity through absenteeism. Finally, it creates a huge pool of ‘dirty’ assets within notionally ‘clean’ jurisdictions which, should it ever have cause to, can easily bring about the corruption of the whole system.
Some of this is self-evident and for some of it we are working on assembling proofs and evidence. Kleptocracy is widespread across the planet. While we are starting out with a focus on formerly Communist states, we intend to have a global reach, interest and activity. Watch this space!