Money Laundering in the Real Estate Sector: A Systematic Literature Review

• In Event: WG Organized Crime and Criminal Networks Panel 2. Organized crime infiltration in the legal economy

Abstract

Purpose - The article provides a comprehensive summary of empirical research into money launderers’ misuse of the real estate sector and evaluates the proportionality, i.e. effectiveness and efficiency, of countermeasures pursuant to Regulation (EU) 2024/1624.

Design/Methodology/Approach - After an initial search yields n=3.465 candidate publications sourced from databases and non-systematic reviews, we select n=21 studies for data extraction and synthesis following predefined inclusion and exclusion criteria as well as a bespoke hierarchy of evidence.

Findings - The article outlines the prevalence of criminal investment in real estate, the characteristics of properties acquired by organized crime, how real estate is misused for money laundering, and the behavior delinquents exhibit when acquiring real estate. Empirical research is contrasted with the liabilities Regulation (EU) 2024/1624 imposes on obligated entities, e.g. estate agents or notaries.

Originality/Value - We identify regulatory gaps and regulatory overreach: additional measures that could mitigate money laundering risks in the sector and superfluous measures that could be repealed to alleviate obligated entities’ financial burden. The article moreover considers the macroeconomic implications of money laundering in the real estate sector, most notably regarding the affordable housing crisis in Germany.

Authors

• Timo Hauler, Humboldt-Universität zu Berlin

• Katrin Höffler, Humboldt-Universität zu Berlin