Oligarchs from Russia and other former Soviet states have money stashed in real estate holdings all over the U.S., despite legislation aimed at stopping kleptocrats and other criminals from hiding and laundering their assets behind anonymous shell companies.
At least $2.3 billion has been laundered through U.S. real estate in the past five years, with millions more flowing through art, jewelry and yachts, but a 2020 law now requires companies to self-report to the Treasury Department the names of the assets' true owners, reported NBC News.
“There’s not enough teeth in the regulations in terms of making Realtors report,” said Louise Shelley, the director of the transnational crime and corruption center at George Mason University, “and there’s not been enough emphasis on commercial real estate. It’s all about oligarchs’ buying real estate for themselves.”
Even with the new reporting requirements, foreign oligarchs can still pass ill-gotten gains through disclosure loophole in private equity and luxury goods, and there's no executive action President Joe Biden can take to stop them.
“There’s this misunderstanding that you can just go out and seize these mansions, seize these yachts,” said Casey Michel, the author of “American Kleptocracy: How the U.S. Created the World’s Greatest Money Laundering Scheme in History.” "For so many of them, it’s a complete black box. The U.S. provided all the tools of anonymity the oligarchs needed."
Russian money shifted from private accounts into real estate after the 2001 passage of the Patriot Act, which required disclosure in banking transactions, and during the 2006-2007 real estate boom they snatched up properties in Manhattan -- including a number of transactions involving former president Donald Trump's holdings in New York and South Florida.
“These are very smart people who have an army of accountants and advisers all over the world,” said Jacky Teplitzky, managing partner of the Teplitzky Dunayer Team with the real estate brokerage Elliman. “Many of them have businesses in the United States. But now they are legit American companies.”