Money laundering still targeting real estate sector

Global mafia groups continue to use Romania as a vehicle for laundering money through property and real estate transactions ‘The Diplomat’ reported in December 2006

Emerging markets are a soft option for mafia groups who want to disguise the source of their revenues.

 “Real estate is specifically targeted,” says Dr Paolo Sartori, the Interpol Liaison Officer in Romania, who checks on Mafia activity in south and eastern Europe. “It is one of the easiest ways to wash cash.”

General Prosecutor Laura Kovesi also adds that, as far as she knows, investment in properties seems to be the “main activity field” of money laundering in Romania.

Loopholes in the Romanian Constitution, which states that all property is lawfully acquired, also encourages foreigners to come to Romania to wash their cash.

Real estate is also attractive to criminals because it offers high profits in Romania.

Prevention of Money Laundering

Few countries have a good record in securing convictions for money laundering.

The Romanian National Agency for  Preventing and Combating Money Laundering has placed the responsibility on Real Estate Professionals to provide information on all suspicious transactions. The Agency then forwards such reports of possible money laundering to the Prosecutor’s Office.

Local banks report around 30 to 40 suspicious transactions daily. But from the non- financial institutions suspicious reports have been spasmodic.

The European Commission’s May 2006 Monitoring Report stated that Romanian real estate companies were not adequately reporting suspicious transactions. Following this, the Agency initiated new laws in July 2006 addressing these sectors and increasing the reporting obligations on Romania real estate companies.

In the year up until 10 November 2006 banks and non-banking institutions had reported more than 2,500 cases of suspicious transactions. They have also reported to the agency 9,000 cases of transactions involving amounts of more than 10,000 Euro in cash – 6,000 reports were from banks.

Real estate agents who do not report such transactions face prosecution.