There’s a pretty interesting story on how money laundering might be making its way to the housing market on MarketWatch: Something to hide: The warning signs a money launderer wants to buy your home.
The story caught my eye after my son tried to sell something on CraigsList this week for $500. The interested party said they would send him a check for $2,600 because she “trusted” him and he could keep an extra $100 for his trouble and send the balance back. He didn’t sell the item to her.
Apparently there is a loophole where large amounts of cash deposited in checking accounts from abroad aren’t scrutinized like a check from a parent would be. The irony here is the lender associates the large cash downpayment with lower risk. Once the cash is deposit and then used for purchase, the money is clean.
Federal Bureau of Investigation, among other agencies, suspects that money laundering is becoming more common. So much so that the Financial Crimes Enforcement Network, or FinCen, is considering a rule requiring real estate brokers, among other entities which don’t have a direct financial interest in property sales, to file the same suspicious activity reports that lenders are compelled to file when they smell something fishy.
Here’s a 3-2009 summary of Suspicious Activity Reports.
An aside, wiring money to Nigeria has its own chapter for those of you who get a lot of those emails.