Banks and real estate experts are being cautioned by U.S. Treasury officials to be on the lookout for any indications that Russian oligarchs are using commercial real estate transactions as a strategy to get around the economic sanctions imposed on Russia as a result of its invasion of Ukraine.
The Treasury Department asserts that, in addition to super yachts and layers of untraceable shell corporations, billionaires connected to Russian President Vladimir Putin may be using covert bank loans to purchase commercial real estate as a way to conceal their wealth and avoid money laundering regulations. Super yachts have frequently been docked in nations that are favorable to Russia as a way to get around sanctions, but the US has seized ships that are thought to belong to billionaires.
If the Treasury Department is aware of any cases in which Russian oligarchs, societal elites, family members, or corporate entities have participated in American commercial real estate loans unlawfully, it did not make mention of it. But the agency did stress current circumstances are poised to make it happen.
The Financial Crimes Enforcement Network, or FinCEN, a component of the Treasury Department, has begun a regulation process that would impose standards to prevent money laundering on the commercial real estate market. However, the procedure has not gone far enough to determine which commercial real estate would be covered by the regulations.
Numerous state and federal organizations, such as the Federal Deposit Insurance Corp., regulate banks. But it’s unclear which organization will require commercial real estate enterprises to adhere to regulatory compliance. It might originate from a number of law enforcement organizations, including the FBI, the criminal investigation unit of the Internal Revenue Service, and the Department of Homeland Security.