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New FinCEN Alert on potential abuse of commercial real estate by Russian actors

FinCEN Issues Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies

Today, the Financial Crimes Enforcement Network (FinCEN) is issuing an alert to financial institutions regarding potential investments in the U.S. commercial real estate sector by sanctioned Russian elites, oligarchs, their family members, and the entities through which they act. The alert lists red flags and typologies involving potential sanctions evasion in the commercial real estate sector, and reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations. The alert, which is the fourth Russia-related alert FinCEN has issued since Russia’s invasion of Ukraine in 2022, further complements ongoing U.S. government efforts to isolate sanctioned Russian elites, oligarchs, and their proxies from the international financial system. The alert is also part of a broader effort by the U.S. Department of the Treasury to increase transparency in the U.S. real estate market and prevent corrupt elites and other illicit actors from hiding their ill-gotten wealth.

FinCEN Notice

And the formal press release:

FinCEN Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies

Immediate Release

January 25, 2023

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) is issuing an alert to financial institutions on potential investments in the U.S. commercial real estate sector by sanctioned Russian elites, oligarchs, their family members, and the entities through which they act. The alert lists potential red flags and typologies involving attempted sanctions evasion in the commercial real estate sector, and reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations. The new alert complements ongoing U.S. government efforts to isolate sanctioned Russian elites, oligarchs, and their proxies from the international financial system, and is part of a broader effort by the U.S. Department of the Treasury to increase transparency in the U.S. real estate market to prevent corrupt elites and other illicit actors from hiding their ill-gotten wealth.

“Thanks to international pressure and the economic restrictions that more than 30 countries have imposed on Russia for its brutal war against Ukraine, sanctioned Russian elites are increasingly left with fewer options for moving and hiding their ill-gotten wealth,” said FinCEN Acting Director Himamauli Das. “FinCEN is committed to exposing the channels that Russian elites, oligarchs, and their proxies may use to move or hide funds. Today we are identifying red flags and typologies in commercial real estate transactions that financial institutions can use to remain vigilant in monitoring, detecting, and reporting suspicious activity that may be indicative of sanctions evasion by sanctioned Russia elites, oligarchs and their proxies.”

FinCEN assesses that sanctioned Russian elites and their proxies are likely attempting to evade sanctions by exploiting vulnerabilities in the U.S. commercial real estate market. Commercial real estate transactions routinely involve highly complex financing methods and opaque ownership structures that diminish transparency in a way that can allow bad actors to hide illicit funds in commercial real estate investments. Additionally, the relative stability of the U.S. commercial real estate market and the high value of commercial real estate properties can provide illicit actors with a way to generate a steady income and store large amounts of wealth.

Today’s alert, which builds on FinCEN’s March 2022 alert identifying real estate, luxury goods, and other high value assets involving sanctions Russian and elites, is the fourth alert issued by FinCEN on potential Russian illicit financial activity since Russia’s invasion of Ukraine in February 2022.

Financial institutions with questions about the content of today’s alert should contact the FinCEN Regulatory Support Section at frc@fincen.gov.

FinCEN News Release

And the actual Alert:

Links:

FinCEN News Release

FinCEN Alert

Categories: Anti-Money Laundering FinCEN Alerts FinCEN Updates Oligarchs Real Estate Relatives and close associates Russian Harmful Foreign Activities Sanctions

eric9to5

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