By Global Financial Integrity, FACT Coalition, and the Anti-Corruption Data Collective

Today Global Financial Integrity, in conjunction with the FACT Coalition and the Anti-Corruption Data Collective, is releasing a report with identifies 25 cases in which illegal, allegedly illicit or suspicious funds were funneled into commercial property in the United States over approximately the last 20 years. With a total value of property exceeding $2.6 billion, California, Florida and New York are some of the most favored locations for these illegal investments, but criminals stashed money across some 20 different states. This money originated from around the globe and includes suspicious funds from 14 countries, including Iran, North Korea, Kazakhstan, Russia and Mexico. As varied as the sources of funds were, so too were the types of properties involved. Hotels, shopping malls, supermarkets, a music studio and an equestrian facility in addition to more pedestrian office high-rise

It should be noted that our research represents only known cases involving U.S. commercial real estate: the actual number is likely much higher. Our data definitively shows, however, that commercial property in the U.S. offers criminal syndicates, cartels, kleptocrats and fraudsters an easy path to hide and launder their ill-gotten gains. Russian oligarchs facing international sanctions have also invested in U.S. commercial real estate. Shockingly, eight of the 25 cases involve foreign government officials or their relatives, yet the links to these Politically Exposed Persons were only uncovered long after the purchases.In recent years it has become increasingly clear that the combination of complex financing schemes and a lack of transparency mean commercial real estate provides a unique opportunity for laundering huge amounts of cash with a relatively low risk of detection. Identifying who is behind the purchase of commercial property often presents a significant challenge given large financial flows from real estate investment trusts and private investment groups, in addition to funds from shell companies formed and operated by registered agents, proxies and/or attorneys. Key Findings – More than $2.6 billion in suspicious funds were invested in commercial real estate in 22 U.S. states over approximately the last 20 years. The actual figure is likely much higher.– Funds used to buy commercial real estate in the United States originated in 14 different countries including Russia (4 cases), Mexico (4 cases), China, Malaysia, Iran and Kazakhstan (see Map 2). – Of the 25 cases reviewed for this study, 14 involved either politically exposed persons or oligarchs who typically have especially close relationships with foreign government officials. – The types of properties appearing in cases fall into four broad categories: land/buildings, business facilities (e.g. music studios, health facilities), retail spaces (e.g. supermarkets, hotels) and industrial sites (e.g. steel plants). – Weak or non-existent reporting requirements by professions involved in the purchase of commercial real estate contributed to the ease with which illicit funds were laundered.Recommendations 1.FinCEN should adopt a reporting obligation for multiple real estate professionals in a cascading order to ensure the requirement falls on at least one U.S.-based entity involved in the transaction, from both the buyer and the seller. As attorneys are legally required to be part of the closing process in almost 20 states, attorneys should be included with specific reference to the function they perform in the transaction.The rule should cover transfers of ownership that do not constitute a sale. Current rules only refer to purchases of real property by a legal entity. However, numerous cases of real estate money laundering simply involve the transfer of ownership or creation of equitable interest in the property without an actual sale. FinCEN should expand the types of transactions covered to include direct/indirect transfers of ownership or creation of equitable interest in the property.The rule should cover transactions by trusts: An increasing proportion of housing is now owned by legal entities and arrangements, including trusts. In Los Angeles, for example, 23% of rental units are owned by trusts. Both foreign and some domestic trusts are excluded from the purview of the Corporate Transparency Act. We recommend that transactions by all different classes of legal entities and legal arrangements be included in any prospective rule.

Washington, DC: Global Financial Integrity, 2024. 21p.

By Lasha Gogidze

Under the current government, Uzbekistan is undergoing reforms to shift from a Soviet-style governance system to an open-market economy. Despite progress, the country remains an authoritarian state, marked by pervasive corruption in sectors like healthcare and education. Key institutions, influenced by the executive branch, lack due process, enabling arrests of activists and journalists on questionable charges. The civic space is restricted, with human rights defenders and journalists facing persecution for exposing government corruption. While reforms are underway, challenges persist in establishing transparency and democracy in Uzbekistan's governance model.

Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer, 2023. 22p.

 By Khachik Harutyunyan and Caitlin Maslen   

After a protracted conflict and a period of self-rule from 2005, South Sudan is now the world’s most recent sovereign country. The young state faces considerable governance challenges; it regularly ranks at or near the bottom of international corruption indices. Corruption is systemic across all levels of government and pervades nearly every economic sector, and perpetrators enjoy widespread impunity. As such, it takes a heavy toll on the populace by diverting the wealth from the country’s extensive oil reserves into private pockets instead of public service provision or gross fixed capital formation. This kleptocratic dynamic is embodied in scandals such as the Cash Grab and Dura Saga scandals. The international community has called on the South Sudanese government to take stronger action to tackle corruption. However, progress has been slow, and corruption remains a major challenge for South Sudan's future development  

Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer, 2023. 25p.

 By David Olusegun Sotola and Roberto Martinez B. Kukutschka  

Corruption in Sierra Leone remains a pervasive challenge. Since the end of the civil war in 2002, successive governments have made efforts to tackle corruption and hold perpetrators, especially those from the previous government, accountable, but challenges remain. Anti-corruption efforts have focused on amending laws, institutional frameworks and the establishment of a special anti-corruption judicial division but concerns about the backsliding of democracy in the country, weak checks on the power of the executive and the politicisation of the anti-corruption cause make it difficult to counter corruption effectively.

 Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer 2023. 21p.

By Lasha Gogidze

The election of Ferdinand Marcos Jr, nicknamed “Bongbong”, as the President of the Philippines in May 2022 has sustained fears of state capture by oligarchic family clans, widespread grand corruption and human rights abuses, all of which marred the rule of his father, Ferdinand Marcos Sr., the country’s former dictator who ruled from 1965 until 1986. Those fears appear to have been substantiated by continued extrajudicial killings, arrests of communist-linked leaders and activists, as well as the Marcos families’ unpaid taxes and damages to U.S. courts from human rights cases, leading to fears that this means further entrenchment of impunity.

 Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer, 2023. 25p.

By Caitlin Maslen  

There has been a rapid rise in the number of Mozambican universities in the past two decades, but corruption risks in these institutions and the research sector more broadly remains an under-examined area. Identified risks include political manipulation of university affairs by government, mismanagement of research grant funds and a lack of independence of the country’s quality assurance body. There are also reports of other forms of corruption such as bribery, plagiarism, academic fraud and sextortion for grades within universities. Several mitigation measures can be put into place to strengthen the integrity of the system, and these include accountability mechanisms within universities and research institutions, independence and increased capacity of the CNAQ, anti-plagiarism policies and tools, sanctions for academic dishonesty, anti-corruption clauses in research grant agreements, compliance assessments of universities and research institutions, and enhanced whistleblower protection.

 Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer 2023. 21p.

By Jackson Oldfield   

Corruption is widespread in Nigeria, where patronage networks and foreign actors play a significant role. Drivers of corruption include neo-patrimonialism and the “resource curse” – referring to the country’s abundance of natural resources. Bribery and other forms of corruption occur in many sectors, including public administration, the judiciary, the electricity sector, and extractive industries. Although several new anti-corruption laws have recently been introduced, weaknesses in relevant institutions have undermined their effectiveness. Despite these challenges, anti-corruption actors, such as civil society organisations, continue addressing corruption as a priority and have had notable achievements, particularly in the area of asset recovery.

 Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer 2023). 25p.

By Mathias Bak

Yemen's ongoing conflict has transformed into an economic battle, with various factions fighting over crucial resources, such as aid flows and control over state resources. The war economy has intensified existing corruption challenges and created avenues for illicit wealth accumulation for new power brokers and previously less powerful networks. However, this takeover of the state has not fundamentally changed the nature of the systematic corruption that has plagued Yemen long before 2014.

Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer 2024:1)

By Vaclav Prusa   

In 2023, President Mnangagwa secured a second term amid allegations of election irregularities and corruption in Zimbabwe. Despite anti-corruption efforts, challenges include political interference and resource constraints, hindering transparency. Though there have been efforts to address corruption in the natural resources sector, progress in prosecuting politically exposed persons and recovering stolen assets has been uneven. Likewise, hopes for reform since Mnangagwa's 2017 presidency have been tempered by enduring corruption, economic challenges, and human rights abuses. And illicit financial flows, notably linked to corruption in mining, timber, and wildlife, pose a significant international threat as they have drained billions of dollars from the country. Though civil society and independent media play crucial roles in exposing corruption, initiatives such as The Patriot Act, introduced in 2023, raises concerns about suppressing dissent and investigative journalism.

Chr. Michelsen Institute (CMI) in Bergen, Norway ; Berlin: Transparency international, 2023. 26p.