Investments in U.S. real estate by Russian oligarchs and others sanctioned by the federal government are the focus of an alert issued Wednesday by the Treasury’s top financial crime unit.
According to the Financial Crimes Enforcement Network (FinCEN), banks and other financial institutions should be on the lookout for “red flags and typologies involving potential sanctions evasion in the commercial real estate sector.” The agency said it also reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations.
“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,” FinCEN said in a release. “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.”
The agency asserted that 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.”
FinCEN said the alert is the fourth Russia-related warning it has issued since Russia’s invasion of Ukraine in 2022. It said the latest action further complements federal efforts to isolate sanctioned Russian elites, oligarchs, their family members, and the entities through which they act from the international financial system.