In most of the world’s leading economies and major financial centres, criminals, the corrupt and their enablers can exploit a series of loopholes to stash dirty money in real estate while likely avoiding detection.
Property markets are vulnerable to abuse because real estate can be held anonymously and avoid meaningful third-party control in many places.
Moreover, law enforcement and public watchdogs are limited in their ability to detect suspicious cases because data is inaccessible or not comprehensive enough. These are the conclusions of the first edition of the Opacity in Real Estate Ownership (OREO) Index, by the Anti-Corruption Data Collective (ACDC) and Transparency International.
The two institutions ranked property markets on their frameworks’ strength to prevent and detect dirty money in real estate.
The OREO Index assessed and ranks 24 jurisdictions, including 18 G20 member nations plus guest countries Spain and Norway, as well as Hong Kong, Panama, Singapore and the United Arab Emirates (UAE).
The index scored them on two metrics: the scope and availability of real estate data; and the strength of anti-money laundering legal frameworks for the real estate sector.
The index showed that no country achieves a perfect mark, with 10 jurisdictions scoring below five out of possible 10 points.
South Africa is the best performer where the government collects broad data on real estate transactions and thoroughly regulates the sector for money laundering, the report noted.
However, even here, gaps remain, including a burdensome process for accessing real estate data, which is also not available to foreign citizens, putting the brakes on follow-the-money investigations.
Some of the anti-money laundering rules are fairly recent and were adopted following South Africa’s designation to the Financial Action Task Force’s so-called grey list of countries with strategic deficiencies in their frameworks. The practical implementation and effectiveness of these measures remains to be seen.
Australia, South Korea and the United States are among the worst performing countries, largely due to their lack of anti-money laundering regulation for professionals involved in real estate transactions.
Australia has recently passed historic legislation extending anti-money laundering obligations to real estate professionals, but these will come into force only in July 2026.
Concerningly, the assessment revealed that property purchases can be made without the involvement of a third party – such as a real estate agent or a notary – in Australia, China, England & Wales, Japan, Türkiye and the UAE.
This means that real estate transactions can occur without being screened for anti-money laundering risks. Making things worse, Russia and the UAE also allow real estate transactions to be made in cash, instead of through a bank which could ensure at least some scrutiny.
While most jurisdictions have regulated professional service providers who can be involved in property transactions, real estate developers who can directly sell properties don’t have to screen their clients and report suspicious activity to the authorities in many of the countries.
The OREO Index reveals that the corrupt can continue to buy, hold and sell real estate anonymously in most assessed countries. The main way this can happen is by owning property through companies, which rarely have to disclose their real owners when registering properties.
Some of the countries which have required companies incorporated domestically to disclose their real owners, usually through separate registers, continue to allow real estate investments by foreign companies to remain secretive.
Following the adoption of new rules in the European Union, this glaring loophole will soon have to be closed in France and Spain.
Maira Martini, CEO of Transparency International, said: “We have known for a long time that real estate is a magnet for dirty money. And yet, the OREO Index shows that countries, including those that have recently reformed their systems, still have major gaps in their systems. It is no wonder that real estate markets are bursting with dirty cash, making cities around the world unaffordable.”
