The real estate market is known to be a corruption-prone industry that can be used for money laundering, among other things. Big money in short-term circulation – combined with the use of straw men and complicated corporate structures – can facilitate to hide criminal dividends. Awareness of these challenges seems to be increasing in the industry, even the number of money laundering messages to Økokrim has increased sharply in a short time.
High house prices are pushing people out
The report "Faulty towers – Understanding the impact of overseas corruption on the London property market" from Transparency International UK, was recently presented at the Anti-Corruption Conference in Oslo. It shows how the London real estate market has been flooded with corrupt capital and contributed to a rise in prices that means no one can afford to live in the city anymore. In a selection of 14's major development projects worth 1,6 billion, four out of ten units have been sold to investors from highly corrupt countries or anonymous companies. Less than a quarter of the properties have been bought by people living in the UK. Prices have risen twice as fast as most people's salaries, and many have become homeless or "sofa surfers". At the same time, thousands of properties are empty.
Less than a quarter of the properties in London have been bought by people living in the UK.
The report points to the same problem in Melbourne, Vancouver and New York, and it is close to looking at how relevant this issue is to Oslo.
Housing prices and prices for commercial property in Oslo are again growing strongly. The consulting firm CBRE estimates that the rent for office buildings will increase by 10-15 per cent in 2018, and many foreign investors buy up in the center of the city. According to CBRE, this is a trend that has evolved in recent years because major players are running out of interesting properties in the US, UK and Central Europe. The ultra-rich are attracted to Oslo, while poverty and inequality appear to be increasing.
Prevention of financial crime
Transparency International would like to map who owns Oslo and see the extent to which the owners bring corrupt luggage. Such a report could in the next turn contribute to targeted efforts towards the property market as a money laundering machine.
Prices have risen twice as fast as most people's salaries.
Regardless of the outcome of such a survey, there are several measures that can be strengthened to monitor the cash flow in this market and prevent economic crime:
- Real estate agents must comply with the obligation to report suspicious transactions.
- Get in place a publicly available register of owners that has already been adopted in the Storting three years ago and recently confirmed by the Ministry of Finance.
- And of course – general compliance with the anti-money laundering and corruption regulations.