EXPLAINER: How criminals use real estate to hide illegal wealth

Ghana’s booming real estate sector attracts legitimate investors, developers and homebuyers, but it can also be used by criminals to conceal money obtained through illegal activities. Land, houses, apartments and commercial properties can be purchased with illicit funds and later presented as legitimate investments. The property may then be rented out, sold or transferred to another person or company, making it harder to trace the original source of the money. Ghana’s housing sector is already under significant pressure, with the national housing deficit estimated at about 1.8 million units. This makes the integrity of the property market particularly important, as illicit funds entering the sector can distort property values and further complicate access to affordable housing. Ghana’s 2024 National Anti-Money Laundering Risk Assessment identified the property market as vulnerable to money laundering, partly because of its heavy reliance on cash transactions. The Financial Intelligence Centre (FIC) also classifies real estate agents as designated non-financial businesses and professions. They are therefore expected to conduct customer due diligence and report suspicious transactions. But how exactly can criminals use real estate to hide illegal wealth? How the money-laundering scheme works Money laundering through real estate generally involves three stages: placement, layering and integration. Placement is when money obtained through crime is first introduced into the property market, for example through the purchase of land, a house or a development project. Layering involves moving the money through transactions designed to make its original source difficult to trace. This could include transferring property between companies, using complex loans or buying and selling properties at unusual prices. Integration is when the money is made to appear legitimate. The proceeds may then be presented as rental income, profits from a property sale or returns from a legitimate development project. Through these steps, criminal proceeds can be turned into assets that appear to have come from legitimate investments. Common methods Criminals may use shell companies, nominee owners, cash purchases, false property valuations, fake loans between related companies and repeated property transfers. They may also inflate construction costs or register properties in the names of relatives, business associates or companies to conceal the person who actually provided the funds. Why real estate is vulnerable Property can hold significant value and appreciate over time, making it an attractive way to store illicit wealth. Determining the true value of a property can also be difficult. Location, size, condition, ownership documents and development potential can all affect its value, creating opportunities for properties to be bought or sold at unusual prices. Real estate transactions also involve several parties, including buyers, sellers, agents, lawyers, surveyors, developers, banks and government institutions. Gaps in checks between these parties can be exploited to conceal the source of funds or the identity of the real owner. Warning signs Red flags may include buyers who refuse to provide identification, payments from unrelated third parties, companies that conceal their owners and purchases that appear inconsistent with a person’s known income. Other warning signs include large unexplained cash payments, pressure to complete transactions unusually quickly, repeated purchases and sales at unusual prices, incomplete property documents and funds from high-risk jurisdictions. One warning sign does not prove criminal conduct, but several indicators together may warrant enhanced checks. Impact on society Money laundering through real estate can have wider economic and social consequences. Large amounts of illicit money entering the property market can contribute to higher land and property prices, making housing less affordable for ordinary citizens. In a country already facing a housing deficit of about 1.8 million units, such distortions can add pressure to an already difficult housing market. It can also distort competition, encourage corruption, reduce tax revenue and create artificially high land values. Role of professionals Real estate agents, developers and lawyers can play an important role in identifying suspicious transactions. They should verify the identity of clients, establish the source of funds and understand the purpose of transactions. Where a company is involved, they should determine who ultimately owns or controls it. They should also examine the relationship between the buyer and the person making payment and consider whether the property price is commercially reasonable. Why beneficial ownership matters A major challenge is identifying the person who ultimately owns or controls a property. The name on a property document may belong to a company, trustee, nominee or relative rather than the person who provided the money. Reliable beneficial ownership information is therefore important in tracing illicit wealth. Without proper checks, criminals can hide behind layers of companies, relatives and intermediaries. What can be done? Authorities can reduce the risk by strengthening property and company ownership records, improving customer checks, limiting unexplained cash transactions and increasing cooperation between land registries, banks and financial intelligence authorities. Training real estate professionals, digitising property records and ensuring suspicious transaction reports are properly investigated can also help. The FIC receives and analyses suspicious transaction reports and can request information from accountable institutions and designated professionals. The fight against money laundering is not the responsibility of government alone. Banks, property professionals, buyers, sellers and the public all have a role to play. The objective is not to stop investment in real estate, but to ensure that land, homes and commercial properties are acquired with legitimate funds and are not used to conceal illicit wealth. With additional files from FIC and Securities and Exchange Commission MASource: www.ghanaweb.com
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