Treasury Warns of Russia Elites Evading Sanctions in Real Estate

[view original post]

(Bloomberg) — The Biden administration is warning financial institutions to be on the lookout for Russians seeking to evade sanctions by investing in US commercial real estate.





© Photographer: Ed Jones/AFP/Getty Images
A general view shows the midtown Manhattan skyline of New York

Most Read from Bloomberg

The Treasury Department cautioned that Russian elites, oligarchs and other sanctioned entities could take advantage of the industry’s complex financing methods and opaque ownership structures to continue investing in the US, its Financial Crimes Enforcement Network said in an alert Wednesday.

Load Error

The move comes nearly a year after Russian forces invaded Ukraine. The US, which said Wednesday it would send tanks to Ukraine, has sought to impose sanctions against rich individuals with ties to Russia in order to try and deter Russian President Vladimir Putin.

“Thanks to international pressure and the economic restrictions that more than 30 countries have imposed on Russia for its brutal war against Ukraine, sanctioned Russian elites are increasingly left with fewer options for moving and hiding their ill-gotten wealth,” Himamauli Das, the acting director of the Financial Crimes Enforcement Network, said in a statement. “FinCEN is committed to exposing the channels that Russian elites, oligarchs and their proxies may use to move or hide funds.”

Sanctions have hit some of the world’s richest people with ties to Russia, including Roman Abramovich, and have financially pressured those individuals. Still, the full impact on Russia’s billionaires is unclear. 

FinCEN warned that US financial institutions should be on the lookout for the use of offshore vehicles to purchase commercial real estate, as well as the use of multiple investors that might have ties to a sanctioned individual. 

Sanctioned Russians may be trying to evade detection by investing in projects that are less likely to draw public or media attention, eschewing luxury for more modest real estate projects, which could include investments ranging from offices to apartment buildings, according to the FinCEN alert. Individuals under sanctions may also invest in all types of different markets across the US, not limiting purchases to big cities. 

“It is just as likely that attempted sanctions evasion is occurring in the CRE markets in small- to mid-size urban centers and throughout the United States as it is to take place in the largest cities,” FinCEN said in the alert. 

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.

Continue Reading