convergence

Shelley
such diverse environments as rural Ohio and central Tokyo. 26 Such decay may be allowed so
the criminal investors can subsequently buy neighboring properties at depressed costs, thereby
increasing their territorial influence. 27
MLRE may yield profits or other tangible benefits allowing launderers to sustain their
activities while simultaneously providing stability and security for their investments. This has
been seen in Mexico, major cities in the United States, and Italy. 28 Therefore, although many
forms of laundering cost launderers 10 to 20 percent of the sums they seek to clean, this rule
does not always apply in the real estate sector. An advantage of laundering into real estate is
often that there is not even a cost of laundering, but rather ongoing financial benefits derived
from property-based revenue streams. Moreover, money laundering into apartments can be
used to facilitate the work of drug traffickers who can use these venues for production of drugs
and as warehouses for drug distribution. 29 These buildings can also be used to house illegal
workers who are sometimes exploited in the criminal businesses of apartment owners. 30 Or
as in one Arizona case, they may be used as safe houses for migrant smuggling.
Money laundering into hotel construction and tourism businesses may facilitate other illicit
activity of organized crime groups such as human trafficking. This has been seen in tourist
areas in Spain and Turkey where drug money has moved into the hotel sector. 31 In Southeast
Asia, Japanese organized crime investment in the hotel sector has facilitated sex tourism.
Money laundering into farms and ranches can distort agricultural prices. In Colombia
drug traffickers chose not to invest in agricultural lands that demanded constant cultivation.
Instead, they invested in cattle ranches, resulting in depressed beef prices as their desire was
not to engage in profitable cattle farming but merely to launder their money. 32
Diverse Environments in Which MLRE Occurs
MLRE is a transnational phenomenon spanning the developing and developed worlds. Money
moves from the developed world into properties in the developing world and vice versa. The
mobility of capital makes it difficult for financial professionals to know their customers. 33 Moreover,
money moves among different regions within the developed and the developing worlds.
The extent to which criminals and corrupt officials launder money into real estate depends
on the “cultures” of organized crime groups and the effectiveness of the regulatory and
confiscation policies of particular countries. In cultures where investments traditionally occur
in property, there is a greater likelihood that money laundering will occur in all forms of real
estate both in their home region and abroad. 34 Therefore, investment patterns of criminals
reflect those of legitimate investors.
In the case of corrupt government officials, especially those from poor countries and
conflict regions, expensive properties are often acquired in developed countries or havens
such as the Gulf states.
With transnational crime groups, laundering can occur in their countries of origin as well
as in areas where they plan on further or future operations. The former has been seen by British
officials investigating welfare fraud and child trafficking. 35 Romanian criminals profiting from
human trafficking crimes in the United Kingdom built enormous villas with the proceeds of
their crimes. But this phenomenon was not confined to the UK. 36
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