convergence

Shelley
world where organized crime groups are major investors, criminal economic control of territory
through ownership of residential and commercial property undermines and determines the
quality of life in the community.
The global financial crisis that began in 2008 was caused, in part, by problems in the
real estate market and inflated valuations. Fraud and organized crime played a role in these
market manipulations in some regions of the world. But as cash-rich investors in the extended
recession, they have the possibility to position themselves for growth and to facilitate their
operations in the future.
As the global financial community works to establish regulation to prevent such future
financial crises, the impact and role of organized crime and corrupt elites in real estate markets
should be carefully examined. Market reforms must include greater oversight of the sources
of funds entering into real estate markets just as they do for other financial markets. There
must be greater accountability and reporting requirements for real estate professionals who
facilitate MLRE. Market analyses must also address susceptibility to money laundering.
Greater transparency is required in land registries, privatizations, and property transfers. Law
enforcement must follow the money trails into both commercial and residential real estate and
seize properties as they do other laundered assets. They must give higher priority to countering
the placement of money in real estate and the ongoing revenue streams going to the organized
criminals who own residential and commercial real estate.
In Italy, properties that have been confiscated from organized crime are used for the
social good. Farms once owned by the Mafia have been used to provide work for individuals
with special needs. Villas have been used as social centers for children and for other functions
in the community. In contrast to countries that just sell the confiscated properties linked to
organized crime, the Sicilian experience has another purpose: to ensure that “crime does not
pay” and properties that once served people who harmed others now serve the public good. 74
This concept could be replicated in other communities that seek to wrest authority away from
organized criminal organizations.
The decade since 9/11 has seen much attention placed on regulation of banks and global
financial markets. As the collapse of the real estate bubble worldwide has shown, there must
be much greater attention paid to real estate markets and to funds used for real estate investment.
Little has been done to institutionalize the recommendations of the Financial Action
Task Force (the chief international body addressing money laundering) to ensure that real
estate markets are properly regulated and guarded against money laundering. Harmonized
measures have not been put in place to ensure that real estate professionals, lawyers, notaries,
and accountants are accountable and understand their responsibility to “know their customers.”
There is an absence of reporting worldwide on financial irregularities and laundering in
real estate markets. Not enough has been done to ensure that real estate professionals make
countering money laundering a higher priority. This is a difficult time to enhance requirements
when sales are down and customers are hard to find, yet it is needed if the global financial
community is to prevent future crises.
Failing to take these steps has consequences for society that transcend the present financial
crisis. They include loss of homes, displacement of people, and a more precarious life in
communities in which organized crime groups are major investors. As the events of the Arab
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