Money Laundering Risk in Residential Real Estate Lending

The focus of our September AML/CFT Membership Group, was AML/CFT risk implications related to residential real estate lending. When people think of money laundering, they often associate that with the teller line and large cash deposits but, in reality, the lending side of a financial institution can be just as susceptible.

Real estate lending can be used as a conduit for placement, layering, and integration by incorporating the following common money laundering schemes:

1. Use of illicit funds to secure loans (e.g., cash-secured loans);
2. Loans paid by third parties or for ambiguous purposes;
3. Structuring to sever the paper trail between borrower and illicit funds; or,
4. Loans involving foreign parties or collateral in high-risk jurisdictions.

Kevin explains more in the video: