The cost of housing has skyrocketed since the banker-caused 2008 financial crisis and there are no signs of prices stabilizing. In Toronto we’ve seen the price of housing rise faster than wages and the same can be said for nearly every major city on the planet. A key reason this is happening stems from using housing as a commodity for money laundering. Yes, that’s right the cost of your house is higher because governments are letting criminals artificially inflate the market.
In the states, like elsewhere, housing can be bought by secretive numbered companies (which don’t disclose who owns what). So the American Treasury ran a very simple pilot project to stop money laundering through real estate by looking into these secretive buyers. They made insurance companies find out who actually owned companies that were buying luxury real estate in a few cities.
It also seems to have had an effect on the market. Since the scheme started, there has been an almost 70% drop in companies buying real estate with just cash, according to an academic paper published last year. Those figures suggest that â€œanonymity plays a significant roleâ€ in people using secretive shell companies to buy property, and money-laundering was a â€œlikely causeâ€ for wanting that secrecy, Ville Rantala, a finance professor at Miami Business School and co-author of the paper, told Quartz after the paperâ€™s publication last summer.
This is more than just a moral issueâ€”it has national security implications. Rantala pointed to Russians hit by sanctions after the Kremlinâ€™s efforts to sway the 2016 presidential election. â€œIf there are these kinds of loopholes, itâ€™s hard to know whether people targeted by sanctions may be able to make purchases in the USâ€”so thereâ€™s really cause to be concerned about anonymous buyers,â€ he said.