A student contacts a real estate broker to view a home but cancels last minute due to illness. The student wants to quickly buy the 800,000 USD home…

The scenario described in the question presents several indicators of potential money laundering

through real estate, which the broker should be aware of and report accordingly. The most relevant

red flags are:

Value: The student wants to buy a home that is overvalued, meaning that the asking price is higher

than the market value or the appraisal value of the property. This could indicate that the student is

trying to launder a large amount of illicit funds in one transaction, or that the seller is colluding with

the student to inflate the price and receive a kickback. Overvaluing or undervaluing properties is a

common technique used by money launderers to manipulate the price of real estate and conceal the

source or destination of their funds12.

Inconsistency: The student’s behavior and profile are inconsistent with the typical characteristics of a

legitimate home buyer. The student cancels the viewing of the home at the last minute due to illness,

which could suggest a lack of interest or a pretext to avoid scrutiny. The student also wants to buy an

expensive home despite being a student, which could indicate a discrepancy between the student’s

income and the source of funds. Moreover, the student disregards the broker’s objections to the

asking price, which could imply that the student is not concerned about the value or quality of the

property, but rather the amount of money that can be laundered through it34.

Transaction speed: The student wants to quickly buy the home, which could indicate a sense of

urgency or pressure to move the illicit funds before they are detected or seized by the authorities.

Money launderers often use fast transactions to avoid raising suspicion or leaving a paper

trail. Transaction speed is especially relevant when combined with other red flags, such as cash

payments, anonymous buyers, or overvalued properties5 .

Reference:

Understanding Money Laundering in Real Estate

RED FLAG INDICATORS FOR REAL ESTATE SECTOR

Investigating Money Laundering through Real Estate

AML Red Flags Associated with Real Estate Sector Businesses

FinCEN Proposes Rule to Combat Money Laundering and Promote Transparency in Residential Real

Estate

[ACAMS Study Guide, 6th Edition, Chapter 7, pp. 200-201]