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  HOME | Brazil (Click here for more)

Alarm Sounded About Money Laundering in Sao Paulo Real Estate

SAO PAULO – Thousands of properties in the most expensive neighborhoods of Sao Paulo belong to little more than 200 shell companies associated with tax havens, which has awakened suspicions that the real estate sector of Brazil’s largest city could be used for laundering illegal funds, according to a report by Transparency International.

The investigation, released Monday, said that 3,452 high-end properties are owned by 236 shell companies registered in Brazil but with close ties to corporations based in some 20 tax havens.

The value of these properties is around $2.7 billion, of which 62 percent are business units and 29 percent are residential properties.

“The hypothesis we’re weighing is that this could be a strategy, a tactic, to launder money. In other words, illegal funds perhaps obtained through corruption are invested and laundered through the real estate sector,” Fabiano Angelico, a consultant for Transparency International in Brazil, told EFE.

The international NGO found that those 236 companies, though registered in Brazil, “are controlled,” or “most of their capital” is owned, by offshore firms, which is to say, located in other countries, which tend to be tax havens, and where they don’t engage in any business activities, Angelico said.

The five principal territories where offshore firms are registered that own these properties in Sao Paulo are the British Virgin Islands, Uruguay, Panama, Switzerland and Delaware in the US.

Investments in real estate is a favored tactic of corruption rings, since with a single transaction, a large amount of illegal resources is transformed into “clean money.”

Offshore companies in Brazil are legally allowed to acquire properties without declaring the final beneficiary, the report said.

In Brazil, “information about company registration and of its proprietary partners is very bad and not very transparent...and it is something that must be fixed,” Angelico said.

 

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