The Financial Crimes Enforcement Network (FinCEN) has issued an alert to financial institutions regarding potential investments in the U.S. commercial real estate (CRE) sector by sanctioned Russian individuals and entities.

Because of the highly complex financing methods and opaque ownership structures (such as trusts, shell companies and pooled investment vehicles) that are common in CRE investment, the CRE market presents unique challenges for financial institutions in detecting sanctions evasion, according to the alert, which notes nine red flags for financial institutions to consider.

Citing an NAR survey, the alert states that 8.4 percent of those surveyed reported that they closed a sale with a foreign client residing abroad, and this figure was above 10 percent for several years prior to the pandemic.

Last Updated on January 29, 2023 by Ramin Seddiq