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Panama Papers Leak: 'Front' Companies Offer Wealthy Foreign Investments, But Obscures Law Enforcement

Posted by Staff Reporter on Apr 15, 2016 09:42 AM EDT
'Panama Papers' Renew Focus On Miami Luxury Real Estate Market Boom more big
Condo buildings are seen April 5, 2016 in Miami, Florida. A report by the International Consortium of Investigative Journalists referred to as the 'Panama Papers,' based on information anonymously leaked from the Panamanian law firm Mossack Fonesca, indicates possible connections between condo purchases in South Florida and money laundering. (Photo : Joe Raedle/Getty Images)

The Panama Papers' leaked documents shifted the spotlight to a number of anonymous companies, which were used by the wealthiest in the globe to secretly gather funds. The companies became fronts for celebrities, high-profile politicians, and businessmen to be allowed to purchase properties, trade assets, and open bank accounts while keeping their identities private.

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Americans were made blind of the fact that foreign-owned companies played vital roles in the United States economy, especially the real estate industry. When a shell company is made front in purchasing assets, the US real estate offered wealthy foreigners investments that are by nature secretive, yet stable.

Real estate agents, several of them, said that wealthy buyers who are into this scheme are only trying to protect their privacy. However, through the course of being private, shell companies become instrumental in obscuring the law enforcement's ownership information that are needed in fighting crimes. This specific result is what the Panama Papers leak is revealing: drug trafficking, money laundering, and corruption, according to a feature from the Fusion.

For years, American properties have been an attractive venue for the wealthiest foreigners to gain access to the stable financial system of the US, according to a feature from the Washington Post. However, the Panama Papers also highlighted that US real estate has also become a magnet industry for people who are looking to launder illicit cash.

The Panama Papers, for instance, mentioned Isaias Property which purchased a Bal Harbour oceanfront condominium in Miami for almost $3 million in 2011, according to a report from the Miami Herald. Isaias Property was managed by a company in the British Virgin Islands named Mateus 5 International Holding.

However, the Panama papers showed that the individual behind the deal was Brazilian politician and developer Paulo Octávio Alves Pereira, who is currently under indictment for alleged corruption in Brazil.

The Miami Herald has also uncovered  19 foreign nationals who are purchasing Miami real estate through offshore companies. Eight of those individuals have been associated with corruption, bribery, embezzlement, and tax evasion in their respective home countries.

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