Ask us not to insist on this point. But Annette Alstadsæter has come to receive threats and fear for her safety as a result of her work. So we will not give more details. This Norwegian academic, a professor at the Norwegian University of Life Sciences, has put her finger on the sore point of laundering, which may have upset someone. Her thesis is simple. Years ago, whoever wanted to hide her money would go to a country (we will not give names) with bank secrecy and the wealth could be hidden.
However, today it is no longer so simple. Banks are part of the global financial circuit and organizations such as the OECD have implemented systems such as the automatic exchange of financial data. So Alstadsæter, who runs the university’s prestigious center for tax research, has started looking at real estate.
His argument, which he presented in Barcelona a few days ago at an event organized by the Barcelona Economic Institute (IEB), is that real estate represents a growing option for laundering money from illegal transactions. The starting point is that not all countries have property registries. And those that have it do not exchange it so easily (certainly not automatically) with third-party states.
And even worse: its regulations allow the owners of the real estate assets to hide behind a chain of shell companies. In summary, it is sometimes difficult to know who is the true owner of the property.
“We have lost the focus of the battle. Years ago it was enough to go with a briefcase to Switzerland. Now it is more efficient to invest in the real estate sector, which also contributes to inflating housing prices and thus more money can be hidden ”, he explains. “Real estate is a relatively safe and stable environment to park money, taking into account that there is no single or global registry,” Alstadsæter illustrates.
This Norwegian professor warns that the real problem occurs when with this money that is intended to be hidden (or that is of illegal origin) strategic infrastructures, such as ports or logistics warehouses, are purchased instead of simple buildings: this can affect to the security of a country. In any city in the world. “Oslo or London are new tax havens,” she warns.
In general, their investigations have shown what many of us already suspected: that levels of tax avoidance increase as income rises. Who else has, more interest has in hiding. And it can do more, because it has experts, advisers and suitable human resources to carry out its objective. For example, it has been shown that the richest Scandinavians evaded up to 25% of income tax, a much higher percentage than the entire population of this region, where the average figure is less than 3%.
His Dubai Uncovered document paints a revealing picture of this Middle Eastern metropolis, after analyzing the ownership of almost 500,000 properties in this city, also relying on information provided by journalistic investigations.
Not only is the property registry not public there, but with some countries (Norway) there is no extradition treaty. The result is that more than half of the total value of real estate in Dubai is attributable to an “unidentified” owner. Of those identifiable, the largest nationality comes from India, something understandable considering the workforce present in this metropolis.
From there, crossing data has detected many inconsistencies. Like the fact that 70% of the properties owned by Norwegians in Dubai were not declared to the Treasury, obviously with the aim of hiding their existence from the competent authorities.
One of the paradoxes is that Dubai participates in the automatic exchange of financial information… but not real estate. “It is necessary to include this sector in the international agreements against tax evasion and money laundering”, says Alstadsæter.
In a study dating back to 2021, the Tax Justice Network platform noted that “the United Arab Emirates appear to have replaced two British Overseas Territories, the British Virgin Islands and Bermuda, as the preferred destination for multinational companies based in the United States. Low”.
The technique used, according to the investigation, is the so-called “hot potato”. Through this practice, multinationals make huge amounts of money flow from the countries where profits are made to the United Arab Emirates using the Netherlands as an intermediary country. In 2019 alone, 200,000 million dollars from the United States and South Africa were diverted. An amount that many times ends up being converted into a quiet piece of real estate with views of the sea.
