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Combating money laundering is of financial benefit for real estate buyers, according to a study by the University of Trier. This shows for the first time an empirical connection between increased money laundering activities and rising real estate prices.
If the number of suspicion of money laundering increases, then a price increase on the real estate market can also be observed- according to the result of an analysis, carried out by a research team from the Institute for Money Wage and Corruption Criminal Law at the University of Trier.
With the study that SWR And the Süddeutsche Zeitung is empirically proven for the first time that increased money laundering activities are related to rising real estate prices.
Financial benefit for Real estate buyer
Effective control of money laundering not only has regulatory advantages, but also a noticeable financial benefit for real estate buyers, said Matthias Neuenkirch, co-author of the study.
“A ten percent reduction in money laundering in the real estate sector, according to a decline in suspected reports by around 30 million euros, could reduce real estate prices by 1.9 percent.” An apartment with a purchase price of 360,000 euros would cost 6,380 euros less if money laundering was effectively fought, Neuenkirch calculates.
Markets for Condominiums compared
In their study, the researchers compared the number of suspected reports on money laundering and the price development on the market for condominiums in the top 7 cities in Germany, including Munich, Hamburg, Frankfurt and Düsseldorf.
The researchers received suspected reports from the Financial Intelligence Unit (FIU), which is responsible for fighting money laundering in Germany. These reports were compared with publicly accessible data on real estate transactions and real estate prices. They stated that the more suspected reports there were in the years 2020 to 2024, the higher the property prices.
The research group assumed that there is a connection between the suspected cases and actually committed money laundering offices.
Since 2020 reporting obligation
For their calculations, the researchers used the increased reporting volume as a result of the money laundering registration ordinance for real estate that came into force in October 2020. This regulation was introduced to determine money laundering in real estate transactions through reporting requirements.
According to the regulation, notaries or banks must suspect, among other things, if something indicates that money from illegal business is involved or, for example, should be paid for with cryptocurrency.
Several billion euros annually
Despite new regulations, the German real estate sector is still affected by money laundering. Estimates assume that several billion euros will flow from organized crime to the German real estate market every year.
For a long time it was legal in Germany to pay real estate in cash, and this has been prohibited since 2023. Nevertheless, criminal real estate acquisitions through nested company structures that are difficult to identify the actual owner.
More qualified investigators necessary
The prohibition of cash payments in real estate sales can be just a first step, says Mohamad el-Ghazi, the director of the Trier Institute for Corruption and Corruption Criminal Law. “A certain potential would have offered a real estate transaction register, but its introduction failed at the fracture of the traffic lights. In the end, the following also applies: we need more qualified investigators.”
The Fiu has repeatedly made the headlines in recent years because of its inefficiency. Two years ago it became known that the special unit had not processed more than 100,000 suspected reports as relevant because the authority did not technically follow the evaluation.
