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A.steve

Land And International Mortgage Fraud...

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I have begun thinking about how it might be possible to identify where there has been mortgage fraud, and am wondering what could be done about it if such a fraud was suspected.

As far as I can tell, it is perfectly OK for foreign nationals to own land in the UK... and, assuming you buy and sell at the right prices, land might well be a great investment - since it generates rent, so has a yield. What interests me most are the tax implications - what would be the situation, for example, if the land-owner was not a real person? Would any crimes be committed charging rent on land that was not legally owned? If so, what laws?

If rent is charged on land, it will be paid into some kind of bank account. Must this bank account bear the name of the account holder in the UK, or are numbered-only Sterling accounts legal in the UK? If, for example, rent were being paid into an account with an implausible name - would anyone be responsible for flagging this up as possible money laundering or tax evasion?

I understand that the laws have changed considerably in the UK in recent years. Has anyone looked into this? Any pointers?

I'm interested both in the situation in the UK and the situation in the USA.

Any ideas?

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Whilst not complete I'd summarise as follows.

If the buyer is foreign and buying in cash in the UK then the responsibility of checking that the money is not laundered would fall to the solicitor... they might try and "portect" themsleves a little by insiting on payment from a UK bank, the UK bank would then need to use their own processes (as well as the solicitor) to try and verify the money had not been laundered.

Whilst policies are in place I am not sure how robust the system is... I would guess you could open an account in Mexico in the name of a company then get yourself into the drugs/prostitution/extortion/kidnapping .. whatever.. game.. deposit funds over a period then set up a subsidiary in the UK, transfer money from mexico to the UK and you'd pass the checks.

It is of course possible for companies to own property in the Uk rather than people and so in that way you could very easily find yourself paying rent to x/y/z Ltd... or indeed x/y/z SA or whatever .. the company could be a Uk company or an overseas company.

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Whilst not complete I'd summarise as follows.

Erm, I think you're thinking about something subtly different to me.

If, for example, one could borrow a lot of money in the USA, then one could shift this money to Britain - and buy real-estate. There'd be interest payments to be made, of course, and then the British rents would need to be somehow transferred back to the USA to service debt. Rents in the UK, however, are considered income and are liable for taxation...

A scheme (which I hope is illegal) would be to borrow money in the USA using false identities; bring this money to the UK and buy real-estate; collect rent on the real estate bought with fraudulently obtained US money using another false identity - and, somehow, transfer the value of rents back to the USA - for example, by using them to increase capital values through renovation... or by shipping high value goods like gems, artwork or cars - for example - back to the USA.

I understand that banking regulations have changed in recent years - and that now I can't legally have a bank account for "Mr Donald Duck" - unless I were to change my name by deed poll. Does anyone know about this?

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Erm, I think you're thinking about something subtly different to me.

If, for example, one could borrow a lot of money in the USA, then one could shift this money to Britain - and buy real-estate. There'd be interest payments to be made, of course, and then the British rents would need to be somehow transferred back to the USA to service debt. Rents in the UK, however, are considered income and are liable for taxation...

A scheme (which I hope is illegal) would be to borrow money in the USA using false identities; bring this money to the UK and buy real-estate; collect rent on the real estate bought with fraudulently obtained US money using another false identity - and, somehow, transfer the value of rents back to the USA - for example, by using them to increase capital values through renovation... or by shipping high value goods like gems, artwork or cars - for example - back to the USA.

I understand that banking regulations have changed in recent years - and that now I can't legally have a bank account for "Mr Donald Duck" - unless I were to change my name by deed poll. Does anyone know about this?

I see, having considered it opening a brothel in mexico would be more profitable.... I don't kniow about US banks but when you buy in the UK you would have to get through UK anti-moneylaundering laws.

If you open a UK bank account using anothe rfalse identity then again you'd have to go through the moeny laundering laws.

If you transferred the US money to a UK bank then again you'd have to get through the money laundering laws.

However of greatest interest however must be that even in a rising market you'd surely struggle to make money out of the rent as there'd be no tax benefit.... the rent you return to the US wouldn't be enough to pay the debt, unless of course you chose to "disappear" the false ID that took out the original debt.

I expect someone could create id's and show you a process that would get it through UK money laundering and I expect US moneylaundering but if held up of course it'd all be strictly illegal not a way through loopholes.

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I see, having considered it opening a brothel in mexico would be more profitable.... I don't kniow about US banks but when you buy in the UK you would have to get through UK anti-moneylaundering laws.

If you open a UK bank account using anothe rfalse identity then again you'd have to go through the moeny laundering laws.

If you transferred the US money to a UK bank then again you'd have to get through the money laundering laws.

Brothels in Mexico aside (they're not my concern) I think we're now on the same page. I would really like to know what the anti-money-laundering laws actually are. If they've changed recently, I'd like to know what changed and when it changed. I'd like to know how this relates to both UK and US accounts.

I talked to real-life bank workers about this, and they said that they have their own "internal procedure" - but if I suspected an account was bogus, they'd not be allowed to tell me anything (even if they knew) as a result of the "Data Protection Act". In any case, all my bank would know is a sort-code and account number... they wouldn't even know the name of the person or company whose account it is. We agreed that this was 'deeply unsatisfactory' - but that no more could be established from the perspective of payments made... there is no transparency.

However of greatest interest however must be that even in a rising market you'd surely struggle to make money out of the rent as there'd be no tax benefit.... the rent you return to the US wouldn't be enough to pay the debt, unless of course you chose to "disappear" the false ID that took out the original debt.

I expect someone could create id's and show you a process that would get it through UK money laundering and I expect US moneylaundering but if held up of course it'd all be strictly illegal not a way through loopholes.

In a rising market the scam makes perfect sense. Borrow $2m in a false name in the USA; Invest in UK real-estate (keeping some cash back to service the debt for a few years... using rent to pay for renovation and to offset depreciation of fixtures and fittings - etc. After 5 years, say, sell the real estate for a capital gain.. if real estate rose at 10% /anm and debt service costs were 5% then this sort of deal would net $500m over the 5-year time scale. There is little or no risk if the debts are attributable to bogus names.

Here's the business plan that I'm sure must be illegal in many ways:

1. Borrow $2m in the USA using a false identity at 5%/anm interest.

2. Forex some of the money to the UK to get £750K sterling with an audit trail that crosses regulatory jurisdictions, so is unlikely to be investigated.

3. Buy real-estate in the UK for £750K - and rent this out at market rents... using the money for renovations and building works in the UK... using up the Sterling yields.

4. Service the US debt using the excess capital borrowed in step 1 - which has provision for 5 years' solvency.

5. Cross fingers and hope that real-estate rises by 10%/anm - not an entirely unreasonable expectation judging by recent history.

6. After 5 years, or sooner if a really good offer comes along, sell the £750K real-estate for profit...

The problem with this business plan, of course, is that if it were to be done legitimately and honestly... there'd be considerable risk if real-estate prices do not rise as expected. This risk, I'm suggesting, is mitigated if false names are used - perhaps using the identity of people who have died.

If one were to suspect that this sort of a scheme is in place, what specific laws would be being broken in the UK and USA?

I once sold a (tiny) house and I needed to prove my identity to a "Notary Public" - I proved who I am (as far as I remember) using a birth certificate and a passport. Is the fact that the "owner" of the real-estate is non-British relevant in the above scam?

If you suspected this scam was going on - what practical things could you do about this as an ordinary person?

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Easiest way to do it is to open accounts in your tenants names.

Uh? Am I being slow or is that a complete nonsequitur?

Essentially, I'm asking if tenants can identify who their landlord really is.

Maybe I should be asking about "sub letting" - and what the law has to say about it.

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Uh? Am I being slow or is that a complete nonsequitur?

Essentially, I'm asking if tenants can identify who their landlord really is.

Maybe I should be asking about "sub letting" - and what the law has to say about it.

If I was the landlord wanting to launder and recycle payments, I would use the tenants identities.

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If I was the landlord wanting to launder and recycle payments, I would use the tenants identities.

Ah-ha, I agree - that's possible, at the very least in theory.

Does no-one here understand what the law says about identity with respect to land-registration and Bank accounts?

P.S. Has anyone here used any of the services to 'protect identity' - I've heard of some who will inform you if anyone tries to take out credit in your name... do they seem to work? Does anyone here use them? I'm not interested in insuring against identity theft, I'm interested in stopping identity theft before it happens.

Edited by A.steve

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Brothels in Mexico aside (they're not my concern) I think we're now on the same page. I would really like to know what the anti-money-laundering laws actually are. If they've changed recently, I'd like to know what changed and when it changed. I'd like to know how this relates to both UK and US accounts.

I talked to real-life bank workers about this, and they said that they have their own "internal procedure" - but if I suspected an account was bogus, they'd not be allowed to tell me anything (even if they knew) as a result of the "Data Protection Act". In any case, all my bank would know is a sort-code and account number... they wouldn't even know the name of the person or company whose account it is. We agreed that this was 'deeply unsatisfactory' - but that no more could be established from the perspective of payments made... there is no transparency.

In a rising market the scam makes perfect sense. Borrow $2m in a false name in the USA; Invest in UK real-estate (keeping some cash back to service the debt for a few years... using rent to pay for renovation and to offset depreciation of fixtures and fittings - etc. After 5 years, say, sell the real estate for a capital gain.. if real estate rose at 10% /anm and debt service costs were 5% then this sort of deal would net $500m over the 5-year time scale. There is little or no risk if the debts are attributable to bogus names.

Here's the business plan that I'm sure must be illegal in many ways:

1. Borrow $2m in the USA using a false identity at 5%/anm interest.

2. Forex some of the money to the UK to get £750K sterling with an audit trail that crosses regulatory jurisdictions, so is unlikely to be investigated.

3. Buy real-estate in the UK for £750K - and rent this out at market rents... using the money for renovations and building works in the UK... using up the Sterling yields.

4. Service the US debt using the excess capital borrowed in step 1 - which has provision for 5 years' solvency.

5. Cross fingers and hope that real-estate rises by 10%/anm - not an entirely unreasonable expectation judging by recent history.

6. After 5 years, or sooner if a really good offer comes along, sell the £750K real-estate for profit...

The problem with this business plan, of course, is that if it were to be done legitimately and honestly... there'd be considerable risk if real-estate prices do not rise as expected. This risk, I'm suggesting, is mitigated if false names are used - perhaps using the identity of people who have died.

If one were to suspect that this sort of a scheme is in place, what specific laws would be being broken in the UK and USA?

I once sold a (tiny) house and I needed to prove my identity to a "Notary Public" - I proved who I am (as far as I remember) using a birth certificate and a passport. Is the fact that the "owner" of the real-estate is non-British relevant in the above scam?

If you suspected this scam was going on - what practical things could you do about this as an ordinary person?

Not that you have put any time or effort into thinking about it or anything....... :lol::lol:

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Not that you have put any time or effort into thinking about it or anything....... :lol::lol:

I've put plenty of time into thinking about this. Now I'm wondering what could be done in practice.

I always thought that it was illegal to have Sterling bank accounts in false names. I'd imagined it was illegal to use false names to register land.

Is this a situation where, while technically illegal, in practice, there's no consequence for those who flout the rules?

Eric Pebbles, where are you when you're needed?

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I've put plenty of time into thinking about this. Now I'm wondering what could be done in practice.

I always thought that it was illegal to have Sterling bank accounts in false names. I'd imagined it was illegal to use false names to register land.

Is this a situation where, while technically illegal, in practice, there's no consequence for those who flout the rules?

Eric Pebbles, where are you when you're needed?

:P I have to say -- I don't know much at all about this. The taxman should - and probably does - have ways and means of tying land ownership, rental incomes, bank accounts etc etc. Then again, maybe the taxman isn't up to scratch on all this.

I have often wondered how much land/property is held by organisations rather than people. I personally think that land/property MUST by law be held by a PERSON - and the more that PERSON owns, the more taxed he should be.

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I have often wondered how much land/property is held by organisations rather than people. I personally think that land/property MUST by law be held by a PERSON - and the more that PERSON owns, the more taxed he should be.

Is that a statement about morality, or a statement about law?

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