As governments scour the earth for Russian oligarchs’ yachts, mansions and bank accounts in the wake of the invasion of Ukraine, a global network of news publications today released new information on $17.5 billion worth of assets owned by Russians identified as cronies of President Vladimir Putin.
Operating under the umbrella of the Organized Crime and Corruption Reporting Project (OCCRP), publications including leading French daily Le Monde and the London-based Guardian have identified more than 120 assets—including land, mansions, companies, boats and planes—that could be tied through documentary evidence to Putin’s circle. The result has been compiled into a Russian Asset Tracker that can be used by readers to further search for Putin-linked wealth.
But when researchers looking for such hidden wealth venture online in San Francisco—one of the world’s top money-laundering destinations—they hit a wall.
That’s because the San Francisco assessor-recorder office’s idea of complying with California’s Public Records Act—which mandates unfettered public access to real estate and other government records—consists of allowing members of the public to physically go to City Hall and view records on terminals in the assessor-recorder’s office. Otherwise, journalists and citizen investigators are stuck paying $3 per page, meaning that examining the ownership of just one building can run up hundreds of dollars in fees.
The U.S. Treasury’s Financial Crimes Enforcement Network identifies 12 metropolitan real estate markets in the U.S. as high risk for money laundering. Local governments in most of those places, including the money laundering havens of New York and Miami, provide the public with deeds and other online real estate records for free. Los Angeles directs members of the public to a third-party service.
Of the four top money-laundering destinations that charge for online access to real estate records, San Francisco is the most expensive.
High fees for real estate records help stop academic researchers, anti-money-laundering activists and journalists from identifying potential wrongdoing, according to a recent report by Transparency International.
“I have come to realize that even a little bit of transparency can undermine massive corruption and criminality,” said OCCRP leader Drew Sullivan, when told about San Francisco’s policy. “If our records are not searchable, then corruption flourishes and bad people use their billions to infiltrate our lives and undermine our democracy.”
The assessor-recorder’s approach to public records mirrors a disregard for transparency across San Francisco city agencies. The Standard in recent months has been forced to engage legal counsel for routine records requests from agencies including the police department, the district attorney’s office and the Department of Public Health.
The Standard has spent weeks with the help of our attorney seeking to compel the release of searchable property records, an effort this publication plans to continue.
Assessor-recorder officials contended over the course of three meetings that it is legal to make members of the public pay exorbitantly because online real estate records management has been contracted out, and thus the fees are out of the city’s hands. State law does not bar the practice, said Assessor-Recorder Director of Communications Adam Mehis.
Karl Olson, an attorney and a specialist in the California Public Records Act who is advising The Standard, disagreed with that legal assessment.
“The California Supreme court has repeatedly said that access to information is essential to uncover potential corruption, both at home and abroad,” said Olson.
Distorting the Real Estate Market
San Francisco is among the dozen cities and counties identified by the U.S. Treasury as being at risk for money being laundered through real estate.
These transactions can aid criminal activity in the purchaser’s home country. But money laundering also has pernicious influences within the city. Purchasers are often indifferent to price, creating a false and inflated market in which everybody overpays, even at real estate’s lower rungs, where priced-out buyers seek refuge.
“We have seen real estate prices increasing in places that are attractive for people wishing to launder money,” said Maíra Martini, a Transparency International money laundering expert speaking from the organization’s international secretariat in Berlin.
“It doesn’t just affect the affordability of their homes, but it also affects the surrounding businesses. There’s nobody to use the laundry service next door,” added Lakshmi Kumar, policy director of Global Financial Integrity, an anti-money-laundering think tank in Washington. Luxury apartments that then sit vacant are a favored vehicle for criminals seeking to hide assets.
Supervisor Aaron Peskin said he has pressed San Francisco assessors on the issue of access to real estate records for 20 years. He met a month ago about the topic with newly-elected Assessor-Recorder Joaquín Torres, and Peskin will introduce a resolution Tuesday calling for all information documenting real estate transactions to be instantly available on the internet for free.
“It’s an embarrassment,” he said. “All of this data, whether it’s used to track down oligarchs or money launderers, or just to understand the title of your property, should just be transparent and accessible.”
Transparency International in 2020 documented how these types of paywalls are proliferating, and thus assist international wrongdoers.
“If you choose a private provider to run the registry for you, then there should be very clear rules on how to set up costs,” said Martini. “Basically what we have been saying, and what we have been advocating for, is nobody should be making profit from public information.”
San Francisco could go further than merely complying with state law and release the records from behind its paywall. This city could look to policies proposed in the United Kingdom and elsewhere, such as recording all real estate whose owners are hidden behind a limited liability company in its own separate registry, making these types of records easier to track.
“The country hasn’t fixed it, and your locality hasn’t fixed it. We don’t have proper transparency and access to these records so that people can unravel them,” said Louise Shelley, a George Mason University government professor focusing on money laundering.
Matt Smith can be reached at [email protected]