Spain’s real estate money laundering problem is probably bigger than Madrid realizes

Our new index with Transparency International, the Opacity in Real Estate Ownership (OREO) Index, reveals that Spain ranks almost last among leading economies when it comes to collecting and making available data that can detect and deter illicit funds moving through the real estate sector. Among the 24 G20 members and guests and non-G20 finance hubs we assessed, only Argentina achieves a worse score on the part of the index focused on data.

More positively, Spain is in the top six of countries assessed on the adequacy of their anti-money laundering (AML) legal frameworks for the real estate sector, securing a ranking of tenth in the OREO Index overall.

But, as we’ve previously discussed in relation to France, a good data system is essential for allowing the media, academic and civil society researchers to not only identify potential money laundering cases, but also determine if AML legislation is working well, identify weaknesses and advocate for improvements.

Spain’s low score on the data part of the index should set alarm bells ringing in Madrid. 

Like France, Spain’s EU membership, relative political and economic stability, and luxury real estate along coasts and in major cities make it an attractive destination for corrupt and kleptocratic cash. Both countries also have strong linguistic and cultural ties to former colonial regions with – perhaps not coincidentally – high corruption levels. But while good real estate data availability in France is helping advocates improve the situation, real estate in Spain remains something of a black box. 

Looking Behind the Wall: Data Availability and Advocacy for Stronger AML-CFT Legislation in France

The very big tip of an iceberg

In 2017, Spain siezed more than 500 properties worth around $700 million from Riffat Al Assad, the uncle of the recently deposed Syrian dictator Bashar Al Assad. Assad’s empire included a €60 million country estate and commercial and residential properties in popular tourist regions. Assad, who twice tried to sieze power in Syria and allegedly left with $300 million in state cash in the 1980s, was convicted of money laundering in France in 2020. This month, eight of his family members – two wives and six children — are due to stand trial in Spain on money laundering charges. 

In 2018, Spain siezed 115 properties worth €60 million as part of a probe into Venezuelan government funds laundered in Spain. One of those arrested at the time, Luis Fernando Vuteff, pled guilty in the U.S. in May 2024 to laundering $1.2 billion that was stolen from the Venezuelan government. For his laundering services, Vuteff received almost $4m in fees through a commercial real estate company in Spain, according to information filed with his U.S. plea agreement. Properties in Madrid were included in those forfeited to the authorities.

Enormous property portfolios linked to illicit cash should have moved real estate transparency up the political agenda. But stopping money laundering is not a priority for Madrid, says Allesandro di Stasio, a journalist from the independent Venezuelan investigative outlet ArmandoInfo who has dedicated the last four years to tracking the flow of money invested in Spain by Venezuelan officials investigated for corruption. 

Data on suspicious transactions reports (STRs) suggests complacency in the industry, as well. In 2023, Spanish real estate professional submitted just 103 STRs. In France the same year, they submitted 505, a number which the French financial intelligence unit admits “falls short of what might be expected” given the size of the country’s real estate market. Spain’s has approximately two-thirds the real estate volume of France, but it’s STR total includes those by property developers, who are not yet subject to AML regulation in France (the Senate has passed legislation to cover them).

The key is in the loophole

At the same time, professional money launderers buying Spanish real estate could altogether avoid professionals who are required to report suspicious transactions. As in Russia and the UAE, anyone in Spain can carry out a real estate transaction without the involvement of a notary or other obliged professional. 

Spain is also one of only two counties assessed – along with Norway – where it is not obligatory to register a property in the real estate register. Loopholes like this can stop even the authorities from easily accessing information on relevant real estate transactions, increasing the difficulty of investigations. In the Assad case, it was French authorities who identified properties in Marbella owned by companies linked to Assad’s immediate family.

The Opacity in Real Estate Ownership (OREO) Index

While the public can access the Spanish land registry, they can only do so to query a specific property, for a fee. Journalists and NGO investigators are unable to search a central register for all the properties owned by a company linked to a politically exposed person, for example. They also have to demonstrate that they have a legitimate interest in accessing the information about the property.  

Cash and gold from Venezuela 

One case revealed by ArmandoInfo involves a luxury Madrid villa used as the headquarters of companies that were allegedly set up to launder bribes by Odebrecht to a high-ranking Venezuelan government offical, Diosdado Cabello, former Minister of Public Works and current Minister of Interior Relations and Justice.

Cabello’s cousin and his associates set up Spanish companies and purchased real estate in Spain after, Venezuelan prosecutors alleged, the minister took bribes to inflate infrastructure contracts.

Alarmingly, sources at the Spanish prosecutor’s office told reporters at ArmandoInfo that senior officials in Spain had put pressure on them not to pursue investigations into high profile Venezuelan officials’ companies and properties in Spain.

Such allegations take on extra significance amidst the ongoing Delcygate scandal, which has revealed high level ties between the governments of Spain and Venezuela.

The scandal began when Spain’s then Transport Minister, José Luis Ábalos, secretly met Venezuela’s EU sanctioned Vice-President and Minister of Petroleum, Delcy Rodríguez, at Madrid airport in 2020, despite Rodríguez being barred from entering the EU. Investigations since have revealed that an assistant to Ábalos had helped arrange Rodríguez’s trip to Spain, which allegedly included delivering 104 gold bars worth $68.5 million bought by a Spanish businessman – in a deal allegedly facilitated by Ábalos’ transport ministry.

Clean the market, not just the house

Delcygate and other corruption scandals swirling around Prime Minister Pedro Sanchez’s government should lead to change that includes, but goes beyond, accountability for those responsible. Systemic vulnurabilities to dirty money must be kept in view.

Prosecutors and law enforcement should have the tools, resources and freedom to go after properties bought with dirty cash. That includes bringing real estate data up to standard, and closing loopholes in AML legislation. Making real estate data openly available would increase media and civil society reporting on the issue, helping spread awareness of the problem not only among policymakers and the public, but also among the designated professionals in the sector who should be the front line of Spain’s defence against dirty money.