Money laundering also increases real estate prices in Serbia

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Money laundering experts claim that the increase in the prices of residential and business space in Serbia is most likely a consequence of the influence of a significant amount of money from illegal activities on the real estate market, according to the report of the Global Initiative against Transnational Organized Crime (GI-TOC).
Real estate prices are growing faster than in neighboring countries, and are not limited to Belgrade, which is why experts suggest that the Serbian real estate market has become a regional hub for money laundering.
“The real estate industry in Serbia recorded unusually high growth between 2018 and 2020, although many newly built buildings are still empty. Similar to Albania, construction continued to develop during the Covid-19 pandemic, despite a slowdown in the rest of the economy,” it is stated in the publication “Current Prices: Analysis of the Flows of People, Drugs and Money in the Western Balkans”.
Although the amount of money earned by crime that enters the economy (individually) can be relatively small, it can have a significant impact on local economies, the report adds.
Criminal activities can thus increase socio-economic disparities, and money laundering can increase real estate prices and make it more difficult for many citizens to resolve their housing issues.
“(Criminals) reduce market fairness and affect access to different types of services and, if left unpunished, create incentives for others to follow suit. Dirty money made and laundered in the region maintains an ecosystem of crime and corruption that weakens the rule of law and hampers the ability of institutions to deal with the problem,” the publication said.
Real estate is especially convenient because, in addition to being a convenient place to “park” capital, they can also gain in value over time, but they are not the only way to launder money available to criminal organizations.
Laundering smaller amounts of illegally acquired money is often done through companies that require larger amounts of cash, such as restaurants, bars, gas stations and taxi companies.
Across the region, illegally acquired funds in such companies are mixed with actual operating earnings, which are then integrated into the banking system.
Tourism is also cited as a key sector for money laundering, but again through investments in bars, restaurants, discos and hotels.
Across Serbia, especially in Zlatibor, Cajetina, Kopaonik, Palic, Vrnjacka Banja and Vranje, the sale of fruits and vegetables (especially mushrooms) and the use of catering shops for money laundering have also been reported.
From 2018, observers notice that such companies tend to change owners regularly, which is usually accompanied by a jump in turnover and earnings.
Another area in which money laundering is potentially carried out is the gambling industry, according to the Global Initiative.
The International Monetary Fund estimates that this form of economic crime is “responsible” for two to five percent of global GDP.
If these global estimates are applied to the countries of the region, it can be concluded that between 1.8 and 4.6 billion euros are laundered annually in the Western Balkans, the New Economy stated.