Davis Polk partner Dan Stipano discussed FinCEN’s recent alert in Law360, which stated that the network’s analysis of financial institutions’ reports of suspicious transactions shows potential U.S. commercial real estate investments by sanctioned Russian nationals and companies.

“Commercial real estate transactions tend to be complicated and opaque, with use of shell companies and trusts and other legal entities that could conceal who the real principals behind the transactions are. So that makes it attractive,” Dan explained. “The other thing is that commercial real estate tends to be pretty stable. If your money is parked in a commercial real estate project, you probably are not going to lose all your money.”

Dan also noted that the “practical effect of this is that banks will be even more on the lookout for potentially suspicious transactions involving commercial real estate, and that would mean some form of enhanced due diligence.”

“FinCEN Takes Aim At Commercial Property Amid Ukraine War,“ Law360 (January 27, 2023) (subscription required)

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