Fabiano Angélico, senior researcher at the Public Integrity Research Group (GRIP) – Università della Svizzera italiana (USI), and Prof. Jean‑Patrick Villeneuve (GRIP &USI) share early insights from the “Corruption in Paradise” project. They explore how rapid urban growth and tourism in Brazil, Kenya and Indonesia open doors to real estate money laundering.
In Brazil’s Balneário Camboriú, the city dubbed the “Dubai of South America”, luxury towers rise from what was once a sleepy fishing village coastline. The city now boasts the country’s highest property prices per square meter. But behind the gleaming facades lies a darker reality: criminal organizations have turned this coastal paradise into a “drug trafficking laundromat”, according to local media reports.
Similar stories unfold across tourist destinations in the Global South. In Bali, foreign investors snap up beachfront properties while local brokers exploit generosity inherent to specific cultural traditions and political connections to facilitate questionable land deals. Our research reveals that the financial burden of expensive cultural ceremonies, combined with broader political, economic and social pressures—and in some cases, threats and violence—leaves many locals vulnerable to selling their ancestral land, often out of necessity rather than choice.
Nairobi’s upscale Westlands district has seen companies purchase commercial real estate with funds that investigators suspect originate from regional conflicts and corruption. In 2024, Kenya’s Assets Recovery Agency froze a luxury apartment purchase after tracing funds to a transaction involving an individual on sanctions lists for financing instability in Yemen.
These findings emerge from “Corruption in paradise: An ecology of money laundering through real estate in the touristic Global South,” an ongoing research project led by GRIP (Public Integrity Research Group) at USI — Università della Svizzera italiana, in Switzerland. The project involves strategically selected local partners in Brazil, Kenya and Indonesia — respectively, the Getulio Vargas Foundation in Sao Paulo (FGV-SP), the Civil Forum for Asset Recovery (CiFAR), and Politeknik STIA LAN Jakarta. The three countries were chosen as illustrative cases of Latin America, Eastern Africa and Southeast Asia.
The urban boom meets dirty money
Cities across the Global South are experiencing unprecedented growth. São Paulo, Nairobi, and Jakarta have emerged as regional economic powerhouses, attracting legitimate investments but also more questionable dynamics. This urban expansion creates multiple entry points for real estate money laundering that traditional oversight mechanisms fail to identify.
The scale is staggering. In Brazil, real estate represents 10% of GDP with annual transactions worth $114 billion. Kenya’s property sector contributes 8.8% of GDP, yet the construction sector alone accounts for 56.5% of all legal structures that had been abused for money laundering purposes, according to a national risk assessment published in 2023. Indonesia has witnessed corruption proceeds laundered through real estate, including a 2020 case where USD 1.1 billion stolen from a state insurance company was converted into apartment and housing developments in Jakarta and its metropolitan region.
Tourism amplifies these vulnerabilities. Business travellers frequent major commercial hubs while leisure tourists flock to coastal resorts and cultural destinations. Both flows create natural cover for suspicious investments. Criminal organisations blend their transactions with legitimate foreign and domestic buyers, making detection particularly challenging.
Beyond the usual suspects
International anti-money laundering frameworks focus heavily on traditional “gatekeepers” — real estate agents, lawyers, and banks. Our research across Brazil, Kenya, and Indonesia confirms these actors remain crucial in the Global South. Real estate agents facilitate transactions, lawyers structure ownership, and banks process payments.
But the ecosystem extends far more widely. Construction companies have emerged as central players, particularly in rapidly growing cities where new buildings constantly reshape skylines. In Kenya, construction firms account for a disproportionate share of legal entities implicated in money laundering schemes. These companies exploit the sector’s cash-intensive nature and minimal regulatory oversight to integrate illicit proceeds into the formal economy.
Property developers play similar roles, establishing legitimate businesses that can absorb large cash injections. Brazilian investigations revealed criminal organisations creating development companies specifically to channel drug trafficking profits through luxury coastal projects.
Land dealers represent another critical category often overlooked by international frameworks. As cities expand outward, these actors control access to newly available and valuable territory. Their transactions frequently involve cash and informal arrangements that bypass formal monitoring systems.
When enforcement fails
Strong legal frameworks exist on paper across all three countries studied, but implementation tells a different story. Brazil provides the most striking example: only a tiny fraction of transactions are reported as suspicious. In 2024, real estate agents flagged fewer than 1,500 transactions as suspicious—despite a market worth over USD 100 billion annually and a workforce of 600,000 real estate professionals. According to experts interviewed, this represents massive underreporting.
Self-regulation models prioritize protecting professional interests over anti-money laundering enforcement. Meanwhile, local governments appear heavily influenced by construction and development sectors, creating permissive environments for questionable projects.
In Indonesia, investigators have identified patterns where illicit funds move from stocks and cryptocurrency into property as a destination, according to our fieldwork. This layered approach exploits regulatory gaps between different asset classes and the agencies that oversee them.
Kenya demonstrates how political connections compound enforcement challenges. Real estate seems to serve as a prime vehicle for corrupt officials to park ill-gotten funds, with a high proportion of politically exposed persons (PEPs) controlling properties in Nairobi’s high-end districts. The country’s placement on the FATF grey list in 2024 highlighted these vulnerabilities but also created pressure for reform.
Counting the costs and fixing the system
The consequences extend beyond distorted property markets. Criminal real estate investments undermine governance structures, fuel inequality, and create safe havens for transnational crime networks. Ordinary citizens face inflated housing costs while criminal organizations acquire valuable assets using stolen money. International reputation suffers too, as Kenya’s grey-listing demonstrates how money laundering vulnerabilities attract scrutiny that can harm legitimate economic development.
Addressing these challenges requires rethinking anti-money laundering approaches for the Global South context. Current international standards, designed primarily for North America and Western Europe, leave critical gaps when applied south of the Equator. The solution demands expanding oversight beyond traditional gatekeepers to encompass the full ecosystem of actors involved in property transactions, while strengthening enforcement mechanisms that can navigate both formal and informal financial systems prevalent in these rapidly urbanising economies.
The path ahead
Rapid urban growth across the Global South will continue creating new opportunities for money laundering. Paradise destinations will keep attracting both legitimate businesses and criminal organisations seeking to hide dirty money. Without adapted regulatory frameworks, these vulnerabilities will persist.
Construction booms, tourism flows, complex ownership arrangements, and informal financial systems create distinct challenges that require tailored solutions. Success depends on recognising that real estate agents remain important gatekeepers while acknowledging the wider ecosystem of actors involved in property transactions. Only comprehensive approaches that address both traditional and emerging players can hope to stem the flow of criminal cash through the world’s fastest-growing cities.
These findings, however, remain preliminary. Key questions about the relationships between actors both to enable and counter real estate money laundering require further investigation. Our ongoing research aims to clarify critical dimensions that remain underexplored: the specific instruments and activities used to launder money in property transactions and the regulatory measures applied thus far; the formal and informal platforms and coalitions used by actors in the ecosystem to coordinate strategies and align actions; and the dynamic interplay between these elements. Understanding these dynamics is essential for developing effective, context-sensitive interventions that can adapt to the evolving nature of financial crime in emerging markets.
This blog draws on the GI ACE project “Corruption in Paradise”. Find out more about the project here