French Ministry of Finance warns against money laundering through chateaux purchases
- Wednesday 7 August 2013
Chateau La Commanderie in Pomerol sold to a Hong Kong couple in May 2013
The annual report, entitled Traitement du Renseignement et Action Contre les Circuits Financiers Clandestins, or Tracfin, is from a task force within the ministry of finance created in 1990 at the G7 summit, and highlights that a significant number of suspicious or at risk activities were reported in the wine property sector over 2012.
Headed up by director Jean-Baptiste Carpentier, Tracfin's remit is to collect information on all suspicious transaction reports related to potential money laundering or tax fraud. The report highlights specifically that vineyard transactions with links to Russian, Chinese and Ukranian buyers have raised questions.
'Complicated legal structures are created, often with shell companies based in fiscally-advantageous countries,' it notes, 'that make it difficult to establish the identity of the final buyer and the origin of the funds used for purchase.'
The enquiry also found that French holding companies can be set up where all the shareholders and the head office are based in tax-friendly countries outside of France.
The report comes as China has raised the issue of money laundering to the 'national strategic level', according to People's Bank of China's deputy governor Li Dongrong in May 2013.
The Chinese economy lost US$3.79 trillion in illicit financial outflows between 2000 and 2011, the Washington-based research group Global Financial Integrity said last year.
The French economy is equally sensitive to losing money through non-payment of taxes and other public finance measures, as it continues to battle the current recession - although some observers note that the need for funds within local economies means less questions are asked of buyers.