Mapping “infected” real estate property

Pages239-253
Publication Date19 Jul 2011
DOIhttps://doi.org/10.1108/13685201111147540
AuthorLuuk Ritzen
SubjectAccounting & finance
Mapping “infected”
real estate property
Luuk Ritzen
Department of Criminal Law and Criminology, Faculty of Law,
Maastricht University, Maastricht, The Netherlands
Abstract
Purpose – In 2009, the research team of Unger and Nelen was requested to study the scale of
entwinement between money laundering activities and the Dutch real estate sector. For this, the team
developed a data mining framework to detect real estate property at risk of being part of a money
laundering scheme. Part of this study involved a criminological testing of the developed framework
which resulted in the statement that improvements and alterations are necessary to increase the
framework’s validity and reliability. This paper aims to review this framework and generate
refinements.
Design/methodology/approach – This paper is concerned with a review – on the basis of data
mining theory – with respect to the original framework in order to generate refinements for a future
model.
Findings – In general, three major shortcomings were identified, being: the use of unspecified
detection clusters; the theoretical nature of some of the risk indicators in combination with data
integrity issues; and the use of speculative/arbitrary risk indicators.
Originality/value – Addressing these shortcomings in a future data mining framework will very
likely increase its effectiveness and so, increase the ability of law enforcement agencies to counter
money laundering activities more effectively and efficiently.
Keywords Red-flag analysis,Risk analysis, Money laundering,Organized crime, Financial crime,
Suspicious properties
Paper type Technical paper
1. Introduction
In 1996, as a consequence of the Dutch Parliamentary Enquiry Committee (PEC) tasked
with the investigation of investigative methods used by the police to combat organized
crime, criminologists hinted, in a rapport published by the PEC, at the importance of
the Dutch real estate sector when studying the interlinking between upper world and
underworld economies (Fijnhaut et al., 1996). It took ten more years before publication
of a specific scientific study dealing with the link between real estate and crime in
The Netherlands (Ferwerda et al., 2007). Because of its exploratory nature the study
focused on a broad scope of behaviours including not only consensual crimes[1 ] but all
mala fide activities. The study’s main conclusion was that multiple mala fide and
criminal behaviours became manifest in the Dutch real estate sector. This conclusion
was enforced by the results of a subsequent study, which originally focused on mala
fide activities in relation to the exploitation of real estate (e.g. the activities of slum
landlords) (Gestel et al., 2008).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
The author would like to thank Hans Nelen and Michael Levi for their critical comments and
additional insights.
Mapping
“infected”
real estate
239
Journal of Money Laundering Control
Vol. 14 No. 3, 2011
pp. 239-253
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111147540

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