Treasury’s Latest Money Laundering Risk Assessment Finds “Concerning Increase in State and Federal Payroll Tax Evasion” in the U.S. Residential and Commercial Real Estate Construction Industry
The U.S. Treasury Department’s latest National Money Laundering Risk Assessment (NMLRA) has a “Special Focus” section that discusses at length workers’ compensation insurance fraud in the U.S. residential and commercial real estate construction industry. The NMLRA examines the current money laundering environment and identifies ways in which criminals and other actors seek to launder funds. The assessment aims to inform the understanding of illicit finance risk by governmental and private sector actors, strengthen risk mitigation strategies of financial institutions, and enhance policy deliberations by the U.S. government.
The “Special Focus” portion of the NMLRA zeroes in on “a concerning increase in state and federal payroll tax evasion and workers’ compensation insurance fraud in the U.S. residential and commercial real estate construction industries” in which “illicit actors perpetuate these schemes through banks and check cashing businesses by exploiting shell construction companies and fraudulent documents to commit insurance fraud and pay their workers ‘off the books’.” The NMLRA also noted that “state and federal tax authorities lose hundreds of millions of dollars to these schemes and legitimate construction companies and their workers are put at a competitive disadvantage.”
The NMLRA echoes several points that SWACCA has consistently pressed with various federal agencies, including the Treasury Department’s Financial Crimes Enforcement Network, regarding how the agency can help address payroll and tax fraud and tax evasion through the beneficial ownership processes that FinCEN is charged with overseeing and that SWACCA has been influencing to fight misclassification in our industry.
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