When people talk about criminal risk in real estate investments, the conversation often gets stuck on banks, funds and high-profile corruption scandals. In practice, however, any structure that attracts significant capital – especially in high-return projects with multiple investors and some level of interface with the public sector – can turn a solid deal into a criminal issue. The blind spot is usually the origin of the funds: the project makes economic sense, but no one has seriously asked who is investing, where the money comes from and what the criminal risk in real estate investments really is when politically exposed persons, relatives or intermediaries are involved.
Alongside topics such as internal investigations, data incidents and complex renegotiations, this is yet another chapter in the broader agenda of Corporate Criminal Law in the upper management of Brazilian companies (https://lucchesi.adv.br/2025/11/18/por-que-o-direito-penal-empresarial-virou-pauta-central-da-administracao-superior-das-empresas-copiar/). The point is not to “criminalize investment”, but to understand how the design of a real estate transaction can be read by prosecutors, police and supervisory authorities when there are suspicions of money laundering, corruption or organized crime.
Why criminal risk in real estate investments is no longer an exception
Real estate has always been a preferred asset class for those who want to “park” capital in a relatively stable way. In an environment of high interest rates, volatile exchange rates and intense political cycles, medium and large real estate projects tend to attract investors seeking asset protection, diversification and, often, discretion. Precisely for that reason, real estate structures have long been on the radar of anti–money laundering authorities.
The logic is well known: high values, room for under- or over-pricing, margins that depend heavily on market conditions, the use of corporate vehicles (special purpose entities, holding companies, funds) and multiple layers between the beneficial owner and the underlying asset. In a world where international bodies demand increasingly strict controls and the Brazilian anti–money laundering framework has become more sophisticated, the combination of “bricks” with unclear sources of funds is naturally viewed with suspicion (see, for instance, the general treatment of money laundering in https://en.wikipedia.org/wiki/Money_laundering).
When the project also involves interaction with the public sector – permits, planning approvals, concessions, lease contracts with public entities, zoning or tax benefits – a real estate development stops being “just a deal” and becomes a setting for regulatory and criminal risk. The central question is no longer only “is this a good project?”, but also “who is joining this project and how will the Public Prosecutor’s Office read this investment agreement?”.
Politically exposed persons and their circles: when capital turns into risk
The most sensitive point today is the presence of politically exposed persons (PEPs) and their close circles. Brazilian regulation adopts a broad concept of PEP, covering not only individuals in prominent public positions, but also relatives and people with close relationships, precisely because these connections increase the likelihood that the economic system will be used to conceal illicit benefits. Brazil’s Financial Intelligence Unit (COAF) provides public guidance on who qualifies as a PEP (https://www.gov.br/coaf/pt-br/assuntos/informacoes-as-pessoas-obrigadas/o-que-sao-pessoas-expostas-politicamente-peps).
In practice, this means that criminal risk in real estate investments does not arise only when a public official appears directly as shareholder or partner. More often, it emerges in structures with “silent investors”, quotas held by relatives, holding companies created in sequence, intra-group loans between family businesses, or the participation of consultants who actually act as conduits for politically connected money.
The question that top management must confront is not only “do we have a PEP formally listed in the contract?”, but “would this investor profile, relationship history, volume of capital and way of funding pass a money-laundering scrutiny?”. When this analysis is not carried out methodically, the project may be dragged into investigations that are not about the real estate development itself, but about the life story – and criminal exposure – of some of its financiers.
Governance blind spot: origin of funds and liability of senior management
From a criminal law perspective, liability does not fall on “the company” in the abstract, but on specific individuals: directors, officers, managing partners. In a real estate structure, this usually includes the group CEO, the person in charge of capital raising and whoever signs contracts on behalf of the special purpose entity or investment vehicle.
The problem is that governance is typically designed around the economic health of the project – construction timetable, sales, cash flow, guarantees – rather than around the origin of funds. The focus is on “closing the funding”, not on documenting the due diligence performed on the investor. When a crisis hits, this omission becomes part of the accusation: “you accepted money from a suspicious source without asking questions”; “you failed to perform enhanced due diligence on PEPs”; “you ignored red flags that any prudent manager would have investigated”.
This type of narrative is now recurrent in asset freezing and seizure cases that affect both individuals and corporate assets, as discussed in the analysis of asset freezing in criminal proceedings (https://lucchesi.adv.br/2025/08/21/bloqueio-de-bens-no-processo-penal/). The line between business misjudgment and criminal liability increasingly depends on what senior management actually did – or failed to do – when it decided to accept a given investor into a real estate project.
How criminal risk in real estate deals shows up in Brazilian law
When a real estate project ends up on the criminal radar, the legal provisions involved are not exotic. The most common mix includes:
• Money laundering, when prosecutors see the project as a vehicle to disguise the illicit origin of funds.
• Corruption and offences against the public administration, if there are indications that the PEP investor’s participation is linked to undue advantages in permits, contracts or urban benefits.
• Organized crime, when the corporate structure, contracts and financial flows suggest a stable arrangement to manage illicit resources.
The key legal discussion is not only whether management “knew” of the illicit origin, but whether it had a duty to know and accepted the funds anyway. At this point, concepts such as willful blindness become relevant, shifting the debate from direct proof of intent to an examination of ignored red flags.
In the context of a company in crisis, the accusatory narrative is often built on behavioral indicators: lack of basic due diligence, absence of board minutes documenting the decision, refusal to seek additional information from atypical investors, concentration of decisions in the hands of a few individuals. Criminal risk in real estate investments, therefore, arises not only from “who” the investor is, but also from “how” the relationship with that investor was structured and documented.
Practical criteria to accept or refuse “sensitive” capital
From a defense standpoint, the best time to address criminal risk is before the crisis. That means setting objective criteria for accepting or rejecting “sensitive” capital – and, above all, being able to show that the decision was taken with due care.
In significant real estate deals, this implies enhanced due diligence regarding PEPs, relatives and intermediaries, with documented collection of information about the origin of funds, business history, exposure to public investigations and links to higher-risk sectors. Brazilian guidance on politically exposed persons (PEPs) (https://www.gov.br/coaf/pt-br/assuntos/informacoes-as-pessoas-obrigadas/o-que-sao-pessoas-expostas-politicamente-peps) makes clear that dealing with this profile requires additional effort in terms of monitoring and documentation.
Another key point is to formally minute board or management discussions about atypical investors: what information was requested, what answers were given, which concerns remained, and why management ultimately chose to accept or decline the investment. That record – often treated as a formality – tends to become crucial years later, when prosecutors and judges ask “who approved this investor?” and “based on which elements?”.
In more sophisticated structures, it often makes sense to subject significant capital contributions to prior review by a criminal lawyer, precisely to map potential criminal classification risks and adjust contractual clauses, making explicit both the investor’s commitment to the lawful origin of funds and the duty to cooperate in any future investigations.
When the investigation has already begun: rebuilding the narrative before it becomes an indictment
Prevention does not always happen in time. In many cases, the defense only enters the scene after the company has been subject to search and seizure, had assets frozen or received subpoenas in a money-laundering investigation. At that stage, simply claiming that “no one knew” or that “everything looked normal” is not enough. Senior management must reconstruct, in detail, the decision-making timeline, the controls in place, the due diligence performed (or omitted) and the actual role of each executive.
This includes reviewing corporate documents, minutes, e-mails, investment agreements, consulting reports and tax records, aligning that evidence with a coherent defense strategy and, where appropriate, with findings from any serious internal investigation and management interviews (https://lucchesi.adv.br/2026/01/20/investigacao-interna-seria-entrevistas-que-esclarecem-sem-incriminar/). In many cases, the difference between closure of the investigation and a formal indictment lies precisely in the company’s ability to show that there was a method – albeit imperfect – in assessing the origin of funds, rather than a blind acceptance of any money willing to join the project.
For companies in crisis, the final message is simple and demanding at the same time: real estate remains an excellent engine for growth and value creation, but “sensitive” capital is never neutral. Senior management that ignores this fact is not only taking a reputational gamble; it is opening the door for the project to be framed, tomorrow, as an instrument of money laundering or corruption. The difference between a success story and a criminal case almost always begins with the diligence of those who decide who the company accepts as its investment partner.
