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Money Laundering Overview

• Money laundering is the process of making illicitly obtained funds appear legitimate.

• Relevant even if funds were obtained abroad, meaning the crime transcends territorial limits.

Key Concepts

Territorial Nature of Criminal Law

• Criminal law applies only in jurisdictions where the crime takes place.

• Money laundering is considered a territorial crime despite international elements.

Phases of Money Laundering

1. Placement

   • Introduction of illicit funds into the financial system.

   • Common methods: bank accounts, safety deposit boxes.

2. Layering

   • The process of concealing the origin of the funds.

   • Involves transferring money between different accounts or using tax havens to break the trail of the money.

   • Techniques include:

     • Using shell companies.

     • Moving money to countries with weak financial regulations.

3. Integration

   • The final phase where laundered money is reintroduced into the economy, appearing as legitimate income.

   • Common investments include real estate, businesses, and other assets.

Importance of Preventative Systems

• The global fight against money laundering emphasizes prevention over mere punishment.

• Effective measures are designed to deprive criminals of the profit from their illicit activities.

• Emphasizes the need for international cooperation to track and confiscate moved assets.

Role of Cash in Money Laundering

• Cash remains a significant medium for transferring illicit funds despite increased detection risks.

• Measures include monitoring cross-border cash movements to prevent money laundering.

• Example: Criminals may hide cash inside shoes to evade detection at airports.

The Impact of Cryptocurrency

• Cryptocurrency presents new challenges in tracking illegal transactions.

• The decentralized and anonymous nature of cryptocurrencies can facilitate money laundering.

International Cooperation & Regulatory Bodies

Major International Instruments

• United Nations: First international body to address money laundering through the 1988 Convention Against Illicit Traffic in Drugs.

• Financial Action Task Force (FATF):

  • Formed in response to drug trafficking issues; focuses on measures to combat money laundering and financing terrorism.

  • Develops recommendations for member countries to implement strong anti-money laundering systems.

Evaluating Country Compliance

• FATF evaluates countries to assess their effectiveness in combating money laundering.

• Certification of compliance is crucial for legitimacy in international finance.

Characteristics of Money Laundering Crimes

Legal Definitions and Requirements

• Money laundering must be considered a distinct crime from the predicate offense (e.g., drug trafficking).

• Countries must criminalize money laundering related to serious crimes as defined by FATF recommendations.

Predicate Offenses

• The original illicit act leading to the funds is termed the "predicate offense."

• Post-Palermo Convention, the definitions expanded to encompass all serious crimes.

The Concept of Dual Incrimination

• A principle requiring that the act constitutes a crime in both jurisdictions involved in prosecution or extradition.

• If the act is not a crime in the prosecuting country, the individual cannot be charged.

Criminal Intent and Evidence

• Criminal liability in money laundering requires intent or serious negligence concerning illicit funds.

• Proving money laundering often relies on indirect evidence or circumstantial facts like sudden wealth increases without justification.

Distinctions Between Money Laundering and Predicate Offense

• A person can commit the illicit act (predicate offense) and subsequently launder the proceeds (money laundering) without the need for a prior conviction of the predicate offense.

• This distinction allows for more efficient prosecution of money laundering crimes.

Sanctions and Legal Actions

• Countries are encouraged to create effective penalties for money laundering, ensuring they are proportionate and dissuasive.

• Specific forms of participation in money laundering must be defined clearly by legal jurisdictions.

Conclusion

• The fight against money laundering is a multi-faceted issue requiring cooperation between countries and various sectors of society.

• Tools, regulations, and international cooperation efforts are vital for effective enforcement and to minimize the impact of organized crime.