Money Laundering - A Brief History Prepared by: Maulin Jani & his friends.
Meaning: Money Laundering
Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money, and is a main operation of the underground economy
Definition: Money Laundering
According to Robinson," Money laundering is called what it is because that perfectly describes what takes place illegal, or dirty, money is put through a cycle of transactions, or washed, so that it comes out the other end as legal, or clean, money. In other words, the source of illegally obtained funds is obscured through a succession of transfers and deals in order that those same funds can eventually be made to appear as legitimate income".
According to Swiss Bank:…… …
Money laundering is a process whereby the origin of funds generated by illegal means is concealed (drug trafficking, gun smuggling, corruption, etc.).
BACKGROUND….
Money laundering as a crime only attracted interest in the 1980s, essentially within a drug trafficking context. It was from an increasing awareness of the huge profits generated from this criminal activity and a concern at the massive drug abuse problem in western society which created the impetus for governments to act against the drug dealers by creating c reating legislation that would deprive them of their illicit gains.
Money laundering is a truly global phenomenon, helped by the International financial community which is a 24hrs a day business. When one financial centre closes business for the day, another one is opening or open for business.
Governments also recognized that criminal organizations, through the huge profits they earned from drugs, could contaminate and corrupt the structures of the state at all levels.
Characteristics of Money Laundering……..
As a 1993 UN Report noted:
The basic characteristics of the laundering of the proceeds of crime, which to a large extent also mark the operations of organized and transnational crime, are its global nature, the flexibility and adaptability of its operations, the use of the latest technological means and professional assistance, the ingenuity of its operators and the vast resources at their disposal.
In addition, a characteristic that should not be overlooked is the constant pursuit of profits and the expansion into new areas of criminal activity. The international dimension of money
laundering was evident in a study of Canadian money laundering police files. They revealed that over 80 per cent of all laundering schemes had an international dimension.
Money laundering policy
The FBC has developed a policy regulating the duties of banks and traders in securities when accepting capital assets. In particular, it enacted the " Policy on the prevention and fight against money laundering". The policy provides elements for interpreting the criminal code; it gives concrete expression to the standards that the banks and the traders in securities secu rities s ecurities must respect with regard to the guarantee of irreproachable activity as defined by the Banking Act.
Anti-money laundering policy… ….
Australia has implemented new laws to improve Australia’s existing anti-money laundering and counter-terrorism financing system. These new laws meet higher international standards to protect Australian businesses from being used for money laundering and terrorism financing. The new laws will make it harder for criminals to use the profits of crime and terrorists to receive money to carry out terrorist acts.
The reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) legislation will provide law enforcement agencies with high quality financial intelligence, to assist in the detection and prevention of terrorist activity and the laundering of proceeds of crime. The new legislation will provide better quality and larger volumes of financial transaction reports to the regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), allowing AUSTRAC increased opportunities to detect instances where legitimate financial, gambling and bullion activities are being used for money
Measures used for the fight against money laundering
Switzerland has one of the tightest provisions in Europe as regards the fight against money laundering. The Swiss criminal code punishes any offense committed within the context of organized crime (money laundering, corruption, fraud, drug trafficking, gun smuggling, etc.).
On 1 August 1990, Articles 305a and 305b of the criminal code entered in force.
Article 305a takes punitive action against money laundering, which is defined as any act of hindrance to the identification, search or confiscation of capital assets of criminal origin. Money laundering is punished, regardless of where the major offense took place.
Article 305b punishes the lack of vigilance in financial transactions, particularly the failure to verify the beneficial owner. Professional financial intermediaries are bound by what is referred to as the Know your customer principle, and are required without fail to identify the true owner of the funds, who is known as the beneficial owner. Negligent identification of the contracting partner or establishing the beneficial owner is punishable.
Article 260b of the criminal code renders punishable any person who has participated in an organization that keeps its structure and its collaborators secret and that seeks to commit criminal acts of violence or to obtain revenue by criminal means. What is more, articles 58 to 60 of the criminal code reinforce measures relating to the confiscation of assets of unlawful origin.
