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//-->01-chap01-f.qxd3/30/0313:44Page I-1Chapter IMoney Laundering and TerroristFinancing: Definitions and ExplanationsA. What Is Money Laundering?B. What is Terrorist Financing?C. The Link Between Money Laundering andTerrorist FinancingD. The Magnitude of the ProblemE. The ProcessesF. Where Do Money Laundering and TerroristFinancing Occur?G. Methods and TypologiesFor most countries, money laundering and terrorist financing raise significantissues with regard to prevention, detection and prosecution. Sophisticatedtechniques used to launder money and finance terrorism add to the complexityof these issues. Such sophisticated techniques may involve many different typesof financial institutions; many different financial transactions using multiplefinancial institutions and other entities, such as financial advisers, shell corpora-tions and service providers as intermediaries; transfers to, through, and from dif-ferent countries; and the use of many different financial instruments and otherkinds of value-storing assets. Money laundering is, however, a fundamentallysimple concept. It is the process by which proceeds from a criminal activity aredisguised to conceal their illicit origins. Basically, money laundering involves theproceedsof criminally derived property rather than the property itself.The financing of terrorism is also a fundamentally simple concept. It isthe financial support, in any form, of terrorism or of those who encourage,plan, or engage in it. Less simple, however, is defining terrorism itself,I-101-chap01-f.qxd3/30/0313:44Page I-2Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorismbecause the term may have significant political, religious, and national impli-cations from country to country.Money laundering and terrorist financing often display similar transac-tional features, mostly having to do with concealment. Money laundererssend illicit funds through legal channels so as to conceal their criminal ori-gins, while those who finance terrorism transfer funds that may be legal orillicit in origin in such a way as to conceal their source and ultimate use,which is the support of terrorism. But the result is the same—reward.When money is laundered, criminals are rewarded with disguised andapparently legitimate proceeds. Similarly, those who finance terrorism arerewarded by providing the financial support to carry out terrorist strata-gems and attacks.A. What Is Money Laundering?Money laundering can be defined in a number of ways. Most countries subscribeto the definition adopted by theUnited Nations Convention Against Illicit Trafficin Narcotic Drugs and Psychotropic Substances(1988) (ViennaConvention):1• The conversion or transfer of property, knowing that such property isderived from any [drug trafficking] offense or offenses or from an actof participation in such offense or offenses, for the purpose of conceal-ing or disguising the illicit origin of the property or of assisting anyperson who is involved in the commission of such an offense or offens-es to evade the legal consequences of his actions;• The concealment or disguise of the true nature, source, location, dispo-sition, movement, rights with respect to, or ownership of property,knowing that such property is derived from an offense or offenses orfrom an act of participation in such an offense or offenses.21. http://www.incb.org/e/conv/1988/.2. TheVienna Convention,Article 3(b).I-201-chap01-f.qxd3/30/0313:44Page I-3Money Laundering and Terrorist Financing: Definitions and ExplanationsTheVienna Conventionadds that money laundering also involves:• The acquisition, possession or use of property, knowing at the time ofreceipt that such property was derived from an offense or offenses …or from an act of participation in such offense or offenses.3By its terms, theVienna Conventionlimits predicate offenses (which isto say, the criminal activity whose illicit proceeds are laundered) to drugtrafficking offenses. As a consequence, crimes unrelated to drug trafficking,such as tax evasion, fraud, kidnapping and theft, for example, are notdefined as money laundering offenses under theVienna Convention.Overthe years, however, the international community has come to the view thatpredicate offenses for money laundering should go beyond drug trafficking.Thus, other international instruments have expanded theViennaConvention’sdefinition of predicate offenses to include other seriouscrimes.4For example, theUnited Nations Convention Against TransnationalOrganized Crime(2000) (PalermoConvention)requires all participantcountries to apply that convention’s money laundering offenses to “thewidest range of predicate offenses.”5The Financial Action Task Force on Money Laundering (FATF), which isrecognized as the international standard setter for anti-money laundering(AML) efforts,6defines the term money laundering succinctly as “the process-ing of…criminal proceeds to disguise their illegal origin” in order to “legit-imize” the ill-gotten gains of crime.7However, in its 40 recommendations forfighting money laundering (TheForty Recommendations),FATF specificallyincorporates theVienna Convention’stechnical and legal definition of moneylaundering8and recommends expanding the predicate offenses of that defini-tion to include all serious crimes.93.4.5.6.7.8.Id.,Article 3(c)(i).See discussion at Chapter V, A., 1., Predicate Offenses.ThePalermo Convention,Article 2 (2), http://www.undcp.org/adhoc/palermo/convmain.html.See Chapter III, B., FATF.FATF,What is money laundering?, Basic Facts About Money Laundering,www.oecd.org/fatf.The Forty Recommendations,Rec. 1, http://www1.oecd.org/fatf/40Recs_en.htm.The FortyRecommendationsare reprinted in Annex IV of this Reference Guide.9.Id.,at Rec. 4.I-301-chap01-f.qxd3/30/0313:44Page I-4Reference Guide to Anti-Money Laundering and Combating the Financing of TerrorismB. What Is Terrorist Financing?The United Nations (UN) has made numerous efforts, largely in the form ofinternational treaties, to fight terrorism and the mechanisms used to financeit. Even before the September 11th attack on the United States, the UN hadin place the International Convention for the Suppression of the Financing ofTerrorism (1999), which provides:1. Any person commits an offense within the meaning of this Conventionif that person by any means, directly or indirectly, unlawfully and will-ingly, provides or collects funds with the intention that they should beused or in the knowledge that they are to be used, in full or in part, inorder to carry out:(a) An act which constitutes an offence within the scope of and asdefined in one of the treaties listed in the annex; or(b) Any other act intended to cause death or serious bodily injury toa civilian, or to any other person not taking any active part in thehostilities in a situation of armed conflict, when the purpose ofsuch act, by its nature or context, is to intimidate a population, orto compel a government or an international organization to do orto abstain from doing an act.2. ...3. For an act to constitute an offense set forth in paragraph 1, it shall notbe necessary that the funds were actually used to carry out an offensereferred to in paragraph 1, subparagraph (a) or (b).10The difficult issue for some countries is defining terrorism. Not all countriesthat have adopted the convention agree on what actions constitute terrorism.The meaning of terrorism is not universally accepted due to significant political,religious and national implications that differ from country to country.FATF, which is also recognized as the international standard setter forefforts to combat the financing of terrorism (CFT),11does not specifically10. International Convention for the Suppression of the Financing of Terrorism (1999), Article 2,http://www.un.org/law/cod/finterr.htm. The conventions referred to in the annex in sub-para-graph 1(a) are listed in Annex III of this Reference Guide.11. See Chapter III, FATFI-401-chap01-f.qxd3/30/0313:44Page I-5Money Laundering and Terrorist Financing: Definitions and Explanationsdefine the term financing of terrorism in its eightSpecial Recommen-dations on Terrorist Financing(SpecialRecommendations)12developed fol-lowing the events of September 11, 2001. Nonetheless, FATF urges coun-tries to ratify and implement the 1999 United Nations InternationalConvention for Suppression of the Financing of Terrorism.13Thus, theabove definition is the one most countries have adopted for purposes ofdefining terrorist financing.C. The Link Between Money Laundering and Terrorist FinancingThe techniques used to launder money are essentially the same as those usedto conceal the sources of, and uses for, terrorist financing. Funds used to sup-port terrorism may originate from legitimate sources, criminal activities, orboth. Nonetheless, disguising the source of terrorist financing, regardless ofwhether the source is of legitimate or illicit origin, is important. If the sourcecan be concealed, it remains available for future terrorist financing activities.Similarly, it is important for terrorists to conceal the use of the funds so thatthe financing activity goes undetected.For these reasons, FATF has recommended that each country criminalizethe financing of terrorism, terrorist acts and terrorist organizations,14anddesignate such offenses as money laundering predicate offenses.15Finally,FATF has stated that the eightSpecial Recommendationscombined withTheForty Recommendationson money laundering16constitute the basic frame-work for preventing, detecting and suppressing both money laundering andterrorist financing.Efforts to combat the financing of terrorism also require countries to con-sider expanding the scope of their AML framework to include non-profitorganizations, particularly charities, to make sure such organizations are notused, directly or indirectly, to finance or support terrorism.17CFT efforts also12. http://www1.oecd.org/fatf/SRecsTF_en.htm. TheSpecial Recommendationsare reprinted inAnnex V of this Reference Guide.13.Id.,at Spec. Rec. I.14.Id.,at Spec. Rec. II.15.Id.16.Id.,at introductory paragraph.17.Special Recommendations,Spec. Rec. VIII.I-5 [ Pobierz całość w formacie PDF ]