What is Money Laundering (ML)?
Money laundering can be defined in a number of
ways.
Most countries subscribe to the definition adopted
by the United Nations Convention against Illicit Traffic in Narcotic Drugs and
Psychotropic Substances (1988) (Vienna Convention) which states that money
laundering is:
“The
conversion or transfer of property, knowing that such property is derived from
any offence or offences or from an act of participation in such offence or
offences, for the purpose of concealing or disguising the illicit origin of the
property or of assisting any person who is involved in the commission of such
offence or offences to evade the legal consequences of his actions”.
The Vienna Convention adds that money laundering
also involves:
The acquisition, possession or use of property,
knowing at the time of receipt that such property was derived from an offense
or offenses or from an act of participation in such offense or offenses.
The Financial Action Task Force, the international
standard setter in the fight against money laundering and financing of
terrorism financing, defines ML as:
“The processing of criminal proceeds to
disguise their illegal origin in order to legitimise the ill-gotten gains of
crime”
In
other words, it is a process by which proceeds from a criminal activity are
disguised to conceal their illicit origins.
It
involves the proceeds of criminally derived property rather than the property
itself
Predicate offence
A
Money Laundering predicate offense is the underlying criminal activities that
generated proceeds, which when laundered, results in offence of money
laundering. Thus, ML is a derivative
offence
What is Financing of Terrorism (FT)?
…
“is the financial support, in any form, of terrorism or of those who encourage,
plan, or engage in terrorism”.
...
It has significant political, religious, and national implications from country
to country
The linkage between ML and FT
_
ML and FT display similar transactional characteristics – concealment
_
Money launders send their illicit funds through legal channels in order to
conceal their criminal origins
_
Those involved in financing terrorism transfer funds (legitimate or illicit in
origin) in such a way as to conceal origin and ultimate use (destination) –
terrorist financing.
Effects of ML/FT
_
Increase in crimes and corruption
_
Weakening the financial system
_
Macroeconomic distortions
_
Welfare Loss
_
Loss of revenue to government – tax crimes
_
Social cost
_
Slows economic development
By
Lamin Jahateh, Gambian journalist/blogger
References:
‘Buno E. Nduka, Ph.D
Head
of Programmes Division, GIABA
Presentation entitled: ‘Money Laundering and
Terrorist Financing, International AML/CFT Initiative and The Role of GIABA’
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