We hear or read about it in the news, but a CCPM specialist explains what this crime consists of, what the process is like and what sanctions there are for money launderers.
Every day we read at least one news item related to money laundering and we take it for granted that it is a crime punishable by law. Although we do not think much about it, we see that the crime of money laundering is always accompanied by the commission of one or more other crimes, be it drug trafficking, corruption, organized crime or any other. Why is that? The crime of money laundering is called underlying, because it always occurs as a consequence of another crime which is called precedent.
Now, let us define underlying and precedent: Underlying comes from Latin and means that it remains under or as a consequence of a thing. Therefore, the underlying crime is one that comes after another. Precedent, likewise, comes from Latin and means that it is before another crime, that is, before the underlying crime, there is a preceding one.
Money laundering
Any type of crime that increases a person’s wealth (drug trafficking, corruption, theft, fraud, among others) becomes the predicate offense for money laundering. When the first crime has already been carried out and the criminals have the money, goods or rights that come from the criminal activity, those assets need to be laundered in order to be able to use them in the formal economy pretending that they come from licit activities.
We must not forget that money is not dirty by itself, money is clean as long as it comes from licit activities and can be used in the activities we want. However, when money comes from illicit activities, it is called dirty money and in order to be used openly in the formal economy, it has to be laundered.
What is money laundering?
Money laundering is the activity carried out by money launderers so that the money or assets obtained from illicit activities can be used in the formal economy pretending that they come from licit activities.
The money laundering process in the financial system has three stages: placement, layering and integration.
Money laundering
Placement in the financial system is the key to good money laundering; as long as the dirty money has not been placed in the financial system, the laundering cycle cannot begin, which is why the financial system has so many controls. Sometimes it becomes a nuisance for clients when we want to open accounts or make deposits because, in case the client is carrying out money laundering activities, the risk for the institution is very great, both for the fines imposed by the authorities, as well as for the reputational damage that may occur if it is published that money can be laundered in that institution.
Once the money has been placed in the financial system, a money launderer proceeds to move it into the financial system, transferring the money to different accounts and in different amounts than the original deposit, with the objective of moving it not only in different banks but also in different countries.
Once the money has been dispersed in many accounts, it can be more easily integrated into the formal economy; this reintegration can be done either as payment of dividends, acquisition of goods, capital contributions or in many other ways.
Money laundering
Predicate offenses for money laundering
When we talk about predicate offenses for money laundering we refer to those illicit activities that give way to money laundering.
Although a predicate offense gives way to another offense, the law clarifies that money laundering is an autonomous punishable act, that is why any person who has incurred in money laundering is convicted by the courts, even if he/she has not had direct or indirect participation in the predicate offense. Thus, whoever launders assets derived from punishable acts cannot be excused before the justice system.
What are the main predicate offenses to money laundering?
1. Drug trafficking: the main generator of dirty money worldwide is directly related to drug trafficking.
2. Illicit enrichment: here we find all the other crimes that lead to increased wealth such as corruption, influence peddling, extortion, kidnapping, smuggling, tax evasion, human trafficking, sexual exploitation, cyber fraud, etcetera.
Continue reading here: https://lawincabo.com/the-5-most-commonly-used-money-laundering-methods/
Money laundering
