Money Laundering

Robert Ramirez

Definition: The process of disguising the proceeds of crime in an effort to conceal their illicit origins and legitimize their future use. Objective: To conceal true ownership and origin of the proceeds, a desire to maintain control, a need to change the form of the proceeds. Techniques: They can be simple, diverse, complex, subtle, but secret.

Proceeds = any economic advantage derived directly or indirectly from criminal offenses

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 an offence or offences to evade the legal consequences of his actions; The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from an offence or offences or from an act of participation in such an offence or offences; and The acquisition, possession or use of property, knowing at the time of receipt that such property was derived from an offence or offences or from an act of participation in such offense or offenses.

How is it done?????

Money Laundering Cycle

1. Predicate Crimes
Corruption and Bribery Fraud Organized crime Drug and human trafficking Environmental crime Terrorism Other serious crimes

4. INTEGRATION
The last stage in the laundering process. Occurs when the laundered proceeds are distributed back to the criminal. Creates appearance of legitimate wealth.

2. PLACEMENT
Initial introduction of criminal proceeds into the stream of commerce Most vulnerable stage of money laundering process

3. LAYERING
Involves distancing the money from its criminal source: movements of $ into different accounts movements of money to different countries Increasingly difficult to detect

Simple Bribe and Money Laundering Transaction

Country 3

Company A to Needs generate $1 million for bribe to Finance Minister. Uses invoices from company in Country 2

Company owned by Ministers cousin

Company Bank Account

Country 2

$500,000 Purchase of Real Estate Country 4

$500,000 Purchase of Bearer Share

The technique of illegal money import Technique of smurfing or nominal partnership Gambling Self-financing loan (Dutch sandwich) Establishing fictitious business organization Fictitious transactions Creating a cover company Method of acquisition and selling of companies

The use of virtual casinos sites and online sport bet sites The possibility of opening online bank account and the banking and electronic payment systems Use of virtual money

Notorious Cases & Statistics

After foreign exchange and the oil industry, the laundering of dirty money is the worlds thirdlargest business. - IMF

How Much Is Laundered?

IMF ESTIMATE = 2-5% Global GDP $1.5 -$3.4 Trillion a year

Why is it an Issue in International Law?

Traditional view of sovereignty - a state is solely responsible for the creation and implementation of international law. The diversity of national legal systems - a crucial obstacle that discourages cooperation in international law enforcement efforts is the differences in legislation among countries Capability to perform international cooperation - This is particularly true for several states that lack of financial and technical resources, administrative and language barriers, lack of necessary expertise, and lack of clarity on the nature and relevance of the information that is requested.

Philippine Laws

Criminalizes money laundering Creates a Financial Intelligence Unit (FIU) Imposes requirements on customer identification, record-keeping and reporting of covered and suspicious transactions. Relaxes strict bank deposit secrecy laws. Provides for freezing/seizure/forfeiture recovery of dirty money/property. Provides for international cooperation

Lowers the threshold amount for single covered transactions (cash or other equivalent monetary instrument) from P4M to P500,000.00 within one (1) banking day. Expands the reporting requirements to include the reporting of suspicious transactions regardless of the amount involved Authorizes AMLC to inquire into or examine any particular deposit or investment, with any banking institution or non-bank financial institution and their subsidiaries and affiliates upon order of any competent court in cases of violation of this Act, when it has been established that there is probable cause that the deposits or investments are related to an unlawful activity. However, no court order is required in cases involving unlawful activities of kidnapping for ransom, narcotics offenses and hijacking, destructive arson and murder, including those perpetrated by terrorists against non-combatant persons and similar targets. Authorizes the Bangko Sentral ng Pilipinas to inquire into or examine any deposit or investment with any banking institution or non-bank financial institution and their subsidiaries and affiliates when the examination is made in the course of a periodic or special examination, in accordance with the rules of examination of the BSP to ensure compliance with R.A. No. 9160, as amended. Transfers the authority to freeze any money/property from the AMLC to the Court of Appeals

Conclusion

Interstate cooperation in countering the cross-border nature of money laundering is extremely important. This means that any country cannot solely deal with the problem of transnational money laundering using unilateral action, but rather needs interstate cooperation in law enforcement matters. In other words, the problem of cross-border money laundering cannot be solved without effective international cooperation.

Recommendation

Enhance cooperation among law enforcement, financial institutions, and judiciary: a coordinated response involving the financial industry, the judiciary, and law enforcement is necessary to address the issues regarding effective counter-laundering measures. Criminalize laundering: adopt legislation that criminalizes the laundering of the proceeds of all serious crime. Establish a financial intelligence unit (FIU): an FIU is a central office, generally composed of investigators, banking experts, and financial analysts, that obtains and analyses information from financial indicative of laundering to an appropriate government authority for investigation.

Repeal bank secrecy laws: laws that unduly restrict the flow of information between financial institutions and law enforcement should be repealed and specific protections afforded those appropriately disclosing information to the authorities. Report large/suspicious transactions: to obtain needed information on a reliable basis, banks and other covered institutions should be required to report all suspicious transactions and all large transactions, where the reports on large transactions would help law enforcement agencies in a manner that is not cost prohibitive. Identify bank customers: because launderers covet anonymity for their clandestine activity, institutions must identify their customers and pass pertinent information to the appropriate authorities.

Record customer and transaction information: banks and other covered institutions must record information obtained in identifying their customers and certain transactions and keep such records for up to 5 years.

Establish effective anti--money laundering programs in banks: banks should establish effective internal anti--laundering program, conduct laundering-detection training for officers and employees, and provide for meaningful institutional accountability. Ensure international cooperation: given the ease and speed that criminals can layer and integrate funds across international boundaries, cooperation among enforcement authorities on an international basis is essential. Countries should adopt laws to facilitate such international cooperation. Adopt forfeiture laws: countries should adopt laws that permit the forfeiture of property connected to laundering offenses and the pretrial restraint and seizure of property subject to forfeiture in domestic cases and upon request by authorities from foreign jurisdictions.