Money laundering can be defined quite simply as the process of filtering the proceeds of criminal activity through a series of accounts or other financial products in order to give it apparent legitimacy or to make its origins difficult to trace.
Following a European Directive in 1991 on the prevention of money laundering, two further important definitions were included in order to clarify the above definition:
- Property: This means assets of every kind, tangible or intangible, movable or immoveable, as well as legal documents giving title to such assets.
- Criminal Activity: this means a crime as specified in the Vienna convention including any other criminal activity designated as such by each member state.
In 1987, the Financial Action Task Force (FATF) on Money Laundering was created as an international organisation dedicated to combat the fight against criminal money. The prevention of money laundering within the financial industry has for a long while been an important objective of many governments around the world. The European commission play a major role within the FATF with many of its EU member states making up a significant proportion its 30 members.
Proceeds of Crime Act 2002
The Proceeds of Crime Act 2002 saw a pooling together of a number of acts and amendments - Most notably, the act deals with the laundering of the
proceeds of all forms of crime. No longer were the proceeds of drug-related crimes separated from all other forms.
In relation to reporting suspicious money laundering activity, the new act also extends this again to all forms of crime - This had previously been restricted to drugs or terrorism offences.
Under the Proceeds of Crime act 2002 there are three principle money laundering offences:
- Concealing criminal property: This is essentially property, which a person knows or suspects to be the proceeds of any criminal activity.
- Arranging: This happens when a person becomes involved in a process which they know or suspect will enable someone else to acquire, retain, use or control criminal property.
- Acquiring, using or possession: It is a criminal offence for a person to acquire, use or possess any property when that person knows or suspects that the property is the proceeds of criminal activity.
Contravention of any of the money laundering rules is a criminal offence. In respect to financial advisors and mortgage advisors, two areas of particular concern are:
- Failure to disclose: All suspicions of money laundering must be reported to the authorities.
- Tipping off: It is a serious offence to disclose to a person who is suspected of money laundering that an investigation is being, or may be carried out.
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