Week 4 - Intro to Money Laundering (ML)

Question 1

Define ML

Answer 1

Money laundering is the process of changing illigitimate funds to make them appear as if they have a legitimate source

Question 2

Explain the 3 general processes involved in money laundering (PLI)

Answer 2

• PLACEMENT. Illigitimate money is introduced into the financial system.
• LAYERING. Using transactions & processes to confuse and or obscure the ownership of the funds
• INTEGRATION. ‘Clean’ money is returned to the criminal

Question 3

‘Just’ ML right? What effects does ML have on society?

Answer 3

• Undermines legitimate businesses by underselling
• Increases crime & corruption. Procedes of ML used to fund other crime & crime relies on ML.
• Loss of tax revenue
• Costs to society, glamorising crime and lifestyles
• Danger to financial institutions

Question 4

Describe the EU Legislation from EU Directive re Money Laundering

Answer 4

ML means the following conduct (when committed intentionally)

• the CONVERSION or transfer of property knowing such property is derived from criminal activity (or an act of participation in such activity) for the purpose of CONCEALING or DISGUISING the illicit origin of the property. Or assisting any person invovled in such.
• 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 criminal activity or from an act of participation
  in such activity.
• the ACQUISITION, POSSESSION or USE of property, knowing, at the time of
  receipt, that such property was derived from criminal activity or from an
  act of participation in such activity.
• PARTICIPATING in, association to commit, ATTEMPTS to commit and AIDING,
  ABETTING, FACILITATING the commission of any of the above.

Knowledge, intent or purpose
may be INFERRED from OBJECTIVE factual
circumstances.

It is still ML even if the illicit activities that generated the money occurred in another jurisdiction

PROPERTY means anything of value - money in all it’s forms

Question 5

What UK Law covers ML?

Answer 5

POCA 2002: Part 7

Question 6

The basics of investigating money laundering

Answer 6

ML is an illusion. The procedes only appear to be legitimate.
-Thorough investigation can uncover the mechanisms used.
- Good questioning during a suspect interview can close off a lot of defences

ML techniques have some fatal weaknesses:
- relies on relatively shallow subtefuge
- relies on professionals & intermediaries
- weakness at the placement stage
- obvious wealth at integration stage

FUNDS OF UNKNOWN SOURCE
This is the means that we use to dismantle the ‘lie’ - evidence the legitimate funds that someone has and compare it to the total funds they have.

Question 7

What is FATF

Answer 7

The Financial Action Task Force.

They provide guidelines aimed at combatting ML & terrorist funding.
See the 40 (+9) guidlines summarised properly in week 6 AML