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5 Basic Money Laundering Offences

Compliance Knowledge Base | Anti-Money Laundering

Posted by: India Wentworth Published: Thu, 06 Sep 2018 Last Reviewed: Thu, 06 Sep 2018
5 Basic Money Laundering Offences

The Proceeds of Crime Act (POCA) published in 2002 changed the way we understand money laundering offences. Money laundering or conspiracy/attempt to money launder is an offence under sections 327-329 of the POCA.

To put it simply, the POCA discusses and defines offences in money laundering as the following:

A person commits an offence if he/she…

  • Conceals criminal property
  • Disguises criminal property
  • Converts criminal property
  • Transfers criminal property
  • Removes criminal property from the UK
  • Enters into an arrangement which he/she suspects facilitates the control of criminal property by or on behalf of another person
  • Acquires criminal property
  • Uses criminal property
  • Has possession of criminal property

So as you can see, organisations don't need to know that they have been involved in a crime to become legally involved, and become tainted by it as a result. The whole focus is on the "criminal property" otherwise known as money/assets gained from crime. The point of laundering is to make the criminal property blend in with normal financial practices, essentially getting lost in the system before anyone can track it down or track it back to the crime.

This worry makes it all the more important that companies do what they can to avoid getting involved in money laundering, as it could result in unlimited fines and reputational damage. By understanding the threats out there, and having an efficient policy prepared, organisations can prevent themselves becoming the next victim of laundering, increasing success and stability as a result.

5 Basic Money Laundering Offences

5 Money Laundering Offences:

1. Tax evasion

  • This is when people use offshore accounts to avoid declaring their full income level, and as a result they can avoid paying their full amount in tax.
  • Possibly one of the most well-known tax avoiders in recent years is the famous comedian, Jimmy Carr. Using a Jersey-based account, he was able to avoid paying higher taxes back in 2012 by sheltering £3.3 million per year of his assets.

2. Theft

  • Probably the most straightforward crime, theft becomes money laundering once it has actually happened. The criminals then try to take the proceeds of the crime and move them into the economy without people noticing, and as a result it becomes much more unlikely that it will ever be tracked down.
  • An example of this came with an accountant from South Wales in February 2018. Jeffrey Bevan was working for the Bermudan government when he stole and laundered £1.3 million. His position as head of expenditure meant he had access to a lot of money, something he took advantage of. Bevan laundered the money through his UK bank accounts, claiming it all as legitimate overtime. As a result he was sentenced to seven years and four months in prison.

3. Fraud

  • Crime related to fraud generates money that needs to be laundered for the criminals to use it without raising suspicion, so where there is fraud there is money laundering. Many organisations actually have a department that is dedicated to preventing money laundering and fraud.

4. Bribery

  • Bribery can occur in money laundering when it comes to politically exposed persons, also known as PEPs. PEPs are a big threat when it comes to money laundering because of their status in society. This status makes them a higher risk customer for companies to work with because they have more chances to gain assets through illegal methods compared to regular public citizens. As soon as corrupt PEPs accept bribes, money laundering can take place.
  • Bribery is a serious global issue because it has significant effects on economic development, political stability and international crime.

5. Terrorist Financing

  • More often the not, terrorist activities are being financed through a technique called reverse money laundering. It is reverse because it works by using legal assets to carry out illegal activities, in this case terrorism. The 'clean' money can come from the least suspicious sources such as charitable organisations, as well as legitimate businesses.
  • The 9/11 terrorist attack was facilitated by reverse money laundering. Money from the United Arab Emirates passed through a New York bank account before reaching the accounts of the hijackers in Florida. It was also revealed that the terrorists actually carried bundles of cash straight into the country.

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