Money laundering

Origin of the expression

The expression “money laundering” ( money laundering in English) comes owing to the fact that the illegally acquired money is called dirty money ( black finance ). This money is often resulting from traffics of weapons, Drogue, human beings or other gangster activities. The bleaching makes it possible this money to pass for clean , i.e. to take an honest appearance.

Another not very probable origin is often advanced: the expression “money laundering” would come owing to the fact that Al Capone (chief of a gangster family) would have repurchased in 1928, to Chicago, a chain of laundries: the Sanitary Cleaning Shops . This legal frontage thus enabled him to recycle the resources drawn from its many illicit activities. Actually the expression appears only during the Années 1970 around the Watergate and it should be waited until 1982 so that it is used in an legal affair.

However the Al Capone arrest for tax evasion, and not for the committed crimes, watch importance and the difficulty of the money laundering in the fight against the criminal organizations. The mafioso Lucky Luciano and her right-hand man Meyer Lansky included/understood as of 1932 the importance to invent novel methods of bleaching of funds, in particular thanks to the network of politically independent islands, known as country Offshore S .

Methods of bleaching

With the increasingly important fight against the money laundering near the banks and of the tax shelters, as well as the lifting of the Bank secrecy on order of the Justice, the criminals are obliged to turn to other intermediaries to bleach their money.

The trade like the Jewelry S and the companies of import-export are the first targets to bleach money.

The establishment of several forged invoices between companies screen also makes it possible to make believe that this money is completely clean. But there exists of course much of other methods, the imagination of the criminals in this case is almost unbounded:

Schtroumpfage : The schtroumpfage is probably the most current method of money laundering. This method requires the implication of many people whose role consists in depositing sums in cash in bank accounts or getting banking drafts of less than 10.000 $, in order to avoid the threshold of declaration.
banking Complicity : There is banking complicity when a bank clerk criminally implied himself in order to facilitate the process of the money laundering. However, the criminals have more and more difficulty in use this method because of the guiding principles, the practices and the processes of formation recommended by the Association of the Canadian bankers (ABC), like in France with the French Banking Federation and the strict application of the legislation (Code monetary and financial, Penal code) and of the banking regulation which results from this.
Undertaken transfer of funds and exchange offices : The companies of transfer of funds and the exchange offices place at the disposal of their customers services which enable them to get foreign currencies which can be carried in addition to-border. One also can, via these offices, to telegraph funds on accounts open in foreign banks. It is in the same way possible to get mandates, accounts - bank checks as well as accounts - travellers' checks through these companies.
Purchase of goods the cash : The launderers buy and pay in cash goods of great value such as cars, boats or certain goods of luxury such as jewels or electronics component. They will use these articles, but they will be distancieront some by recording them or by buying them in the name of a associate.
electronic Transfer of funds : Also known under the name of transfers electronics or electronic funds transfer, this method makes it possible to transfer from the funds of a city or one country to the other in order to avoid the physical transport of the money.
Money orders : This technique consists in exchanging sums in cash against mandates posts, which are then transmitted abroad for end of bank deposit.
Credit cards : The criminals pay in too the balance of their credit cards and preserve a high credit balance being able to be used in many ways such as the purchase of goods of value or the conversion of the credit balance into bank check.
Casinos : The launderers go to the casino, where they cash get tokens in exchange of money for then boxing their tokens in the form of check.
Swindles with the lottery : The traffickers are brought to buy a ticket of the type PMU, play to be scraped or bulletin of lotto gaining at the price of the gained sum, to bleach an average dirty money sum.
Refining : This technique consists in exchanging small cuts against grosses with an aim of decreasing volume by it. With this intention, the launderer exchanges money sums from one bank to another in order to avoid waking up the suspicions. That is used to decrease the great money sums.
Amalgamation of funds in honest companies : The criminal organizations as well as the individuals who are implied there can bleach funds while investing in companies which normally post a high volume of cash transactions in order to incorporate products of criminality in the legitimate marketing activities brewed by the company. Lastly, it happens that criminals buy trade which generate gross earnings by cash sales. It is the case of the restaurants, bars, nightclubs, hotels, exchange offices and companies of vending machines. They invest then these funds obtained by fraudulent means by amalgamating them with an income which would not differently be enough to support an honest company.
Deterioration of the values : A launderer can buy a real estate of a person willing to declare a selling price appreciably lower than the actual value of the good and to be made cash pay the money difference “in hiding-place”. The launderer can buy, for example, a house of a value of two million dollars for only one million and transmit in secrecy to the salesman the remainder of the money that it owes him. After a certain period of retention of the real estate, the launderer sells it at his real price, that is to say two million dollars.
Car-loan : For the needs for this technique, the trafficker gives to an accomplice an illicit amount of money. This accomplice “lends” an equivalent sum to him, documents of loan to the support, to create the illusion which the money of the criminal is legitimate. The calendar of refunding of the loan by the criminal adds to the appearance of legitimacy of this combines, and still gets another means of transferring from the funds

Fight against the money laundering and legal requirements

With the Universalization and the exchanges of capital which is increasingly important and frequent, the fight against the money laundering is now carried out with the international scales. Thus various groups like GAFI (Grouping of Financial Action International against the bleaching of capital), meet regularly to take stock and to set up new methods of fight and thus to adapt to the novel methods of the criminals.

The money laundering contributes (inter alia) to the financing of terrorism, political parties, trade unions, etc

See also the list of software used by the Bank S in the fight against the money laundering and the detection of the potentially fraudulent movements, what is called sometimes the vigilance computer-assisted (VAO).

France

As regards legal requirements in France, the national and European texts have unceasingly, since 1990, widened the field of the subjugated professions to the fight against bleaching, like their obligations themselves. Among the professions concerned appear in particular the finance companies, the manual changers, the casino S, the intermediaries in real goods, the professions legal (Notaire S, receivers, Huissier S and lawyers), the chartered accountants and the auditors.

declarations of suspicion : the principle consists, for the subjugated professions with these obligations, to declare with TRACFIN the operations or the sums which could come from certain offenses. Held at the origin with the only bleaching of the product of the drug trafficking, the declarations of suspicion henceforth relate to the bleaching of the product of the following offenses: drug trafficking, Fraud with the interests of the European Community, financing of terrorism, Corruption, and organized criminal activity. With the next transposition of the third European directive, the declarations of suspicion should cover the bleaching of the product of the crimes and punished offenses of a sorrow higher than one year (either near total of the penal code of which tax offenses). Declarations of suspicion must also be carried out when the financial institutions are not able to know with certainty the identity of the true client of an operation (for example in the case of a trust or of a Fiducie). In practice, majority of the finance companies (82% of: 11500 declarations in 2005) declare the operations “abnormal” or “suspect”, not being always able to distinguish with precision the subjacent offense.
measurements of vigilance : the obligation of declaration of suspicion is accompanied by a certain number of measurements of general vigilances (at the time of the entry in relation and within the framework of the operation of the account) and of measurement of particular vigilances (specific measurements of identifications for the openings of remote accounts or relation with a “politically exposed person” for example).
financing of terrorism : the particular measures intended to fight against the financing of terrorism consist mainly in the comparison (generally data-processing) between lists of terrorists known with the names of the clients or of recipients of the international transfers or the holders of bank accounts. This device is called “freezing of the assets” since it allows, in case of doubt, with the MINEFI to order with the establishment to block the funds.

Two very different risks can be incurred by the subjugated professions:

on the one hand a lawful risk in the event of non-observance of the obligations described above for the professions which have a regulator (the Bank charge, body of supervision of the finance companies, takes care particularly of implementation the effective of these rules. The many sanctions on the subject testify)
to it in addition a penal risk: independently of the very specific obligations of the subjugated professions, the Penal code French punishes 5 years of imprisonment and of: 375000 euros of Fine any intentional act of bleaching. This offense which applies to all the population, daily exposes the finance companies, required passage of bleaching, at least with the risk of continuation (put in examination) of this count of indictment. The many calling into question of paid or social agents of the banks testifies some.

The obligations of fight against bleaching have sometimes evil to be reconciled with other legislative texts intended to protect from individual freedoms:

the Bank secrecy : almost all the countries of the world were obliged to soften their legislation relating to the bank secrecy for requirements of fight against the bleaching of the capital. The finance companies thus often have the possibility of communicating to their head office located abroad of personal information on their customers. The 3rd European directive is further laying down the possibility of information exchange between the finance companies;
CNIL had to authorize a derogatory mode for the systems of data processing related to the fight against the bleaching and the financing of the Terrorisme;
the “right to the account”, which makes it possible the Banque de France to impose a customer on a finance company for the behavior of its account, can, in practice, raise some difficulties in comparison with the implementation by the banks of the provisions anti-bleaching. Indeed, of many finance companies henceforth break the relations with a customer who was the subject of a declaration of suspicion in order not to be seen reproaching within the framework of an criminal investigation for money laundering, to have continued to place at the disposal of the launderer the means of achieving the offense. Thus, the bank of France imposes regularly on finance companies of the customers who already were the subject of declarations of suspicion on behalf of other banks.

National and international devices of fight against bleaching

The States set up various organizations and services in order to fight against blanchiement of money:

in France, the device of Treatment of the information and action against the clandestine financial circuits (TRACFIN) was set up by the Ministère of the Economy, Finances and Industry (MINEFI): the financial institutions and Banque S are held to declare the suspicious behaviors of their customers. These " declarations of soupçons" are treated in-house, most credible and exploitable are transmitted to the various national parquet floors. The public prosecutors decide possible continuations then. The central Office for the repression of the great financial delinquency (OCRGDF) of the Central management of the judicial police is recipient of most of these sasines.
Monaco has the " Service of Information and Control of the Financiers" Circuits; (SICCFIN).
the the United States have off the Office Foreign Assets Control (OFAC).
the Suisse with the Convention of diligence of the banks has a tool making it possible to identify each customer of a bank. The source and the use of the funds are also the research object. In addition, the obligation to go up until having economic right of the funds removes the risks related to the companies screens.

But this fight must also be done with an international level:

the members of the G7 (become since G8) set up in 1989 the Action group Financial on the bleaching of capital (GAFI) or in English the Financial Action Task force (FATF). Since, this last was extended to other members.
the economic Union and monetarist West African (UEMOA) has in a Directive of 2002 reaffirms its will to fight against blanchiement of money.

References

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