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Risk-assessment obligations and decisions for countries

 

Money laundering
Terrorist financing
Countries assess risks of
(i) Inform potential changes to the AML/CFT regime
Including changes to
Laws
Regulations
Other measures
(ii) Assist in allocation and prioritization of AML/CFT resources
By competent authorities
Information necessary for conducting AML/CFT risk assessments
(iii) Provide financial institutions and DNFBPs with
Assessments should be kept up-to-date
Appropriate information on the results of assessments should be provided to
Financial institutions
DNFBPs
Self-regulatory bodies (SRBs)
Relevant competent authorities
R. 1, IN
Money laundering
Terrorist financing
Proven low risk
Countries assess risks of
1. Financial institutions
2. DNFBPs
3. Another type of: · institution · activity · business · profession
Strictly limited circumstances
Exemptions: decide not to apply AML/CFT requirements
At risk of abuse from money laundering or terrorist financing
Consider applying AML/CFT requirements
Relates to a particular type of financial institution, activity or DNFBP
A financial activity is carried out on an occasional or very limited basis
Having regard to quantitative criteria
Gathered information should be retained as in R. 11
An activity other than the transferring of money or value

 


 


Lecture 4. Legal requirements for a national AML/CFT regime

Key words


· Adverse implications of ML

· dual criminality

· objective factual circumstances

· state of mind of a money launderer

· knowledge

· intent

· purpose

· aim

· agreement

· perpetrator

· self-laundering

· confiscation

· provisional measures

· bona fide third parties

· freezing

· seizure

· non-conviction based confiscation

· corporate liability

· lawful origin of property

· criminal conviction

· civil liability

· criminal liability

· administrative liability

· common law tradition

· civil law tradition

· contamination effect


 

Key Questions

· What are the arguments against holding the perpetrator of the predicate offence liable for laundering the proceeds?

· Why some scholars insist that the perpetrator of the predicate offence should be held liable for money laundering?

· List adverse macroeconomic implications of wide-spread money laundering.

· Which risks and damages of money laundering are law-abiding intermediaries facing?

· Define the contamination effect of money laundering.

· How does wide-spread money laundering influences the average yield and risk ratios of investments?

· Define dual criminality.

· What is the difference between the minimum standard and the broader approach to applying dual criminality test?

· Where the intent and knowledge required to prove the offence of ML may be inferred from?

· Define the term “objective factual circumstances”.

· Which three parts of a money launderer’s state of mind are listed in the Vienna and Merida conventions?

· Which convention allows to determine money launderer’s state of mind on the grounds of his suspicion that the property was proceeds from crime? What are the other grounds of such determination listed in the same article of the convention?

· What is the difference between confiscation and provisional measures?

· Define bona fide third parties. Why should their rights not be prejudiced during confiscation of property?

· What is the reason for confiscating the property of corresponding value?

· Why is it important to confiscate the instrumentalities used in money laundering?

· What is the difference between freezing and seizure of property?

· Why is it important to have mechanisms that allow competent authorities to effectively manage seized or confiscated property?

· Give an example of confiscating proceeds from money laundering.

· Under what circumstances is it possible to confiscate proceeds of money laundering without a criminal conviction?

· What are the three general qualities of all sanctions directed at money launderers and financiers of terrorism?

· What is the reason for imposing measures of criminal liability on legal persons?

· What law tradition should a country have, to allow it to impose criminal liability measures on entities involved in money laundering?


 

4.1. An extension liability for money laundering to the predicate offence perpetrator: the adverse implications for the economy

Commission of a predicate offence
The same person launders the ill-gotten proceeds (self-laundering)
I. The perpetrator of the predicate offence is not held liable for laundering the proceeds
Rationale: multiple punishments for a single criminal offence
II. The perpetrator of the predicate offence is held liable for laundering the proceeds
Rationale: money laundering is a separate offence with its adverse implications for the economy
Adverse macroeconomic implications
Risks and damage to entities and professionals involuntarily involved in money laundering
· Distortion of economic data · Misleading monetary data because money demand shifts from one country to another · High interest and exchange rate volatility · The income distribution effect (from high savers to low savers, from sound investments to risky) · Dominance of riskier but higher-yielding investments in the small business sector where tax evasion is prevalent · Erosion of confidence in markets by widespread insider trading, fraud and embezzlement · Difficulties in managing government economic policy · Legal transactions involving foreign participants become less desirable due to association with money laundering (the contamination effect)
The risks: · reputational · operational · legal · concentration risks
What should an attorney do when he defends the accused in a trial and takes a fee paid with proceeds from crime?

 


 


Date: 2015-01-29; view: 1025

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