Money laundering is an operation that consists on giving a legal appearance to funds obtained from illicit activities and, consequently, these funds pass through the financial system without problems.
For money laundering to exist, another serious crime – which provides the benefits- must be previously committed. Introducing those benefits obtained from an illegal activity in the financial markets or other economic sectors is a crime. It is a specific crime which does not require a prior conviction for the criminal activity that generated the laundered funds.
The use of ‘laundering’ has its origin in the US gangster Al Capone, who justified his high income to his laundry businesses when, in fact, profits were obtained from criminal activities. The comparison between cleaning a dirty garment and cleaning dirty money fitted perfectly with the expression of money laundering.
The following activities are considered money laundering:
I. The conversion or transfer of property, knowing that such property is the proceeds of a crime, or of the participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of helping any person involved in the commission of that activity to evade the legal consequences of his or her action.
II. The concealment or disguise of the true nature, source, location, disposition, movement or ownership of goods or rights on property, knowing that such property is the proceeds of crime.
III. The acquisition, possession or use of a property, knowing that, at the time of receipt, such property is the proceeds of crime.
IV. Participation in, association with or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the offences mentioned in the previous sections.
Companies must be very cautious in the exercise of their activities to avoid being used as means to the attainment of these crimes.
The perpetrator of money laundering can be convicted when it is proved that this person was aware of the collaboration in an unusual operation and that the source of money and property was not legal provided that the perpetrator was in position to know its origin and had the duty to know it. In addition, profits obtained by the felon will be confiscated.
Determining a direct evidence is virtually impossible since the money has been initially camouflaged. Therefore, circumstantial evidences that allow a certainty of trial about its illegal origin are admitted: (i) an increase in equity without legal justification and in an unusual form, (ii) non-existence of lawful business to justify the increase in equity or amounts related to a business, (iii) commercial transactions for high amounts that do not correspond to the usual cost of such operations, or (iv) the existence of a link with organizations that deal with narcotic drugs or are directly related to these types of illegal activities.
It should be noted that in Spain, SEPBLAC (Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences), fulfils the function of developing prevention policies, establishing procedures for communications by indication, for the request information by national authorities, for international cooperation and for the exchange of information.
Money laundering is a dangerous activity for both countries and their financial institutions, since this type of criminal activity can lead to an increase in crime and an unbalanced economy, affecting the good reputation of financial institutions.
For all these reasons, it is so important to fight against money laundering, supervising and reinforcing current regulations. It is necessary to reduce the threats and support an strict international regulation and the prevention through the financial system.
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