The Table of Contents for the RCMP Feature Focus: 2005 Economic Crime is available in html format at: toc_e.htm |
Money Laundering…
IMF estimates between 2-5% of global GDP
- economic distortion – e.g., unfair competition
- primary approach of launderers – concealing origin of money through business dealings – operate at low profit margins, negatively impacting legitimate competitors
- while prevalence highest in Asia and Africa – emerging issue in Latin America – home of 6 of the top 10 countries with money laundering through their bank channels
- risks to financial integrity – e.g., banking failures and financial crises resulting from unexpected movement of large sums of money
- tarnishes reputations of associated banks, professionals, industries and economies
- losses in tax revenue as transactions take place in underground economy
- facilitates criminal activity – potentially leading to higher levels of corruption inside private and public organizations and higher costs to law enforcement
- enables criminal groups to self-fund, engage in research and development and underwrite new and more sophisticated types of activity
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We need to get away from drug-related definitions of money laundering and address the issue from an all crimes perspective.
~ Creon Butler, Foreign and Commonwealth Office, UK, 2002 |
Challenges to law enforcement
- complex cross-border financial and communication systems and infrastructure
- disparate laws and regulations across jurisdictions
- increasingly sophisticated methods – difficult to trace origins of activity
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Three steps of money laundering:
- placement: introduction of criminal proceeds into financial system – most difficult step
- layering: series of movements in funds to create distance from source
- integration: funds re-enter legitimate economy
Source: UNODC, 2005 |
- requirement to invest in reliable data and intelligence for the major types of offences that underpin money laundering to exclusively target the activities generating sources of “dirty money”
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Money laundering…
International response focusing on prevention and awareness
Movement toward establishing and strengthening money laundering institutions:
- in 2004, ten new countries established financial intelligence units (FIUs) bringing the total to 94
- 26 additional countries criminalized terrorist financing in 2004; bringing the total number of countries that have criminalized terrorist financing to 113
Financial Action Task Force (FATF) – an independent, inter-governmental body setting standards to combat money laundering and terrorist financing:
- issued 40 landmark recommendations on anti-money laundering measures (1990) – ultimately endorsed by 130 states, including Canada
- issued Eight Special Recommendations on Terrorist Financing (October 2001)
- maintains and publishes annual list of non-cooperative countries – pressures governments to act
IMF and WB currently assessing international efforts and initiatives aimed at the prevention of money laundering
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Operation White Whale
- EUR 600M ($1B) laundering racket – largest European ring dismantled
- 300 police officers – 10 months investigation
- arrests covering a network of 1 000 companies, seven lawyers and three notaries
- laundered money purchased luxury cars, aircrafts and real estate
- affected Canada, the US and countries in Europe
Source: Media reports, 2005
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