((وبلاگ علمی دانشمندان حقوق ایران فردا))

Palermo 2000 Convention in analyzing crucible with a look at British & Swiss money laundering laws

 Peyman Namamian *

Criminal Law and Criminology M.A. and member of Iranian Criminal Law Association

Sobhan Tayyebi

International Law M.A. Islamic Azad university , Fars Science and Research unit

Abstract

By the beginning of second half of 20 th century and increasingly growing organized crimes as well as laundering earnings from it , a lot concern has been created in some western countries.

In this direction , in 1980 s , money – laundering phenomenon attracted western countries' attention as a crime , especially related to earnings from drug and psychedelias smuggling.

Thus , considering ever – increasing growth of this phenomenon , governments intended to approve acts to consider money – laundering as a crime , an obvious example of which is U. N convention of December of 2000 against phased organized crimes.

Nevertheless , present article is seeking to investigate punitive policies of western countries , especially Britain and Switzerland , in connection to considering money – laundering a crime while analyzing aforementioned convention.

Keywords

Money – laundering ; Precarious crimes ; Organized crimes ; Palermo convention ; Threathening financial system.

Introduction

Nowadays , some monetary crimes are being committed , which are supported by Mafia groups having some hierarchy and being ruled by severe regulation accompanied by a cruel administrative sponsorship .

These groups act immorally through influencing ruling systems. Then , they eliminate existing barriers following that step and , next , attempt to eliminate some people physically. Ultimately , they gain monetary and material profits. Such groups are specialized in committing organized crimes such as drug , cultural works , and humans smuggling ; as a result , money – laundering is one of these dangerous crimes.

In fact , working method of these groups is that when they commit crimes , the purify them and hide illegal factors of their works and take advantage of revenues from purification.

Equipped with advanced computers and with advancements in communications and technology , these groups commit huge thefts in banks by using computers.

According to the U.S. Justice Ministry , annually ten thousands of dollars are stolen from this country's banks electronically. And it should be noted that ($) 1 billion of illegal capitals are flowing in the world's monetary markets daily . [1]

However , foreign banks and developing nations are damaged and offenders do their acts easily ; such purified funds also are easily purified amongst highly huge amounts of money and transactions. [2]

Money – laundering is a global event , and following goals are pursued in fighting it as a part of combating organized offences:

1)        To prevent criminal organizations' revenues and activity volumes from increasing ;

2)        To undermine economic power of organizations' interweaved structures by confiscating properties as a result of ascertaining committed offences ;

3)        To find reasons by defining the way purified money has covered in order to gain access to high levels of criminal organizations. [3]

From 2 past decades up to now , this offence has had high appeal in global community , for this reason , some organizations have been established to combat such offences one of which is Financial Action Task Force (FATF) founded in 1990.

Two conventions were codified by governments at both international and universal levels : one is the convention for combating drug traffic , the other is the U.N. convention against phased , organized offences signed by 147 governments and ratified by 28 ones in Palermo (Italy) , in 2000 Dec.[4]

It is , of course , important to say that term "money – laundering" has been accompanied by offences related to drug smuggling historically , but it is seen as the main element of combating corruption today.

Te scope of money – laundering includes all economic crimes including those related to bribery. The aim of law – making about money – laundering is to ensure that economic crimes are not profitable and that perpetrators committing important economic crimes have no way to escape from law.[5]

1. An outlook on money – laundering

1.1. Definition

Jurisprudents have provided different definitions of money – laundering in international documents one of which is as follows:

By money – laundering we mean hiding the main source of assets resulting from committing crimes and converting them into pure assets so that it is very difficult , or impossible , to find the main source of assets. [6]

In money – laundering , profits from committing a crime enter financial system so that their illegal roots are missing and they seem to be legitimate . In most cases , when considerable benefits are obtained by committing a crime such as drug and weapons traffic and white – collar offences the organized offence is accompanied by money – laundering.[7] Article (1) of directive proposal by European communities , in 1990 Mar , defines money – laundering as follows :

Converting or transferring properties , knowing that such properties have been acquired by committing harsh offences , in order to conceal or deviate their unlawful sources or to help any persons committing such offence (s) escape from legal outcomes of their acts or to conceal or deviate actual nature of source , location , transfer , movement , and rights related to properties and to their ownership with knowledge that they came from committing a grave offence.[8]

Another definition briefly provided by one of juris prudents states that:

Money – laundering is a process by which a legitimate and legal aspect is given to the source of huge amounts of money acquired in an illegal way (drug traffic , acts of terrorism , or other serious offences).[9] Money – laundering or money – purifying is also the process of changing the form or the usage of illegal revenues resulting from committing economic offences in order to conceal the source of such revenues.[10]

1.2. Instances

As inferred from above definitions , there are , presently , five major (act and omission) factors for money – laundering:

1)        To help other people maintain benefits from crimes ;

2)        To acquire , seize , and utilize criminal benefits ;

3)        To hide or transfer benefits in order to evade being prosecuted or receiving seizure warrant ;

4)        Not to reveal committing the crime of money – laundering in the case of knowing or suspecting it ;

5)        To communicate secretly.[11]

To help other people maintain benefits from crimes means that a person knowing or suspecting the other person is smuggling (narcotic) drug or acting  another criminal behavior or acquiring benefits by doing so helps him maintain or control resulting benefits to enable him to invest those benefits on behalf of himself.

The second item means utilizing or seizing properties known to be acquired by smuggling (narcotic) drug or by acting another criminal behavior , which have been acquired at least at less than their actual values ; or having sufficient reasons to be suspecting such case. Concealment means misleading or removing or transferring benefits from drug smuggling or from another criminal act in order to release a person from being sued or to help him escape from justice grasp. This crime is ascertained when helpful person is aware of the nature of properties or has sufficient motives to suspect it.[12]

The fourth item is only related to (narcotic) drug smuggling and terrorism. It is not associated with revenues and benefits from crimes entirely. This crime is committed when a person is aware of the existence of a crime in the course of his commercial , occupational , or employment operations , but does not inform the police force or customs officers.

To communicate secretly means that a well – informed person inform a suspected person of information or any other things that can damage the flow of discovering prosecution and investigation process.

This happens when police investigation has begun or is about to begin on money– laundering . Someone becomes aware or suspicious of it and prevents the crime from being discovered , or disrupts its process by secretly informing the suspected person.

1.3. Phases (stages)

To purify revenues from crimes , 3 distinct phases must be followed : establishment , camouflage , and integration.

1.3.1. Establishment

Since crimes having priority to be purified are greatly those crimes giving huge amounts of money to perpetrators through doing unlawful activities , aquired funds either enter financial system or microeconomics or are transferred abroad in this phase in order to be unavailable and to make discovering impossible and , then , they can be converted into other property forms like traveler's checks , bills , etc.[13]

It is also possible that such funds be converted into expensive objects such as artistic works, aircrafts , metals , and ancient jewels and resold then.

1.3.2. Camouflage

In this phase , it is attempted to hide the real source of properties ownership by creating complex covers through monetary transactions and / or to represent it inversely. The aim of camouflaging is to separate unlawful money , resulted from committing crimes by doing complex monetary transactions , from its original source. This process often takes place by extra – border transferring with electronic devices.Given that there are 500,000 exchange – wire lines around the world through which $ 1 billion exchanges take place daily most of which are unlawful , complexity aspects of discovering this crime becomes more clear. Laundrymen also resort to complicated stock and brokerage transactions.

1.3.3. Integration

In this phase , the money entering economic and monetary (financial) system is legitimated and becomes similar to all other properties , and distinguishing it from other legitimate properties is impossible.The entrance of purified money into economic system by laundrymen is accompanied by maneouvres to pretend the property has been acquired legally. In this phase , various tricks are used as follows :

a)        Creating nameless or nicknamed companies in countries where privacy right is guaranteed so that offenders allocate loans to themselves counting on purified funds by doing legitimate transactions and even claim tax exemption to avoid reimbursing the loans.

b)        Sending unreal bills for exporting / importing products the prices of which are rising allows laundryment to transfer the money involved from one company to another or from one country to another and the source of money is shown legitimately by those bills.

c)         An easier way is to send money from laundrymen's own banks to the banks existing in tax havens. [14]

2. Analyzing contents of Palermo 2000 convention

2.1. Crime – supposing

This convention is not intended to create inflexible obligations for state parties , rather it is intended to encourage them to bring their domestic laws into agreement with insertions of convention , hence with other governments' laws provided that this task be in conformity to principles of their national laws.

Instead of defining the criminal subject  convention represents a definition which must be adopted by governments obligated to enact regulations necessary to consider said acts as offences according to their domestic laws. Article (6) of convention under heading "considering purification of interests resulted from committing crimes as an offence " defines money – laundering so :

1)        when following acts are committed intentionally each state party shall take these law – making steps and other steps necessary to consider those acts as criminal offences in accordance with their substantial principles of domestic law.

(a)     (I) converting or transferring properties with the knowledge that they are benefits resulted from committing crimes in order to hide or mislead the illegal source of properties , or to help the person perpetrated the crime in order to efface legal outcomes of his act ;

(II) concealing or misleading real nature , source , place , transfer , movement , or ownership of properties or of its respective rights with the knowledge that such properties are benefits resulted from committing crimes;

(b)     according to substantial concepts of each country's law system:

(I)                   acquiring , seizing , and utilizing such properties , with the knowledge that they are benefits resulting from committing offences at the time of receiving them;

(II)                participating in committing , or cooperating or conspiring in committing or in starting to commit , or assisting to facilitate and giving consultation to commit any offences as crimes under this Article.

(2) To exercise or execute clause (1) of this Article:

(a) each state party shall try to execute clause (1) of the Article on prior offences as most extensively as possible ;

(b) each state party shall enter all offences inserted in Article (2) of convention as well as crimes defined based on Articles (8) , (5) , (23) of convention into their domestic laws. For state parties whose laws enumerated a list of specially prior offences , a comprehensive enumeration of offences associated with criminal organized groups must be inserted in such list.

(c ) based on clause (b) , prior offences include those offences being committed both inside and outside of jurisdiction of the state party discussed , however , offences committed outside of jurisdiction of a state party only are considered as prior offences when the acts involved are criminal offences according to domestic law of the government in which that offence was committed ; and when that offence committed inside the territory of the state party executing or exercising this Article is considered a criminal offence based on domestic law of that government.

(d) each state party shall submit a copy of its regulations approved in executing this Article and of subsequent changes in such regulations or in their respective interpretations to the U.N. General secretary.

(e) If constitutional principles of a state party's domestic law require , it shall be established that offences mentioned in clause (1) of the Article shall not be applied to people committing prior offences ;

(f) knowledge , intention , or purpose stated as actus reus in clause (1) of the Article shall be inferable from objective conditions and states.

First the concept of prior or main offence , which is used a lot in the Article , should be clarified.

This term is defined in clause (h) of Article (2) of convention as follow.

Prior offence is any offence from committing which some benefits are obtained which is itself considered as an offence according to definition inserted in Article (6) of convention.

In other words , money – laundering crime is based on an offence committed independently the revenues and benefits resulted from which are purified then. The first committed offence the revenues from which are purified is called prior offence.

Phrase origin offence is used in money – laundering bill.[15]

 As it is clear from studying preliminary tasks of formulating convention , terms concealment or misleading mean steps taken to prevent illegal source of properties from being disclosed.[16]

Purpost of the Article can be divided into 2 categories where it explains criminal subject :

(a)      obligations absolutely imposed on state parties ;

(b)      obligations that governments are obligated to fulfil them based on substantial concepts and principles of their domestic laws.

In definition of purifying profits resulted from committing crimes , supposing following items as offences is foreseen as an absolute obligation and each state party is bound to suppose these acts as offences[17] : converting or transferring properties , with the knowledge that they are benefits resulted from committing crimes , in order to hide or mislead illegal source of properties or to help a person committing a prior offence to remove lawful outcomes of his (perpetrator's) act and to conceal or mislead real nature of source , place , transfer , movement , or ownership of properties or of their respective law.

How ever , acquiring , seizing , or utilizing such properties , with the knowledge that they are profits resulted from committing crimes , depends on compatibility of these items with domestic law.

First paragraph of clause (2) of said Article of convention obligates governments to do their best as much as possible in order to execute contents of clause (1) for prior offences.

Although it is completely clear from the context of the sentence that executing this Article is optional , not compulsory , clause (e) has provided that if the constitutional principles of a country's domestic law require , it will be established that offences inserted in clause (1) of the Article shall not be applied to persons committing prior offences so that those countries finding  implementation of this Article incompatible with their domestic laws don't have to be worried in this sense.

Clause 2 (b) of the Article has provided that state parties shall put offences inserted in Articles (5) , (8) , (23) of convention into their domestic laws as prior offences.

Articles (5) and (8) are , respectedly , associated with participating in criminal organized groups and monetary corruption or bribery.

Undoubtedly , some material interests can be acquired by performing both subjects mentioned. An organized group is founded in order to acquire material or monetary profits , and participating in such a group takes place to gain benefits , which must be purified to avoid discovering the offence involved.

In crime of financial corruption (bribery) . while bribees gain unlawful benefits , bribers and their respective groups usually gain huge profits which is purified then.

Article (23) devoted to considering prevention of justice exercise as an offence includes cases where giving evidence or reasons about offences included in convention is interfered by force use or threatening and / or by offering or granting benefits ; or by threatening or pressuring judicial and executive officials , resulting in deviation of fair and justice way. State Parties are obligated to put this criminal subject into their domestic laws as a prior offence. As with bribery , the main purpose is to acquire interests by criminals due to deviation of justice course.Considering transnational aspect of organized crimes , clause (2) (c ) states that prior offences include both offences committed inside jurisdiction of a country investigating the crime of purifying resulted revenues , and offences committed outside of its jurisdiction provided that prior offence be a criminal offence with in the territory of the country where the offence was committed.

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