“Money Laundering and Financing of Terrorism as Trasnational Crimes” Wednesday 4 th March 2009, Centre for Criminology, Oxford University (12:30 – 13:30 hs.)

Purpose of the research (what this presentation is about and what it is not about). 1) This presentaion is about: Understand Money Laundering (“ML”) and its connection with the process of Financing of Terrorism (“FT”). 1) This presentaion is about: Understand Money Laundering (“ML”) and its connection with the process of Financing of Terrorism (“FT”). 2) This presentation is not about: 2) This presentation is not about: (i) Investigate how is organized the anti-ML and FT legal framework that has been put in place on an international and national level (focusing on the ML and FT criminal offence); (ii) Identify and discuss the main legal problems that arise in the implementation of the international ML and FT criminal offences into the national legislation. The main legal problems, of instance, are: (a) extraterritorial and applicable law problems coming through the globalization of crimes such as ML and FT; (b) human rights limitations to the application of the ML and FT offences; among others. 3) Justification of the research: Little attention has been paid to the relation between ML and FT. Furthermore, the little academic debate regarding this topic has taken place within particular disciplinary context. In contrast, this research attempts to consider an interdisciplinary –criminology, criminal law, constitutional law, international public law and international relations, as well as government practice – and comparative perspective. 3) Justification of the research: Little attention has been paid to the relation between ML and FT. Furthermore, the little academic debate regarding this topic has taken place within particular disciplinary context. In contrast, this research attempts to consider an interdisciplinary –criminology, criminal law, constitutional law, international public law and international relations, as well as government practice – and comparative perspective.

Agenda 1. Introduction to the topic. 2. What is Money Laundering (“ML”)? 3. What is Financing of Terrorism (“FT”). 4. Understanding the techniques of “laundering” and “dirtying” money. 5. Four good reasons for fighting ML and MD – Why criminalize the process of ML and MD? 6. Understanding the principles of ML. 7. Conclusions and debate.

1) Introduction to the topic 1920s: New York Mafia groups. Arise ML term. 1920s: New York Mafia groups. Arise ML term. 1980s: ML as a criminal offence (USA, ML Control Act 1986 and UN Vienna Convention 1988). 1980s: ML as a criminal offence (USA, ML Control Act 1986 and UN Vienna Convention 1988). 1990s: (i) extend the legal definition of ML, including other serious crimes as predicate offences (EU “Strasbourg Convention” 1990 and UN “Palermo Convention” 2000); (ii) Creation International anti-ML regime (preventive and repressive norms). (iii) Creation Financial Action Task Force (FATF). 1990s: (i) extend the legal definition of ML, including other serious crimes as predicate offences (EU “Strasbourg Convention” 1990 and UN “Palermo Convention” 2000); (ii) Creation International anti-ML regime (preventive and repressive norms). (iii) Creation Financial Action Task Force (FATF). 11 Sept. 2001: UN Convention Against Financing of Terrorism and UNSC Resolution Sept. 2001: UN Convention Against Financing of Terrorism and UNSC Resolution : UN Convention against Corruption. 2003: UN Convention against Corruption. 2005: EU Convention against ML and FT. 2005: EU Convention against ML and FT. Current ML estimations IMF/WB: 2 billion dollars a year (=5% world gross domestic product –GDP-). Current ML estimations IMF/WB: 2 billion dollars a year (=5% world gross domestic product –GDP-).

2) What is Money Laundering (ML)? FATF: “Process whereby criminals attempt to disguise and legitimate their ill-gotten gains of crime”. Simpler: making money coming from a criminal source A, look like it comes from a legitimate source B. FATF: “Process whereby criminals attempt to disguise and legitimate their ill-gotten gains of crime”. Simpler: making money coming from a criminal source A, look like it comes from a legitimate source B. Why criminals choose ML?: a) commission “predicate offence”, b) accumulation significant amount of “dirty” money, c) The dilemma: transfer “dirty money” to a ML process, or not? Why criminals choose ML?: a) commission “predicate offence”, b) accumulation significant amount of “dirty” money, c) The dilemma: transfer “dirty money” to a ML process, or not? Goal of ML: (i) separate and disguise criminal origin of assets by giving it an apparently legitimate source, (ii) enjoy ill-gotten assets by purchasing luxury assets in the legal economy. Goal of ML: (i) separate and disguise criminal origin of assets by giving it an apparently legitimate source, (ii) enjoy ill-gotten assets by purchasing luxury assets in the legal economy.

3) What is Financing of Terrorism (FT) Both “Criminal Organization” and “terrorism” require financial help. The first as an ultimate goal, the second to commit a “terrorism act”. Both “Criminal Organization” and “terrorism” require financial help. The first as an ultimate goal, the second to commit a “terrorism act”. FT: “Financial support, in any form, of terrorism or of those who encourage, plan, or engage in terrorism” (source IMF/WB). FT: “Financial support, in any form, of terrorism or of those who encourage, plan, or engage in terrorism” (source IMF/WB). Difference b/ ML and FT in the origin of the source: ML derives always from illegal activities, FT use both “dirty” and “clean” money (e.g. Al- Qaeda´s enterprises in Sudan or Yemen, governments, religious charities). Difference b/ ML and FT in the origin of the source: ML derives always from illegal activities, FT use both “dirty” and “clean” money (e.g. Al- Qaeda´s enterprises in Sudan or Yemen, governments, religious charities). “Dirty” money – ML process: terrorism also “launder” money (example, drug trafficking, extortion, kidnapping) in order to disguise the illegal origin (“predicate offence”) and destination (“crime of terrorism”). “Dirty” money – ML process: terrorism also “launder” money (example, drug trafficking, extortion, kidnapping) in order to disguise the illegal origin (“predicate offence”) and destination (“crime of terrorism”). “Clean” money – “money dirtying process”: a concealment process tending to separate the legitimate source of funds with its criminal destination. “Clean” money – “money dirtying process”: a concealment process tending to separate the legitimate source of funds with its criminal destination. Conclusion: FT´s economic channels are: ML, “money dirtying”, “dirty” or “clean” money. Conclusion: FT´s economic channels are: ML, “money dirtying”, “dirty” or “clean” money.

4) Stages and techniques of ML and “Money dirtying”. Source: United Nations Office on Drugs and Crime (2006) See:

4) Stages and techniques of ML and “Money dirtying” (cont.). ML and “Money dirtying” activities, use identical techniques. ML and “Money dirtying” activities, use identical techniques. “Money Laundering” Stages: “Money Laundering” Stages: (i) Placement or concealment: separate assets one step way from illegal origin and place them into the financial system. Techniques: reduce volume by converting money into financial instruments, “smurfing”, “hawala” system or “smuggling” assets). (ii) Layering or decanting: assets are moved and reconverted again. Techniques: open “off shore” or “shell” companies, under “straw men” names or false identifications. (iii) Integration or reinvestment in the official economy: assets enter legal economy as if they were obtained legally. Techniques: purchase of assets, such as real estate, bank notes, loans or luxury goods. “Money Dirtying” stages: The first two stages (placement and layering) are common to ML and “Money dirtying”. But integration, involves, in money dirtying, the distribution of funds to terrorists. “Money Dirtying” stages: The first two stages (placement and layering) are common to ML and “Money dirtying”. But integration, involves, in money dirtying, the distribution of funds to terrorists.

5) Four good reasons for fighting ML and FT. 1) To undermine crime and “Criminal Organizations”: profits is “the life blood” of any criminal enterprise. 1) To undermine crime and “Criminal Organizations”: profits is “the life blood” of any criminal enterprise. 2) To protect socio-economic global regime: ML affects, principally, “fair competition”. 2) To protect socio-economic global regime: ML affects, principally, “fair competition”. 3) Moral reasons: “crime should not pay”. 3) Moral reasons: “crime should not pay”. 4) To protect the correct public administration of Court investigations. 4) To protect the correct public administration of Court investigations.

6) Why are some countries more attractive than others as a destination of “dirty” money? 1) Jurisdictions competing for “dirty” money. 1) Jurisdictions competing for “dirty” money. 2) Countries with high index of corruption. 2) Countries with high index of corruption. 3) Countries with social, economic and political conflicts. 3) Countries with social, economic and political conflicts. Countries with weak law enforcement anti-ML agencies. Countries with weak law enforcement anti-ML agencies. Countries with vulnerable and open borders. Countries with vulnerable and open borders. Countries with outdated Anti-ML and FT Legal Regimes in light of international standards. Countries with outdated Anti-ML and FT Legal Regimes in light of international standards.

Conclusions of this presentation ML is the practice of concealing assets as they were obtained legally. ML is the practice of concealing assets as they were obtained legally. FT is the financial support, in any way, of terrorism. “In any way” means, financing by any form (ML or money dirtying process), or by any source (“dirty” or “clean” money). FT is the financial support, in any way, of terrorism. “In any way” means, financing by any form (ML or money dirtying process), or by any source (“dirty” or “clean” money). “ML” stages: placement – layering – integration. “Money dirtying” stages: placement – layering – terrorism support. “ML” stages: placement – layering – integration. “Money dirtying” stages: placement – layering – terrorism support. Reasons for fighting ML and FT: (i) to undermine criminal and terrorist organizations and crime in general, (ii) to protect socio- economic regime, (iii) Moral reasons, (iv) to protect correct administration of justice. Reasons for fighting ML and FT: (i) to undermine criminal and terrorist organizations and crime in general, (ii) to protect socio- economic regime, (iii) Moral reasons, (iv) to protect correct administration of justice. “Dirty” money flourishes best in corrupt countries, with open borders, implementing “Seychelles” fiscal strategies and outdated anti-ML legal frameworks, together with other tolerant attitudes. “Dirty” money flourishes best in corrupt countries, with open borders, implementing “Seychelles” fiscal strategies and outdated anti-ML legal frameworks, together with other tolerant attitudes.