1. The Treaties, conventions on money laundering and corruption in Europe and globally
“Fight against organised crime and corruption: strengthening the prosecutors’ network”
March4th-7th 2014, Skopje, Macedonia
Mona Konecny, Public Prosecution Office, Vienna, Austria

2. General aspects of combatting money laundering
Criminological aspects of money laundering:
Necessity to hide gains from illegal activity
The more profitable an illegal activity, the more difficult to hide the money (e.g. drug trafficking, corruption, tax evasion, organised crime in general)
Money laundering is a problem of quantity
Tendency to include petty offences in the fight against money-laundering might reduce efficiency
Difficulty to prove money laundering in the ambit of a criminal investigation due to transnational aspects and major efforts of criminals to hide the provenience of the funds

3. Money laundering and terror financing
Hiding money of criminal provenience
Money is necessarily derived from criminal activity
Money is used either for financing new criminal activities or for non-criminal purposes (“income” from criminal activity etc.)
Terror financing:
Raising money for criminal/terrorist activity
Money can derive from illegal or legal activities (e.g. donations)
Money is used to finance terrorism, supporting members of the terrorist organisation is rather a side effect and not the aim

4. How to combat money laundering
Repressive approach:
Criminalisation of certain ways of conduct (e.g. money laundering, formation of a criminal organisation, terror financing)
Criminal activity in the ambit of a criminal organisation or within a terror organisation as an aggravating factor
Enlargement of the catalogue of predicate offences
Preventive approach:
Confiscation of laundered money
Advantage: not only possible from the money launderer or the offender, but from whoever takes advantage of the illegal activity
Greater possibility to shift the burden of proof  in a rule of law system, an offender cannot be forced to prove his innocence, but the profiteer of illegal income can be obliged to prove the lawful acquisition

5. United Nations Conventions
Vienna Convention against illicit traffic in narcotic drugs and psychotropic substances (1988) (Vienna Convention):
First document on UN-level against money laundering
Predicate offences envisaged only those related to narcotics trade
However: “The international community, through the adoption of the convention, has expressed its universal abhorrenceof drug-related money laundering. However… there would seem to be little policy justification for the proscription of money laundering arising from some profit-generating criminal activities and not others… In any event drug trafficking may not remain … the most profitable form of transborder criminal activity.”

6. Vienna Convention Definition of money laundering: Art 3 (1)(b):
Conversion or transfer of property knowing that such property is derived from [predicate offence] for the purpose of concealing or disguising the illicit origin of the property or of any person who is involved in the commission ….
Concealment or disguise of the true nature, source, location, disposition, movement, rights with respect, or ownership of property, knowing that such property is derived from [predicate offence]
This definition includes also petty offences (e.g. reselling single units of psychotropic substances) as predicate offences to money laundering

7. Vienna Convention Two-fold approach
Repressive measures Confiscation of property
Repressive measures
Art. 3 commits the signatory states to make the offences listed a criminal offence and provide for adequate sanctions
Necessity to take into account aggravating factors such as involvement in a criminal organisation

8. Vienna Convention Confiscation of property
Art. 5 commits the signatory states to adopt adequate measures of confiscation of illegally acquired property
Art : Enabling of authorities to identify, trace, freeze or seize inter alia property (note that convention puts seizure of property before the seizure of drugs)
Bank secrecy – a major problem in criminal investigation – may not hinder confiscation
Proceeds intermingled with legally acquired property liable to confiscation up to the assessed value of the intermingled proceeds
Burden of proof may be reversed from the prosecutor to the person who alleges the legal acquisition of the property!

9. United Nations Conventions
Palermo Convention against transnational organized crime (2000)
Money laundering one of key features of organised crime
Distinction between primary criminal activity and secondary criminal activity (e.g. money laundering)
Definition (Art (a) is more or less equal to the Vienna Convention
Extension of predicate offences to money laundering, minimum requirements are
- participation in a criminal organisation (Art. 5)
- corruption (Art. 8)
- obstruction of justice (Art. 23)

10. Palermo Convention
Combatting money laundering under the Palermo Convention
regulatory and supervisory regime of the financial sector in order to identify suspicious transactions
- customer identification
- record-keeping and reporting
international cooperation
Measures should not impede movement of legitimate capital
States should use international guidelines (soft law)  FATF

11. Council of Europe
Convention on laundering, search , seizure and confiscation of the proceeds from crime 1990
Four principles underpin this Convention
Congruence with other international initiatives
Co-operation and exchange of information between law enforcement agencies of different countries
Minimisation of profit incentive
Flexibility to make the Convention compatible with different legal systems and respect for different legal systems an law enforcement methods
 Focus on law enforcement once the laundering has occured

12. Council of Europe
Definition of money laundering similar to the Vienna Convention, BUT
Leaves the signatory states a broad discretion in defining predicate offences
Focus on confiscation
Confiscation of proceeds or property or correspondent value
Investigative and provisional measures
Bank secrecy shall not hinder Parties from action
On the other hand effective legal remedies
Special emphasis on international co-operation and assistance  main focus of the Convention  transnational co-operation to fight transnational crime

13. Council of Europe
Convention on laundering, search , seizure and confiscation of the proceeds from crime and on the financing of terrorism 2005
Terror financing is not identical to money laundering, therefore a new Convention was agreed on to include also the phenomenon of Terror financing
Definition of terror financing drawn from the UN Convention for the Suppression of the Financing of Terrorism 1999
Greater emphasis on monitoring bank accounts

14. Council of Europe Convention 2005
Definition of money laundering – developments to the 1990 Convention
Profit-making is no longer a prerequisite
Predicate offences are set out in an appendix instead of left to the discretion of the Parties with the possibility to make a caveat
Negligent money laundering may constitute an offence (Art. 9 (3)) – but no obligation for the Parties
A conviction for a predicate offence shall not be a prerequisite for a conviction for money laundering nor shall there be a necessity to establish the exact nature of the predicate offence
Establishment of Corporate liability

15. European Union 1st anti-money-laundering directive (91/308/EEC)
Amendment of the 1st anti-money-laundering directive (2001/97/EC)
3rd anti-money-laundering directive (2005/60/EC) – currently in force
Several framework decisions, joint actions, regulations
on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds from crime
Confiscation of Crime-Related Proceeds, Instrumentalities and Property
cooperation between financial intelligence units of the Member States in respect of exchanging information

16. 3rd AML-directive Main aspects
No provision of criminal law on money laundering
Art obliges member states only to “prohibit” money laundering
Member States – however – are bound by the CoE conventions, the 3rd AML-directive has to be seen in that light
Member States may not express a caveat to the CoE conventions (Art. 1 (1)(b) joint action on money laundering; Art. 1 (1)(b) framework decisionon money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds from crime)
Definition corresponds more or less to the pre-mentioned Conventions, with the possibility to apply it to a broad range of predicate offences (also the offence of “negligent money laundering” is not foreseen

17. 3rd AML-directive
Aims of the directive Primary aim: Secondary aim: Stability and reputation of the Fight against money laundering and financial system organised crime The reason for this ranking of values is to be found in the complex distribution of competences between the EU and its Member States (competence for criminal law only if necessary for the functioning of the Common Market)

18. 3rd AML-directive Stability and reputation of the financial system:
Liberalization of the free movement of capitals and payments
Not restricted to EU Member states, includes also third countries
May not be restricted, unless justified and proportional
Criminal activities take advantage of the basic European freedoms, especially of the free movement of capitals
Applies basically to financial operators and related businesses
Customer due diligence (“Know your customer”)
Simplified or enhanced, depending on the customer
Reporting obligations including a prohibition of disclosure
Record keeping and statistical data
Directive requires adequate sanctions, but not necessarily a criminal sanction
Member States shall ensure that money laundering is prohibited
This is a consequence of the competences of the EU and the addressees being financial operators  administrative sanctions more ample and adequate