By Ahsan Habib
Senior Analyst, AML Operations Governance, Scotiabank
December 15, 2021
With editing and content editions by ACFCS VP of Content, Brian Monroe
When looking back at a tumultuous and pandemic-pocked 2021 and reviewing the perennial battle of criminals who want to generate illicit income and fincrime compliance teams working to stop them, it’s critical that we understand, nearly all major crimes are more or less triggered by money laundering.
But without the precursor crimes, there is no money to launder. What crimes are we talking about?
Here are some examples: Human trafficking, tax evasion, Ponzi schemes, kleptocracy/political corruption, drug/weapon/organ smuggling, green crimes, terrorist resourcing and whatnot.
These offences have a well recognized name in common: i.e. predicate offenses, which can be considered the initial stage of money laundering.
With so many predicate crimes to generate illicit revenue – in the real and virtual worlds – the industry platinum standard of taking the risk-based approach, at least in 2021, was not always a perfect fit.
For instance, yes, adding laundering through crypto coins as a predicate offense could potentially help out with record ransomware attacks.
But these and other risk-based moves can still miss outspoken outliers – like a laundering lecturer who consulted on anti-money laundering (AML) around the world and then betrayed everything he stood for to use that knowledge to facilitate cleansing ill-gotten funds for narco syndicates.
Even so, bank fincrime fighters must remain focused on the classic generators of tainted funds – but also be cognizant that regardless of the region, criminals will not stick to one laundering method.
Last year – and for decades prior to that, going all the way back to miscreant mobsters of the prohibition era, a trend no doubt snaking into 2022 – criminals chose to move funds through multiple regions and institutions, swimming together cash, money remitters, prepaid cards and virtual value, like Bitcoin.
In some regions, like the European Union and its recently updated Sixth Anti-Money Laundering Directive, they have a roughly defined list, as the bloc details nearly two dozen predicate offenses.
But other countries define these predicate offenses, or specified unlawful activities, more broadly, noting that any crime that generates illicit revenue, if used to purchase an item or move through a financial system to obfuscate its origin, would be money laundering.
Even so, the laws around the world are being forced to play catchup with the historic disruptions to traditional value and money movements, shifting from banks and money remitters using fiat currencies, to virtual value, like Bitcoin, moving into and out of cryptocurrency exchanges – and then back into bank accounts and cash.
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