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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding Anti-Money Laundering Investigations: A Comprehensive Guide

Author: Azizur Rahman  29 April 2014
3 min read

The European Union (EU) has been looking at fresh ways to tackle money laundering. But does there need to be a bold, new approach? Would better-prepared prosecutions be a simpler, more obvious solution?

It is now a decade or so since the EU last reviewed its rules for preventing – or at least punishing – money laundering. And now it has decided to take a fresh look at the problem. It is a problem that has certainly not gone away since the last review.

On March 11, the EU is expected to vote on its proposed 4th Anti-Money Laundering Directive, which is intended to place tighter controls on money laundering and terrorist financing. A succession of amendments have been put forward and discussed but it now looks as if a final version could become reality.

Prior to the vote, an American anti-crime organisation, Global Financial Integrity (GFI) has been demanding EU action against offshore registries, which it believes are a vital aid to money launderers. GFI’s president Raymond Baker justified his claim by explaining:

“There is a tremendous amount of illicit capital flowing in and out of Eastern Europe and anonymous shell companies are one of the reasons why.

“British Prime Minister David Cameron set a new global standard last fall when he committed the United Kingdom to creating a public registry of the true, ultimate owners of all companies in the UK. It is now time for the full European Union to decide if it will rise to that standard.’’

It is worth saying at this point that money laundering is nothing new. It has been around since the advent of money and probably always will be. So it is not a recent problem for the EU. And it is certainly not a new problem for the many other regulatory and investigative bodies that have made it their responsibility to identify it and prosecute the perpetrators.

The EU may be announcing its intentions to tackle money laundering but this has always been an area that can involve many different agencies and huge amounts of evidence. As the name implies, money laundering is the 'cleaning' or disguising of the origins of the proceeds of crime. Someone can do it in an attempt to disguise the proceeds of their own crime or can do it to conceal the criminal origins of someone else’s ill-gotten gains. In either case, the attempt to clean the money can be extremely simple or exceedingly complex; involving shell companies, offshore accounts, a range of front men and a large and deliberately confusing set of transactions.

The Crown Prosecution Service (CPS) views money laundering as one of three processes: getting criminal money into the financial system (placement), moving money in the financial system through complex webs of transactions (layering) and absorbing such money into the economy through apparently legitimate investment (integration).

In its hands, the CPS has the Proceeds of Crime Act 2002 (POCA). Sections 327 to 329 of the Act create three specific money laundering offences: Concealing, disguising, converting or transferring criminal property or removing it from the jurisdiction. (Section 327)

Entering into, or becoming concerned in, an arrangement to facilitate the acquisition, retention, use or control by, or on behalf of another person, of criminal property knowing or suspecting that the property is criminal property. (Section 328)

Acquiring, using or having possession of criminal property. (Section 329)

The Act also places a responsibility on certain business to report to the police any suspicions they have of their clients or customers laundering money.

Taken at face value, the Act gives the CPS plenty of scope for successfully prosecuting money laundering. The Act outlines the various forms laundering can take and places a responsibility to report it on those likely to encounter it – bankers, fund managers and real estate agents. And yet the fact that the EU is looking for new ways to fight money laundering indicates that current prosecution approaches are not working perhaps as well as they could be.

If that is the case, the question that has to be asked is “Why?’’ Why, when you have the legislation on your side and the cooperation of agencies at home and abroad, is money laundering still such a major problem?

Having successfully defended many money laundering cases, we know the value of case preparation. We always make sure we can obtain all possible materials that the investigating authorities have in their possession and make the maximum possible use of them to challenge any prosecution assumptions. It is one of the established facts in a money laundering case that often what is not in dispute is the existence of the assets but their origins – the route they have taken into certain people’s possession.

Materials that the prosecution may not intend to produce as evidence can, if obtained by the defence, prove useful in building a defence case. Such cases are just as likely to be decided by the evidence that the prosecution does not submit (but which we obtain) as by the evidence that it does put to the court. Evidence is there to be challenged: any means of rebutting a prosecution claim made to the court can turn a money laundering case in a defendant’s favour.

The EU may well change the legal landscape as regards money laundering. Its member nations may pledge extra resources to tackle it, there may be a larger number of prosecutions as a result and EU countries may work closer and better together to ensure the potential for money laundering is reduced. But if, in spite of all of this, the prosecution rate does not improve, the problem will remain.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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