Money Laundering is the process by which criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities thereby avoiding prosecution, conviction and confiscation of the ill gotten wealth. This process involves three overlapping stages of placement, layering and integration. Money laundering covers all methods used to change the identity of illegally obtained money so that it could be used for legitimate purpose. It is a necessary consequence of almost all profit generating crime. It is equivalent to economic and financial terrorism. As an offence, money laundering is considered to be as old as the notion of wealth.
Areas considered to be vulnerable to money laundering include law firms, audit firms, car dealers, hotels, super markets, casinos, real estates and cash intensive businesses such as banks. Many governments require that banks take steps to prevent money laundering. The United States for instance has the Bank Secrecy Act, which was passed in 1970 and amended by the antiterrorism laws in the USA Patriot Act of Oct. 26, 2001.
The International Monetary Fund (IMF) once estimated that drug use alone accounts for 5 per cent of the global gross domestic product of some $ 33 trillion and that $ 100 billion of illegal money moves annually from the 'undeveloped, world to the 'developed' world through illegal trade paid into, or through global corporations.
The Financial Action Task Force (FATF) established in 1989 is the main inter- governmental body established for the purpose of developing and promoting policies, both at national and international levels, for combating money laundering and terrorist financing. FATF is therefore a "policy- making body" which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. In performing these activities, the FATF collaborates with other international bodies involved in combating money laundering and the financing of terrorism. It reviews its mission every five years.
Money laundering methods and techniques change in response to developing counter- measures. The FATF has noted increasingly sophisticated combination of techniques, such as the increased use of legal persons to disguise the true ownership and control of illegal proceeds, and an increased use of professionals to provide advice and assistance in laundering criminal funds. These factors, combined with the experiences gained through the FATF's Non- Cooperative Countries and Territories process, and a number of national and international initiatives, led the FATF to review and revise its 40 recommendations into a new comprehensive framework for combating money laundering and terrorist financing. The FATF expected countries to take the necessary steps to bring their national system for combating money laundering and terrorist financing into compliance with the its recommendations and to effectively im- THE ADVOCATE 08037213732 (sms only) E-mail: afribic@yahoo.com OLUGBEMI FATULA plement these measures.
A key element in the fight against money laundering and the financing of terrorism is the need for countries' system(s) to be monitored and evaluated, with respect to these international standards. The mutual evaluations conducted by the FATF and FATF style regional bodies such as GIABA as well as the assessments conducted by the IMF and World Bank, are a vital mechanism for ensuring that the FATF Recommendations are effectively implemented by all countries.
The effects of money laundering include: Facilitation of Institutional Failures, Creation of Avenue for the Perpetuation of other crimes, Undermining of Confidence in Public Institutions, Threat to Financial Institutions and the Economic Stability of all Countries, decrease in government revenue, distortions to macro-economic indices; impediments to planning and developmental efforts, restraint on indigenous entrepreneurship, political instability and insecurity, break on inflow of foreign direct investment and boosting terrorist-related activities. Considering the effects of the crime on development and global security the need to intensify the war on money laundering is imperative. Legal and institutional frameworks for battling the crime must be intensified while efforts should be made to protect the integrity of both the international financial system and designated non financial institutions (DNFIs) with a view to making it difficult for criminals to profit from their crimes.
Dr. Fatula, a lecturer writes from Obafemi Awolowo University (OAU), Ile-Ife, Osun State.
National Mirror