GROUP 3
PHASE 2
COUNTERMEASURES AGAINST MONEY LAUNDERING
Chairperson

Mr. Shankar Pratap Singh(India)Co-Chairperson

Mr. Masakazu Ameku(Japan)Rapporteur

Mr. Jan Samuel Maringka(Indonesia)

Co-Rapporteur

Mr. Oscar Antonio Goyanes(Argentina)

Members

Mr. Sazali bin Salbi(Malaysia)

Mr. Tsunekazu Kobashi(Japan)Ms. Azumi Misawa(Japan)Mr. Rafael Romero(Venezuela)

Mr. Taizo Yokoyama(Japan)Deputy Director Keiichi Aizawa(UNAFEI)

Prof. Yuichiro Tachi(UNAFEI)

Prof. Kenji Teramura(UNAFEI)

Advisers

I. INTRODUCTION
In view of the fact that money
laundering is at the center ofpredominantly all other criminal acts, it
becom es an integral part of any
transnational organized crime. Hence,
any genuine effort to combat
transnational organized crime has tonecessarily address the serious issue of
adopting countermeasures to fight the
menace of money laundering.
Since the goal of a large number ofcriminal acts is to generate a profit forthe criminal that carries out the act, thep roc essing o f the crimina l p roc ee ds
through m oney la undering a ssum es
critical importance, as it enables thecriminal to disguise their illegal origin
and helps him in enjoying the proceeds of
his crime w ithout any threat. Thus,
m o ney la und e re rs a r e co ntinuo usly
looking for new methods and routes forlaundering their ill-gotten proceeds from
crime. The criminals do this by effectively

exploiting the differences between thenational anti-money laundering systems
an d te nd to mo ve th eir ne twork s tocountries and financial systems withweak or ineffective countermeasures.
Therefore, the possible social and politicalconsequences of money laundering, if leftunchecked or dealt with ineffectively, canbe very grave and serious for any country.
M ost funda menta lly, since money
laundering is inextricably linked to theunderlying criminal activity thatgen erated it, targeting the money
laundering aspect of criminal activity anddepriving the criminal of his ill-gotten
proceeds of crime would automaticallymean hitting him where it hurts themost, i.e. where he becomes financiallymost vulnerable. Without a usable profit,
the criminal activity cannot continue.
This, inevitably brings to the fore theneed for having an effective andorganized system to deal with money

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laundering by adopting suitablec o u nte r m e a s ur e s i n th e le gi sla tiv esystems and law enforcement mechanismof various countries. In a broader sense,
som e o f the co unte rmea sures would
include making the act of money
laundering a crime; giving theinvestigative agencies the authority to
trace, seize and ultimately confiscate theproceeds derived from criminal activity
and building the necessary framework forp erm itting the a gencies involved to
exchange information am ongst
themselves and their counterparts inother countries. It is, therefore, criticallyim po rtant that all co untrie s should
develop a national anti-money launderingp rogra mm e. This should , inter ali a,
include involving the law enforcementa gencies in e sta b lishing a f ina ncialtransaction reporting systems, customer
identification system, record keeping
system and also a method for verifying
compliance.
However, it needs to be emphasizedthat national strategies by themselves
would prove inherently inadequate in
responding to the challenges posed bytransnational organized criminal groups
i n th e ir a c t iv it y r e l a t in g t o m o n e ylaundering since they cross multiple
borders, involve multiple jurisdictions
and multiplicity of laws. Hence, thec o un t e r m e a s u r e s to c o m b a t m o n e y
l a u n d e r i n g c a ll s f o r a t r u ly g l o b a l
response making it absolutely imperative
for increased global cooperation between
the law enforcement agencies of different
countries in effectively dealing with them ena ce of mo ney laund ering b y thetransnational organized criminal groups.
II. THE GLOBAL RESPONSE
Realizing the gravity of the problem,
the international comity of nations has
tried to come up with a global response.

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The United Nations adopted the Vienna
Convent ion, 1 98 8 a gainst the Ill icit
Traffic in Narcotic Drugs andPsychotropic Substances, which, interalia, incorporated the incrimination ofmoney laundering activity as a criminal
act in an international treaty for the firsttime.
In response to the mounting concern
over money laundering, the Financial
Action Task Force On Money Laundering( FA T F ) w a s e sta b lish e d b y t he G - 7
Summit held in Paris in 1989. The FATF
was given the responsibility of examining
the money laundering techniques andtrends, reviewing the actions which had
already been taken at the national andinte r natio nal le ve l and the fu rth er
measures which w ere req uired to betaken to combat money laundering. In
April 1990, FATF issued a report
co ntaining a set of the Forty
Re comm enda tions w hich provided a
detailed plan of action needed to combat
money laundering. The Forty
Recommendations were further revised
and made more comprehensive by the
FATF in 1996.
Thus, drafted in 1990 and revised in
1996, the Forty Recommendations of the
FATF pr ovide a ver y detailed andcomprehensive blue print for action in thefight against money laundering. The
Forty Rec ommen dations cov er thecriminal justice syste m and law
enforcement, the financial system and its
regulation and more importantly the
intrinsic need for international
cooperation to combat money laundering.
The Forty Recommendations of the FATF
h a v e c o m e t o b e r e c o g n iz e d a s t h einternational standard with regard toanti-money laundering programmes. The
Forty Recommendations of the FATF set
out the basic framework for anti-money
laundering efforts and are designed to be119TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
of universal application. However, it wasrecognized at the outset, that different
countries have diverse legal and financial
systems and therefore could not takeidentical
m easures.
The
Recommendations, therefore, only lay
down the basic principles for different
countries to implement, within theirconstitutional frameworks and thus allow
the countries a degree of flexibility. The
measures suggested by the FATF arefound to be absolutely essential for thecreation of an anti-money laundering
framework.
III. THE FORTY
RECOMMENDATIONSThe Forty Recommendations of the
FATF, apart from the general framework,
can be broadly classified under threemajor heads viz:
A. The existence or creation, within thelegal framework of each country, a
law criminalizing the act of money
laundering, as defined by the Vienna
Convention of 1988 on NDPS.
B. Theexistenceor
creationor
st ren gt hen ing of t he lega l an dfinancial systems in different
countries, which would provide thelaw enforcement and investigating
agencies effective tools to combat
money laundering.
C. Strengthening of the International
Coop eration between different
countries at all levels, so as to enable
an organized and concerted effort ofthe various law enforcement agenciesof the different countries, in
successfully combating money
laundering.
The gist of some of the very importantr e co m m e n d a tio n s, u nd e r t he a b o v ereferred three m ajor heads, areenumerated as follows:

A.(i)Each country should take suchm e a s u r e s a s m a y b e ne c e s s a r y,
including legislative ones, to enable
it to criminalize money laundering,as set forth in the Vienna
Convention. Further, the offence ofm oney la und ering should not b emerely confined to drug offences but
should be extended to all serious
offences which could be designated as
money laundering predicate offences(R. 4).
(ii) The concept of knowledge relating tomoney laundering may be inferredfrom objective factual circumstances(R. 5) and that corporationst h e m s e l v e s , a n d n o t o n ly th e ir
e m p lo ye e s, shou ld b e sub j ect tocriminal liability (R. 6).
B. The further perusal reveals that a
predominant majority of the Forty
Recommendations of the FATF falls
within the ambit of major head (B).
The gist of some of the very important
recommendations are briefly
summarized as follows:(i) Countries
shouldadopt
measures, including legislative
ones, to enable their competente n f o r c e m e n t a u th o r i ti e s, t oconfiscate laundered property or
the proceeds from thecommission of any money
laundering offence. This may
a ls o i n c lu d e c o n f i s c a t io n o fproperty of corresponding valueof the offending party (R. 7).
The above re com m endationf u r th e r st ip u la te s , th a t th emea sures should include theauthority to (1) identify, traceand evaluate property which issu bjec t to con fi sc ation, (2)provide for measures such as
freezing and seizing to preventany dealing, transfer or disposalof such property and (3) take any

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further appropriate investigative
measures toward this end.
The FATF has made very specificrecommendations with regard to thestrengthening of the financial
systems of different countries. The
gist of some of the very useful andimportant recommendations can besummed up as follows:(ii) Financial
institutionsofdifferent countries should not
permit opening of and operationsin anonymous accounts or
accounts in fictitious na mes.
T h e y s h o u l d b e n e c e s s a r il yrequired by law or regulation toestablish the correct customer
identity while op ening an
account, renting safe deposit
lockers or while entering intolarge monetary transactions (R.
10).
(iii) Financial institutions in eachcountry should maintain, at least
for a period of five years, allnecessary records relating tof inan cial tr ansa ctio n s, bo th
domestic and international, so as
to enable them to comply swiftlywith information requests fromthe competent authorities. Such
records should be sufficient to be
used as evidence for prosecution,
if required (R. 12)(iv) Countries should pay special
attention to money laundering
threats inherent in new ordeveloping technologies thatmight f avour anonym ity a ndtake suitable measures, if
required, to prevent their use inmoney laundering schemes (R.
13).
(v) Financial
institutionsindifferent countries should pay
special attention to all complex
and unusually large patterns oftr a n s a c t io n s w h ic h h a v e n o

660

apparent lawful purpose. Suchunusual transactions should bevery closely examined and thefindings should be m adeavailable to the law enforcementa gencie s (R . 14 ). If f inancia linstitutions suspect that funds
emanate from a crim inal
activity, they should be required
to report prom ptly theirsu sp icio ns to the co m p e ten t
authorities (R 15).
(vi) The various functionaries of thefinancial institutions should beprotected from criminal or civil
liability for reporting suspicioustransactions in good faith (R. 16).
The financial institutions andtheir functionaries should not beallowed to warn their customers
for having rep orted any
suspicious transaction to thecompetent authorities (R. 17).
Financial institutions should
comply with instructions fromthe competent authorities (R.
18).
(vii) The financial institutions indifferent countries should
develop programm es a gainstmoney laundering including:a. the development of internal
policies, procedures andcontrols,b. an ongoing employee
training programme,c. an audit system to test thefunctioning of the actual
implementation of thescheme (R 19).
In addition to the above, the FATF
has also made certain further
recommendations to avoid money
laundering and to cope with countries
ha v ing n o o r ins uf f icie n t m on e ylaundering laws/measures. Some of
the important recommendations inthis regard are as follows:

119TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE(viii) Financial institutions should
give special attention to businesstr a ns a c ti on s w it h c o un tr ie s
having no or insufficient antimoney laundering laws/measures. There should be ave ry t h o r o u gh s c r ut i ny a n dmonitoring of such transactions(R. 20 & 21).
(ix) Countries
shouldtry
toimplement suitable measures tode te ct and m o nito r ph ysicaltransborder transaction of cash
andbearernegotiable
instruments (R. 22). They should
try to implement a system ofreporting all d omestic orinternational
currencytransactions above a specified or
fix ed amoun t to a n ational
central agency having acomputerized data base. Such
info rm atio n sho uld be m a d eavailable to the competent law
enforcement agencies of eachcountry as and when required(R. 23). Countries should try todevelop safe money management
te c h ni q u e s i nc l ud i n g u se o fchecks, payment cards, etc. torepla ce cash tra nsa ctions ortransfer of money (R. 24). They
should ensure that the money
launderers are not able to abuse‘s hel l corpora ti ons’ a nd
str en gth e n the ir s yst em s t o
pr event a ny su ch u nla wful
misuse (R. 25).
(x) The competent authorities indifferent countries should ensurethat adequate laws andregulations are in existence to
pro vide safe guards againstmoney laundering. They should
also ensure that the enforcement
authorities in each country havea very high level of co-operationand co-ordin ation among stthemselves in combating money
laundering activity (R 26). They
should ensure sufficient
safeguards to protect taking overof control or acquisition of any
financial institutions bycriminals or their associates (R.
29).
C. The
FATF
has
very
heavilyemphasize d the strengthening ofinternational cooperation between the
different countries with a view toeffectively deal with the criminals
in d u l g in g i n m o n e y l a u n d e r i n gactivities. Some of the very important
recommendations in this regard are
enumerated as under:(xi) The
first
part
of
the
‘Recommendation’ pertains togreater and increased level ofexchange of information, bothgeneral and those relating tosuspicious transactions.
It states that countries shouldhave a system of recording
international cash flows, bothin f l o w s a n d o u tf l o w s, in a l lcurrencies so that an estimate
could be made with regard to
movement of money whichshould be made available to theInternational Monetary Fund(IMF) and the Bank forInterna tional Settlements tofacilitate international studies(R.
30).
Further,the‘I N T E R P O L ’ a n d th e ‘ W or ld
Customs Organization’ should be
g iv e n t he re sp o n si b i li ty f o r
ga thering and disseminatingsuch inform ation to thecompetent authorities indicating
the latest developments inmoney laundering and money
la u nd e ri n g t e c hn iq u e s. T h eabove exercise should also bedone by the Central Banks andcompetent authorities in

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RESOURCE MATERIAL SERIES No. 59
different countries domestically(R. 31). Countries should further
ensure that there is a system of aspontaneous or “upon request”
exchange of information relating
to su spic iou s transac tions,persons and corporations
involved between the different
countries. This international
exchange of information should
be in conformity with thenati on al and in tern ational
provisions on privacy and dataprotection (R. 32).
The
seco nd
partof‘Recommendations’ emphasizes
on other forms of co-operation atinternational level including
those relating to confiscation,
mutualassistanceandextradition.
The FATF has suggested thatdifferences in the laws and theund ersta nd ing of the m on ey
laundering definition andactivity in va rio us countries
should not prove to be ahindrance or obstacle inprovid ing each other withmutual legal assistance (R. 33).
International co-operation
should be further strengthenedby bilateral and multi-lateralagreements and arrangementswith the inte n t to f a c ilita temaxim um mutual assistance
between different countries (R.
34). Further, countries should
tr y to ra t if y an d im p le m e nt
relevant
international
conventionsonmoneylaundering including the 1990
Council of Europe Convention on
Laundering, Search, Seizure andConf iscatio n of the Pro ce eds
from Crime (R. 35).
(xii) The concluding part of the Forty
Recommendations pertaining to662

e nh a n cin g in te rn atio n a l co o p e ra tio n b et w e en d iff e r en t
countries suggest some of thefollowing important measures:
There should be increased coo p e ratio n , wh ile c o nd uc tin g
investigations between different
countries including usage of theeffective technique of controlled
delivery related to assets known
or suspected to be the proceeds ofcrime (R. 36). There should beprocedures for providing mutual
assistance in criminal matters,
including production of records
by financial institutions, thesearch and seizure of persons
a n d p r e m i s e s f o r o b t a in in gevidence in money laundering
investigations and prosecutions(R. 37 ). An authority to take
immediate action on requests
from foreign countries to
id entify, freeze, seize andconfiscate proceeds of crime or
the underlying crime behind themoney laundering activity (R.
38).
The FA TF further suggested
that conflicts relating tojurisdiction should be avoided
and the accused should beprosecuted in the best venue, in
the interest of justice, if morethan one country is involved.
Further, there should also be
arrangements for coordinating
seizure and confiscatio nproceedings, including sharing ofconfiscate d assets ( R. 39 ). It
lastly suggested that different
countries should have anarra ngem ent for extradition,
where possible, of individuals
charged with a money
laundering offence. All countries
should recognize money
laundering as an extraditable

119TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
offence and should try to simplify
their legal framework relating to
extradition proceedings. (R. 40).
IV. NON CO-OPERATIVECOUNTRIES AND TERRITORIESThe FATF continued to further review
the Forty Recommendations from time totime with regard to their effectiveness indealing with the crime relating to money
laundering and also the implementationby the various countries of ther ecommen dations
made
more
comprehensive in 1996. On 22 June 2001,
the FATF published its Twelfth Annual
Re po rt which outlin es its m ainachievements, including the significant
progress made in relation to work on Non
Co-operative Countries and Territories(NCCTs). The FATF has revised andupdated its list of NCCTs which now
includes the following countries/
territories; Cook Islands, Dominica, Egypt,
Guatemala, Hungary, Indonesia, Israel,
Lebanon, Marshall Islands, Myanmar,
Nauru, Nigeria, Niue, the Philippines,1
R us s i a , S t . K i t t s a nd N evis a nd S t .
Vincent and the Grenadines. The FATF
has suggested that all countries should be
especially vigilant in their financia ldealings/transactions with the above
mentioned ‘NCCTs” and if necessary, takeadditional countermeasures.
V. THE UNITED NATIONSCONVENTION AGAINSTTRANSNATIONAL ORGANIZEDCRIMETh e United Nat ion s Con vention
against Transnational Organized Crime(TO C) 2000 has effectively combined
m a ny o f the an ti- mo ne y la unde ring1

It needs to be emphasized that the Philippines

mechanisms explored at the internationalle v e l in t o o ne c o m p re h e n si ve l e ga l
instrument. The convention on TO C
addresses a number of issues, raised
through several international initiatives,
which in many instances were earlier notlegally binding, into an internationalle gal in str um e nt h a vin g f o rc e. T he
convention has recognized that a
considerable amount of valuable work
re la te d to t h e f i gh t a g a i n st m o ne ylaundering has been undertaken by anumber o f organizations and hassuggested that countries should seek
guidance from such initiatives.
The UN Convention on TOC borrows
from the 1998 General Assembly Political
Declaration and extends the definition ofmone y la undering to include money
derived from all serious crimes which arede fined a s those of fence s w hich a repunishable by a maximum sentence of atleast four years or more.
In its focus on issues more directly
related to fina ncial institutions, theconvention requires member countries toestablish comprehensive regulatory andsupervisory regimes for banks and also
non-banking financial institutions. It
r e q ui r e s t h a t s u c h r e g i m e s s h o u l dspecifically address the issue of customer
id e n t i f i c a t io n , r e c o r d k e e p i n g a n dsusp icious transa ction repo rting. I t
stresses the importance of the exchangeo f i n f o rm a t i o n a t t he na t i o n a l a n dinternational levels and in that context
highlights the role of Financial
Intelligence Units (FIU) for the purposeof collecting, analyzing and disseminating
information. It also highlights the needfor co-operation am ongst the law
en fo rc em e nt, j ud icia l a n d f ina nc ia lr e g ul a to r y a u th o r i t ie s o f d i f f e r e n t
countries.

has since enacted the Anti-Money Laundering Act
on 29 September 2001.

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RESOURCE MATERIAL SERIES No. 59
For a fuller and more comprehensive
understanding of the issue relating tomoney laundering, as adopted by the UN
Convention on TOC, 2000, the complete
reading of Article 6 and Article 7 and also
articles 12, 13, and 14 is deem ed
imperative.
VI. SOME COUNTERMEASURESAGAINST MONEY LAUNDERINGThe workshop, after having deliberated
at length and in detail, highlight threesubjects which are regarded to be very
important in strengthening theimplem entation
of
the
Forty
Recommendations.
A. Knowing Your Customers
Money la undering is conducted bydepositing proceeds of crime in financial
institutions, hiding such proceeds ofcrime, and disguising them as if they
origina ted from legitimate economic
activity.
In order to detect money laundering in
the most effective way, it is important toobtain illegal proceeds at an early stage.
Therefore, the Forty Recommendationsprescribe countermeasures, including
identification of the person at the time ofthe opening of his or her bank account.
It was discussed, however, that thescope of the identity of the customer by
the bank and other financial institutions
should not be expanded. It is prescribedunder law in most of the participant’s
countries that financial institutions
identify the person by such means as hisor her ID card at the time of the openingof his or her bank account. It was pointed
out while it is effective to extend thescope of obligation for identification to theareas such as occupation, original capitaland deposits, it may impose excessive
burdens on the financial institutions.

664

Most of the participants, how ever,opined that the financial institutions
obligations should be extended in order tocontrol money laundering crime. It was
discussed whether or not sanctions be
imposed upon such financial institutions
if and when they fail to me et the
obliga tions on their part in order to
e n s u r e t he p r a c ti c a l e f f e c t o f s u c hobligations. On this point, some argued
th at i t is n o t r e as o na b le to im p o se
sanctions upon the financial institutions.
Most of the participants argued that somecountries already have such sanctions
and that it is useful to have provisions on
sanction in order to achieve the mosteffective control over money laundering.
Another topic to keep in mind is thatthe crime of laundering assets is born asconsequence of the seizure of earnings.
Th e p ro f its o r instr um e nts a nd theeconomic benefit must be confiscated.
And this is the key to criminal politics onmoney laundering. We have to attack
their economic interests, their results,
and their earnings. The important thing
for criminal organiza tions is not thecrime itself but the earnings that theygene rate. Here, a ga in w e m eet withanother inconvenience from thelegislative point of view.
In relation to the effective normative
frame, and referring that is to say to thematter that concerns us, the financial
system, diverse legislation is necessary
for the identification of clients.
Also another regulation exists and it
re fers to the obligation of taking“a c co un tin g b o o ks ” w he r e th e t ot a loperations are registered and banks may
preserve the bank documentation for 10
years from the date of its registration.
Additionally other regulations arenecessary to highlight, such us:

119TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
•

•

•
•

Register payments of checks andmake it an obligation to maintainregistrationondetermine doperations;
Enforce financial entities to inform
about certa in transactions w here
specifically it is require d for the“Prevention of money laundering
coming from illicit activities”;
Regulations that include the Agencies
and Offices of Change;
To designate, in each entity, a
responsible official for the specifictopic of money laundering.

In relation to future perspectives, weshould point out that the crime of money
laundering should be considered as aninternational crime. It is necessary tohave different tools that should accord
with those that have already be en
implemented in other countries.
However, such laws must include an
obligation on certain people to denounce
operations and/or suspicious activities.
B. Asset Forfeiture System
An asset forfeiture system is averitable tool for law enforcement andjud ic ia l crim ina l p roce ss to d ep rive
criminals of illegally acquired proceeds,
and plough back such proceeds to thecommunity for the greater good of society.
The legal provisions regarding an asset
forfeiture system differ from country tocountry. Generally they have this system
in a criminal proce eding act. B ut
especially in countries like Venezuela andArgentina, they have a forfeiture systemin their Money Laundering Act, the sameas in Malaysia relating to the Dangerous
Drugs (Forfeiture of Property) Act which
was enacted in 1988.
In Indonesia, the Anti Corruption Act,
1971 (amended in 1999) deals with theproceeds of crime. Such goods (from theproceeds of crime) can also be confiscatedin the interests of the investigation.
The Japanese assets forfeiture systemfor organized crime is embedded in the
Organized Crime Punishment Law, 1999.
In this law, the system of confiscation andcollection of equivalent value is provided,
which is helpful for the asset forfeituresystem. There is also provision for assets
illicitly received in relation to property
obtained by the parties during
engagement in drug-related offences, if
the value is deemed unreasonably large
then such property or equivalent thereofis liable to be confiscated.
However, it is very difficult toc o n f i s c a t e e f f e c t i v e ly e v e n f o r t h ecountries which have a special forfeituresystem against money laundering. In
other words, one of the most serious
problems that countries deal with, in theconfiscation procedure, is where the 3rdparty is disguised as bona fide to avoid
seizure by the criminals.
It is hard to prove that a 3rd party hasreceived illicit proceeds, knowing it was
the product from crime. A s a result,criminals keep their illicit proceeds. We
should make a 3rd party prove he/she isbona fide.
Indonesia introduced this issue underthe Anti-Corruption Law, 1999 aboutburden of proof. This article makes thedefendant prove his innocence and to
sho w th at h e is n ot co nd ucting any
corruption. This article contradicts theburde n of proof regulation in the
Criminal Procedure Code, which states
tha t th e bu r den of pr oof i s in th eprosecutor’s hand. It is the prosecutor’s
duty to prove whether the defendant is
guilty or not. The Anti-Corruption Law
reversed this burden of proof in limited

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RESOURCE MATERIAL SERIES No. 59
circumstances, because the prosecutor
still has to prove his indictment.
Thus, the transfer of the burden of
proof can be an effective weapon for thelaw enforcement agent, but at the sametime can also impose excessive burdens
o n a 3rd party. In c ase the m o neylaunderer has transferred the proceeds ofcrime to the 3rd party, the 3rd party
receiver must prove that he/she has notknown of the source of the money. In thissense, to prevent the burden of proof frombeing excessive, the scope and extent ofsuch a b urden should be a dequately
considered.
C. Gatekeepers
Th e p ro ce ss o f lau nd e ring ille gal
m one y norm ally goes thro ugh thre edifferent sta ges, that’s ‘investment’,‘layering’ and ‘integration’. Naturallyt h e se t h re e st a g e s a r e u se d b y t h elaunderers as a means to circumvent
m one y la und ering counterm ea suresthrough more complex schemes. This
increase in complexity means that thoseindividuals desiring to launder criminal
proceeds must turn to the expertise oflegal professionals, accountants, financial
consultants, and other professionals toa i d th e m in t h e m o v e m e n t o f s u c hproceeds. The types of assistance thatth ese pr of e ssion a ls p ro vid e a re th e
gateway through which the launderers
must pass to achieve the above stages.
Thus the legal and accounting
professionals serve as sort of‘gatekeepers’ since they have the ability
to furnish access (knowingly or
unwittingly) to the various tools thatmight help the criminal move or conceal
the funds.
The functions that are most useful tothe potential launderers include:

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•

•

•

•

Creation of corporate vehicles or othercomplex legal arrangement (trusts,
for example). Such constructions may
serve to confuse the links between theproceeds of a crim e and theperpetrator;
Buying or selling of property.
Property transfer served as either thefunds (layering stages) or else they
represent the final investment ofthese proceeds after having passed
th r o u gh t he la u n d e r i ng p r o c e s s(integration stage);
Performing financial transactions.
Sometimes these professionals may
carry out various financial operationso n b e ha lf o f th e la u n d e re r s ( f o r
example, cash
deposits or
w i t hd r a w a l s o n a c co u nt s, r e t a i lforeign exchange operations, issuingand cashing cheques, purchase andsale of stocks, sending and receiving
international fund transfers, etc.);
Financial and tax advice. A criminal
with a large a mount of mo ney toinvest ma y pose as an individual
h o p i n g t o m i n im i z e h i s / h e r t a x
liabilities or desiring to place assets
out of reach in order to avoid future
liabilities.

In some of these functions, thepotential launderer is obviously not only
re lying on the expertise of these
professionals but is also using them andtheir professional status to minimize
suspicion surrounding their criminal
activities. In view of the vast services
these professionals provide, these socalled ‘gatekeepers’ would have access toimportant and useful information that
could be used to implicate the launderero f a n o f f e nc e o f m o n e y l a u nd e r in g.
However to obtain such incriminating
information from the gatekeepers is notan ea sy task due to the p rivilege ofconfidentiality between the ‘gatekeeper’and their clients, in particular the legal

119TH INTERNATIONAL TRAINING COURSEREPORTS OF THE COURSE
profession. This traditional professional
confidentiality is now extended to othernon-advocacy ‘gatekeeper’ functions.
One solution to overcome the above
problem is to include these professional
gatekeepers under the same anti-money
lau nd er ing o b ligatio ns as f in a ncial
intermediaries when they perform theirprofessional functions. In other words,t he s e p r o f e ss io n a l ga te k e e p e rs a r erequired to identify the client with which
they are dealing and to channel a ny
suspicious transaction reports (STR) to
the relevant authority/financial
intelligence unit (FIU) or to face thepenalties which come with failing to doso.
VII. CONCLUSION
It may, thus, be seen that the problem
of money laundering is being seriously
viewed by the international community
w ith the concern it rightly deserves.
Subsequent to the September 11 2001
terrorist attacks on the World Trade
Center and the Pentagon in the USA, theissue of money laundering has suddenly
assumed altogether a new dimension interm s of the funding of terrorist
organizations all over the world and the
predominant use of money laundering by
t e rr o ri st c r im in a l o r g a ni z a t io ns infunding their activities. However, theglobal response to the challenge posed
has been overwhelming, as is evident by
the media coverage (CNN: October 23,2001) where it has been reported that
more than 140 countries from all parts of
the world are co-operating in tracking
down funds of criminal organizations andmore especially terrorist funds which ares u s p e c t e d t o b e i n v o l ve d i n m o n e ylaundering activity at different stages invarious countries. It is, indeed, very
heartening to note, that out of the above
140 countries, seventy countries haveactually gone ahead and frozen certain
accounts in banks and financial
institutions, which were believed to be
involved in suspicious financialtransactions. The intent behind the above
exercise is to chase the ‘money trail’ usedby the criminals/terrorists and after
identifying such suspicious accounts,
freeze, seize and finally confiscate thefunds/assets involved so that organizedcriminal gangs/terrorist organizations
are finally starved of funds.
It needs to be emphasized, however,that moving forward in the twenty first
century is going to pose new threats andc h a l le n g e s t o t h e l a w e n f o r c e m e n t
authorities in different countries withregard to combating organized crime,
including money laundering. A case inpoint would be the financial frauds which
can now easily be committed over the
In tern et. C e rta in ins ta n ce s o f suchfinancial frauds have already come tonotice and preventive action needs to betaken as a priority.
The workshop, after having deliberated
at length and in detail, is o f theconsidered view that new challenges
posed by the money launderers calls for
new initiatives, techniques and tools tocombat the menace of money laundering.
To this end, the new techniques and tools
wou ld neces sarily hav e to include‘controll ed deli very’, ‘ele ct ronic
surveillance’ including ‘wire tapping’,
whenever necessary, and also ‘undercover
operations’. It is the considered view ofthe workshop, that the domestic laws ofdifferent countries should provide for theusage of the above modern investigation
techniques and tools, with the intent ofeffective enforcement of money
laundering laws. However, the above
specialized techniques are not meant tototally replace but only to strengthen and

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RESOURCE MATERIAL SERIES No. 59
supplement the existing investigation
techniques and tools.
The workshop is also of the consideredview that there should also be a provisionin the domestic laws of each country forprosecution of the so called “gatekeepers”
i.e. the legal professionals, accountants,
financial consultants and otherprofessionals who provide the requisite
expertise, without which it would not be
possible for the organized criminal groups
to invest large sums of money without
getting detected. Such professionals
indulge in money laundering activity by
way of providing professional accounting
and legal advice to the criminal so as toenable him to conceal the origin of theillegal proceeds of crime. In the view ofthe workshop, such professionals alsoneed to be simultaneously prosecutedwith the criminal, in the same manner,
for abetment of the offence of money
laundering.
The workshop is also unanimously ofthe view that all the investigating andintelligence agencies within each country
need to co-operate and interact morec l o s e ly in t h e f i g h t a g a i n s t m o n e ylaundering. It is also felt desirable thatfor successfully combating the menace ofmoney laundering, all investigating andintelligence agencies in different
countries need to necessarily adopt a very
pro-active attitude towards the collectionof intelligence relating to money
laundering, i.e. instead of just reacting,they need to actively act on gathering
intelligence on the subject.
Lastly, with regard to international cooperation, there is total unanimity that it
would be in the best interests of all
countries to strengthen and enhanceinternational cooperation at all levels, i.e.
a t t he r e g io n a l, i nt e r- r e g io n a l a n dinternational levels by way of bilateral,

668

multi-lateral and international treaties
providing for mutual legal assistance andextradition, where necessary.
In view of the workshop, there are still
a lot of gen uin e impediments a nd
difficulties being experienced by many
countries in the implementation of the
Forty Recommendations of the FATF and
the TOC UN Convention, 2000. However,
it is the genuine belief of the workshopthat all such obstacles and hindrances
could be, over a period of time, removed
backed by the all important political willof the leadership of such countries.