Editorial: The FATF criminalization of money laundering – much room for improvement
| Date | 23 January 2024 |
| Pages | 225-227 |
| DOI | https://doi.org/10.1108/JMLC-03-2024-180 |
| Published date | 23 January 2024 |
| Author | Yehuda Shaffer |
Editorial: The FATF criminalization
of money laundering –much
room for improvement
As the Financial Action Task Force(FATF) celebrates 34 years since its conception,we can
critically examine its role as the international standard-setting body and cannot avoid the
conclusion that while some achievements have been made on the preventative measures
side, making it, for example, more difficult for criminals to open a bank account, when it
comes to the effective detection investigation and prosecution of money laundering (ML)
offenders, and the confiscating of the proceedsofcrime, results are extremely modest. Most
of those convicted of ML worldwide are in self-laundering cases (Adding little or nothing to
the sentence) and complex international ML cases, especially with regard toprofessional
enablers, are extremelyrare and notalways successful.
Moreover, when examining the results of the FATF mutual evaluations, there is an
inverse correlation between the relatively good results most jurisdictions are achieving on
the technical criminalization of ML (Recommendation 3) compared with the failing grades
for effectiveness granted to most jurisdictions on actual investigations and prosecutions of
ML in immediate outcome7 (IO7). This all might suggest that the problem lies not only with
government policybut also in the FATF standards themselves.
It is not surprising, therefore, that the FATF, embarking on its 5
th
round of mutual
evaluations, has agreed on several amendments to its methodology. What is surprising,
though, is that on the law enforcement side, the FATF has chosen to focus on confiscation
rather than on the criminalization of ML,and no additional consideration has been given to
amending Recommendation3 or IO7.
The amendments regarding confiscationare most welcome. The FATF is now amending
Recommendation 4 and embracing, as a minimal standard, nonconviction-based
confiscation, which will apply to a very wide definition of criminal property. This positive
amendment lowers the evidentialthreshold for confiscation to a balance of probabilities and
will make it easier for investigators and prosecutors to confiscate ill-gotten property. This
should dramatically improve the global confiscation results, which currentlyare extremely
limited and cover onlyafraction of the estimated proceeds of crime.
But FATF should additionally amendits methodology regarding the criminalization of
ML. As a first step, it should inquirewith investigators and prosecutors worldwidewhy is it,
in their opinion, that resultsare so modest when it comes to criminal convictions of high-end
ML cases? Looking around the table at the FATF plenary, only a few, if any, experienced
investigators andprosecutors are actually taking part in the debate.
The FATF standards on the criminalizing of ML are outdated, based on the Vienna
Convention [1] and the Palermo Convention [2] focusing on a predicate offence. The FATF
has failed to even adopt the improved standard for criminalization of ML in the Warsaw
convention [3], which criminalizes, for example, situations when the offender merely
suspected that the propertywas proceeds derived from any criminal offence.
The FATF should urgently consider adoptinganupgraded modern standard for the ML
offence, considering the two rationales for criminalizing it. One is the protected value of
punishing those aiding and abetting the offender of the predicate crime, as adopted by the
international treaties in their definition of ML; society must criminalize activity which
Editorial
225
Journalof Money Laundering
Control
Vol.27 No. 2, 2024
pp. 225-227
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-03-2024-180
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