International initiatives against corruption and money laundering: an overview
| Date | 01 July 2005 |
| Pages | 221-245 |
| DOI | https://doi.org/10.1108/13590790510624828 |
| Published date | 01 July 2005 |
| Author | Abdullahi Y. Shehu |
| Subject Matter | Accounting & finance |
International Initiatives Against Corruption
and Money Laundering: An Overview
Abdullahi Y. Shehu
INTRODUCTION
The transnational nature of corruption and money
laundering is a compelling reason to develop instru-
ments for combating these phenomena at the global
level. The overall concept and fundamental principle
of international cooperation is based on the functional
theory of collective security. The assumption that
nations could deal with common problems through
collective and concerted eorts is better than acting
in isolation. The concept of collective security is a
proven approach, but it is necessary that international
cooperation be premised on at least a theoretical
understanding and knowledge of the problem which
such cooperation seeks to deal with. The necessity
for a consensus about the problem, in order to facilitate
collective action, cannot be over-emphasised. This
consensus has not been achieved fully and it cannot
be achieved in principle, yet nations have agreed to
come together to develop ways and means of facilitat-
ing meaningful action against transnational crime.
This paper examines the various international,
legal, policy and institutional initiatives that have
been created to deal with these problems. Of particular
importance are the initiatives of the United Nations
Organisation (UNO), the Organisation for Economic
Co-operation and Development, the Financial Action
Task Force (OECD/FATF), the World Bank, the
International Money Fund (IMF), Interpol and other
cross-national initiatives by both government and
non-governmental organisations. The importance of
these international frameworks is that they provide
the basis for a global approach to the prevention and
control of these problems. The objective here is to
identify and discuss these instruments in the context
of the North± South approaches to the combat of cor-
ruption and money laundering. Since the United
Nations (UN) has been the lead multilateral institution
in this regard, the work of the UN will come ®rst.
THE UNITED NATIONS INITIATIVES
International concerns about global problems date
as far back as the League of Nations, which was
formed as a result of the experience of the First
World War Ð 1914± 1919. The experiment of the
League of Nations in collective security collapsed
with the outbreak of the Second World War in
1939, consequent upon which the UN was formed
in 1945. The UN mandate covers the whole spectrum
of human endeavour and its Charter embraces notions
of both self-determination and mutual respect. And
although there may have been eorts to address pro-
blems related to crime as far back as the 1950s, the
®rst recorded signi®cant involvement of the UN in
organised crime issue was in 1975, when the Fifth
UN Congress held in Geneva on 1st± 12th September,
1975, examined the changing nature and problems of
organised crime. Subsequently, the Seventh Congress
held in Milan, Italy, 26th August± 6th September,
1986, examined the problem of crime and criminality
in the context of human development and adopted the
Milan Plan of Action. The UN General Assembly in
1990 adopted a model treaty on Extradition, Treaties
and Transfer of proceedings in criminal matters;
mutual assistance in criminal matters; and on Transfer
of Supervision of Oenders. In pursuance to the UN
General Assembly Resolution 45/108, the ministerial
meeting on the creation of an eective UN crime pre-
vention and criminal justice programme was held in
Versailles on 21st± 23rd November, 1991. It is impor-
tant to note that this meeting set the priority goals
for the ministerial conference that was held in
Naples, Italy, following which the political Declara-
tion and Global Plan of Action against Organised
Crime was adopted on 23rd November, 1994.
Furthermore, in its Resolution 55/188, titled `Prevent-
ing and Combating Corrupt Practices and Illegal
Transfer of Funds and Repatriation of Such Funds
to Countries of Origin', the General Assembly called
for increased international cooperation to achieve
the objective of combating corruption and related
money laundering. Under this objective, the General
Assembly invited the inter-governmental open-
ended expert group to examine the issue of illegal
transfer of funds and repatriation of such funds in an
appropriate legal instrument. The active role of the
UN against corruption and money laundering is
aimed at the harmonisation of relevant legal and
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Journal of Financial Crime Ð Vol. 12 No. 3
Journalof Financial Crime
Vol.12,No. 3,2005, pp. 221 ±245
#HenryStewart Publications
ISSN1359-0790
policy countermeasures, as well as the strengthening of
international cooperation. The rationale behind these
initiatives is to attack criminals at their weakest or vul-
nerable points: in other words, to deny them the
bene®t of illegal gains. The UN initiatives are cate-
gorised into resolutions, legal instruments, global pro-
grammes of action, and policy guidelines. Since the
resolutions led to the development of legal and action-
able programmes, this paper will concentrate on the
legal and global programmes while making references
to the resolutions and policy guidelines that emanated
therefrom.
INTERNATIONAL LEGAL
INSTRUMENTS
The UN initiatives against corruption and money
laundering were developed in a number of Conven-
tions, principal of which are the Convention against
Illicit Trac in Narcotic Drugs and Psychotropic Sub-
stances (1988); the Transnational Organised Crime
Convention (TOC, 2000); the Convention against
Corruption (2003); and the Universal Anti-Terrorism
Conventions and Protocols.
1
The 1988 Convention
The 1988 UN Convention against Illicit Trac in
Narcotic Drugs and Psychotropic Substances,
2
which
improved on both the Single Convention of 1961 on
Narcotic Drugs (as amended by the 1972 protocol),
and the Convention on Psychotropic Substances
of 1971, is on record as the ®rst signi®cant interna-
tional instrument to address the proceeds of crime.
Adopted in Vienna, Austria, on 19th December,
1988, the Convention creates oences and spells out
speci®c sanctions and procedures for the con®scation
of the proceeds of crime in Articles 3 and 5 in particu-
lar. Article 3(b)(i) provides a legal de®nition of what
constitutes money laundering.
Article 5(1± 9) enjoins member states to adopt such
measures as may be necessary to enable the con®sca-
tion of the proceeds derived from the oences estab-
lished under Article 3. In particular, parties are
enjoined to adopt necessary measures to identify,
trace, and freeze or seize proceeds, property, instru-
mentalities or any other thing referred to under the
de®nition in paragraph b(i) of Article 3. It is based
on the provisions of the 1988 Convention, on which
many national laws against money laundering are
modelled, albeit with modi®cations to suit domestic
peculiarities.
However, following realisation of the inadequacies
and limitations of the 1988 Convention, and to address
the problems of corruption and money laundering in a
comprehensive manner, the UN General Assembly
authorised the Secretary General to establish an Ad
Hoc Committee to elaborate a comprehensive Con-
vention that would address the lacuna observed in
the 1988 Convention. The Ad Hoc Committee,
which commenced work in 1999, was mandated to
develop through consensus a workable instrument
that would address the proceeds of crime.
3
The Ad
Hoc Committee worked for over two years (1999±
2000) and produced a draft Convention that was
adopted by the Heads of State and Governments of
member states in Palermo, Italy on 12th± 15th Decem-
ber, 2000 (the TOC).
The 2000 Convention
`Criminal groups have wasted no time in embra-
cing today's globalised economy and the sophisti-
cated technology that goes with it. But our eorts
to combat them have remained up to now very
fragmented and our weapons almost obsolete.
The Palermo Convention gives us a new tool to
address the scourge of crime as a global problem.
With enhanced international cooperation, we can
have a real impact on the ability of international
criminals to operate successfully, and help citizens
everywhere in their often struggle for safety and
dignity in their homes and communities.'
4
The UN Convention Against Transnational Orga-
nised Crime (hereafter, the 2000 Convention) repre-
sents the response of the international community to
the need for a truly global approach to the problem
of transnational crime. Its purpose is to promote coop-
eration, both for the prevention of crime and for eec-
tive combat against it. Like any UN instruments, it
accommodates the dierences and speci®cities of
diverse legal traditions and cultures, but at the same
time promoting a common language and helping to
overcome some of the barriers to eective interna-
tional cooperation. Speci®cally, the Convention: (i)
de®nes and standardises certain terms that are used
with dierent meanings in dierent countries; (ii)
requires states to establish speci®c oences as crimes;
(iii) requires introduction of certain speci®c control
measures, eg victims and witnesses protection; (iv)
provides for the con®scation and forfeiture of pro-
ceeds of crime (ie promotes international cooperation,
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Shehu
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