The Global Detection and Deterrence of Money Laundering
| Published date | 01 February 2000 |
| Pages | 336-344 |
| DOI | https://doi.org/10.1108/eb027247 |
| Date | 01 February 2000 |
| Author | Harjit S. Sandhu |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 3 No. 4
The Global Detection and Deterrence of
Money Laundering
Harjit S. Sandhu
Crime is becoming ever more international. This is a
world where it is quicker to cross the Atlantic from
Paris to New York than to traverse the city of Paris
by road. This world is faced with a criminality that
profits by the advantages of the so-called free
world, where there are practically no frontiers any
more. Whether it is drug trafficking, financial fraud
or cyber-pornography, crime has gone global on a
massive scale as borders fade and cash rockets from
Grand Cayman to Hong Kong, Luxembourg or
Vanuatu in the flash of a second. Criminals know
no geographical boundaries; nor does their dirty
money recognise any such barriers.
Law enforcement agencies, on the other hand, are
restricted at every turn. Apart from the obvious
differences between nations such as language,
dif-
ferent judicial systems have to be satisfied; different
laws have to be carefully considered to ensure that
what constitutes a crime in one country is also a
crime in another; thereare different procedures and
levels of authority for investigations; budgets
demand that pressing local or national problems are
given priority, at the expense of what might be a
lengthy, complicated and expensive international
investigation with no direct benefit to the originating
country; agencies are constantly reactive rather than
proactive due to the sheer scale or volume of crimes
that are reported and require investigation. Conse-
quently they are often left one or more steps behind
the criminal.
GREED DRIVES THE CRIMINAL
Organised criminals are motivated by one thing —
profit. Greed drives them further. Huge sums of
money are generated through arms smuggling,
drug trafficking, terrorism and economic crimes.
The end result is that organised crime must move
billions of illegally gained dollars into the legitimate
financial system. Today, enterprising criminals of
every sort — from drug traffickers to stock fraudsters
to corporate embezzlers and commodity smugglers
— must launder the money flowing from their
crimes for two reasons. The first is that the money
trail itself can become evidence against the perpetra-
tors of the offence; the second is that the money per
se
can be the target of investigation and seizure. In other
words, criminals launder money because they need to
conceal their profits — their illegally gotten gains —
and avoid detection of the illegal activity that pro-
duced them. The success of organised crime is based
on its ability to launder money. Arrangements for
moving, disguising and laundering of the proceeds
must also be made well before the predicate offence
is actually committed.
DIRTY MONEY STINKS
The Roman Emperor Vespasian, we are told, put a
tax on the use of the public toilets, and his son
Titus objected. The money, Titus said, is dirty; it
smells. Vespasian had the treasurer go to the store-
house and bring back some coins, which had been
washed on their receipt. He held them out to his
son and declared: 'Non olet.' It doesn't smell. If you
had to choose a banner to hang outside the big
banks of the world, that would be the legend
woven into its warp and
woof:
non olet. Our custo-
mers bring us money. Money is fungible. By the
time we see it, it doesn't smell. But the truth is that
some money definitely stinks. It comes from ped-
dling drugs, or arms trafficking, or collecting
ransom for the kidnapped, or selling worthless
debentures to old folks.
OPERATIONAL PRINCIPLES OF
MONEY LAUNDERING
Dirty and crumpled linen looks respectable after
laundering. So does dirty money generated by not
quite legitimate means. Money laundering involves
disguising assets so they can be used without
detection. Dirty money can take many routes —
some complex, some simple, but all increasingly
inventive — the ultimate goal being to disguise its
source.
Regardless of who actually puts the apparatus of
Journal
of
Money Laundering Control
Vol. 3, No. 4, 2000, pp. 336-344
© Henry Stewart Publications
ISSN 1368-5201
Page 336
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