The institutional framework against money laundering and its underlying predicate crimes

DOIhttps://doi.org/10.1108/13581981111123870
Date10 May 2011
Pages174-194
Published date10 May 2011
AuthorNorman Mugarura
Subject MatterAccounting & finance
The institutional framework
against money laundering and its
underlying predicate crimes
Norman Mugarura
Global Action Research and Development Initiative (Garadi) Ltd,
Barking, UK and
The Law Tutor Limited, London, UK
Abstract
Purpose – The purpose of this paper is to underscore the current supranational anti-money
laundering (AML) regimes articulating challenges of harnessing them as a robust framework. Some
aspects of the above framework are created under the auspices of the United Nations treaties, some are
regional-based initiatives while others are ad hoc arrangements.
Design/methodology/approach The paper was written on the basis of the supranational
framework against money laundering such as the United Nations Convention against drug traff‌icking
and other psychotropic substances. Owing to the limitations of the above AML model law, the paper
utilised a qualitative research methodology, exploring a wide range of the current AML regimes.
The paper has also exploited the revised AML framework which expands the scope of the offence to
encompass, not only proceeds from drug traff‌icking but also serious criminal activities (smuggling,
fraud, serious f‌inancial crimes, and the sale of stolen goods). Ideally, the paper has been written based
on the provisions of the United Nations Convention against transnational organised crimes and its
attendant three protocols adopted in Palermo (2000); and the Financial Action Task Force (2004).
The foregoing regimes underscore an essential framework for the study of money laundering and its
attendant predicate offences globally.
Findings – The f‌indings of the study clearly demonstrate that the current AML framework is not
robust enough to caution countries against the threat of money laundering. There is a gaping gap in
the law of money laundering within and between regions even though there is a global framework in
place. This is presumably the reason why some countries have not fully transposed some aspects of
current AML regimes locally.
Social implications – The gaps in the law against money laundering both in relation to the way
they are created and enforced signify that states still need to do more collectively to stem the threat of
money laundering. The current intransigence in application of AML laws in some countries sign-post
the inherent challenges of globalisation of international f‌inance.
Originality/value – While there is a growing body of literature generated on supranational AML
regimes, this paper is distinctly based on the interplay of global and local factors in harnessing it.
Thus, the research design of this paper is connected by two strands a review of existing
supranational AML framework and the inherent challen ges faced by individual states in
domesticating it. The paper is also written based on some practical experiences of harnessing
global AML regimes in some countries.
Keywords Money laundering,Crimes
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
Garadi Ltd is a research-oriented non-governmental organisation (NGO) carrying out research on
transnational crimes, issues of globalisation, international trade and other overlapping global
issues particularly focusing attention on less developed economies in Africa.
JFRC
19,2
174
Journal of Financial Regulation and
Compliance
Vol. 19 No. 2, 2011
pp. 174-194
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581981111123870
1. Introduction
The paperhas deconstructed individualanti-moneylaundering (AML) regimesas a global
AML frameworkagainst money launderingand its related predicatecrimes. International
efforts towards combating systemic f‌inancial abuse, f‌inancial crime, and specif‌ically
money launderingintensif‌ied in the late 1980s in responseto the growing concerns about
drugtraff‌icking. It was also recognisedthat globalisationof trade, f‌inance, whichhad been
spurredby advancement in communicationtechnology might facilitatemoney laundering
and hencethe urgent need for a frameworkto leverage the f‌ight againstmoney laundering
(Bantekas and Nash, 2003). Since then, countering f‌inancial crimes such as money
laundering became an integral part of the agenda of many multilateral organisations.
Leading the inter-agency group on money laundering is the FinancialAction Task Force
(FATF) and its aff‌iliated regional organisations such as the East African Anti-Money
LaunderingGroup. To internalisethe dynamics of the current AMLframework, the paper
has been organised in three parts: part I examines those regimes formed under the
auspices of the United Nations with the specialised focus on money laundering and its
underlying predicate offences; partII underscores regimes such as the FATF,the World
bank and International MonetaryFund (IMF); and part III proffersthe authors conclusion
to the paper.The conclusion section to the paperarticulates the challengesinherent in both
treaty provisions and soft law regimes; and accordingly why the current global AML
framework has been slackin relation to its potential challenges.
Part I
Part I explores the ethos of United Nation model treaties which states are required to
translate into domestic AML legislation. Primarily, the paper has examined the
dynamics of UN Convention against narcotic drug traff‌icking and other psychotropic
substances in 1988. Also, explored is the UN Convention against transnational organised
crimes in Palermo (2000), in particular those provisions that were adopted to extend the
remit of what should constitute money-laundering offences – predicate offences.
1.1 The background to United Nations Convention against narcotic drug traff‌icking and
other psychotropic substances (1988)
The antecedents of the United Nations Convention (1988) were a series of General
Assembly resolutions[1] where the concern over drug abuse was expressed by delegate s
from many national governments. In the above resolutions, drug abuse and traff‌icking
was viewed as of increasing concern in international arena, which facilitated the
adoption of the General Assembly resolution 39/141 of December 1984 entitled
“Draft Convention against Traff‌icking in Narcotic Drugs and Psychotropic substance s”
(The UN Economic and Social Council, 1986). The securitisation of drug abuse and
traff‌icking through their conceptualisation as a threat and priotisation of the adoption of
countermeasures resulted in the call for a specialised conference (Anderson, 1989) to deal
with the f‌ight against drug traff‌icking. In adopting a similar securitisation discourse,
the then Secretary General of United Nations[2] stated that existing resources were
inadequate to deal with the drug plague, which was contaminating, corrupting, and
weakening the very fabric of society. In resolution 40/121, its preamble characterises the
activities of transnational criminal organisations engaged in drug traff‌icking as “threat
to the well being of people; the stability of democratic institutions; and the sovereignty of
states”, and calls in its second paragraph for maximum priority against drug production,
Money
laundering
175

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