““The International Crime of Money The International Crime of Money Laundering: A debate regarding the Laundering: A debate regarding the

inclusion of this global crime under the inclusion of this global crime under the jurisdiction of the International Criminal jurisdiction of the International Criminal

Court”Court”

Wednesday 11 October 2009, Centre Wednesday 11 October 2009, Centre for Criminology, Oxford Universityfor Criminology, Oxford University

(1:00 – 3:00 PM)(1:00 – 3:00 PM)

AbstractAbstract

Taking an international and comparative perspective, the MSt Taking an international and comparative perspective, the MSt research argues that the definition of the international crime of research argues that the definition of the international crime of ML as drafted in the international conventions is inadequate in ML as drafted in the international conventions is inadequate in dealing with ML operations because it is not uniformly applied dealing with ML operations because it is not uniformly applied in every country. in every country.

Based on that conclusion, the research will intend to design the Based on that conclusion, the research will intend to design the adoption of a uniform act, elaborated in a future international adoption of a uniform act, elaborated in a future international convention that generates a kind of fusion or combination convention that generates a kind of fusion or combination between the different ‘models of law’ that every country can between the different ‘models of law’ that every country can adopt at the national level. In order to design one and uniform adopt at the national level. In order to design one and uniform ‘model of law’ we need to reach the necessary consensus ‘model of law’ we need to reach the necessary consensus throughout the key elements that are part of the definition of throughout the key elements that are part of the definition of the international crime of ML. the international crime of ML.

This consensus should also analyse the inclusion of a uniform This consensus should also analyse the inclusion of a uniform definition of this global crime under the jurisdiction of the definition of this global crime under the jurisdiction of the International Criminal Court (ICC). If we do not reach the International Criminal Court (ICC). If we do not reach the necessary consensus, criminal organizations could continue necessary consensus, criminal organizations could continue finding the gap in order to persist in doing their ‘dirty’ finding the gap in order to persist in doing their ‘dirty’ activities.activities.

AgendaAgenda1.1. What is Money Laundering?.What is Money Laundering?.2.2. International conventions (hard law International conventions (hard law

instruments)instruments)3.3. Legal definition of the ‘international crime of Legal definition of the ‘international crime of

ML’ as drafted in the international conventions.ML’ as drafted in the international conventions.4.4. Towards a new international convention with a Towards a new international convention with a

uniform definition of the ‘international crime of uniform definition of the ‘international crime of ML’.ML’.

5.5. Cost - benefit analysis on drafting a uniform Cost - benefit analysis on drafting a uniform definition of the international crime of ML.definition of the international crime of ML.

6.6. Why include a uniform definition of this Why include a uniform definition of this international crime under the jurisdiction of the international crime under the jurisdiction of the ICC?ICC?

7.7. Cost – benefit analysis of this last suggestion.Cost – benefit analysis of this last suggestion.

1) What is Money Laundering?1) What is Money Laundering?

FATF: ‘Process whereby criminals attempt to disguise and FATF: ‘Process whereby criminals attempt to disguise and legitimate their ill-gotten gains of crime’. Simpler: making legitimate their ill-gotten gains of crime’. Simpler: making money coming from a criminal source A, look like it comes money coming from a criminal source A, look like it comes from a legitimate source B.from a legitimate source B.

Why criminals choose ML?: (i) commission “predicate Why criminals choose ML?: (i) commission “predicate offence”, (ii) accumulation significant amount of “dirty” offence”, (ii) accumulation significant amount of “dirty” money, (iii) First dilemma: transfer or not “dirty money” to a money, (iii) First dilemma: transfer or not “dirty money” to a ML process, (iv) Second dilemma: self-laundering or not.ML process, (iv) Second dilemma: self-laundering or not.

Main aims of process of ML: (i) Main aims of process of ML: (i) concealment process:concealment process: separate and disguise separate and disguise criminalcriminal originorigin of assets by giving it an of assets by giving it an apparently legitimate source, (ii) apparently legitimate source, (ii) cleaning process:cleaning process: enjoy ill- enjoy ill-gotten assets by purchasing luxury assets in the legal gotten assets by purchasing luxury assets in the legal economy.economy.

Main aims of ‘reverse ML’ or ‘dirtying process’: (i) Main aims of ‘reverse ML’ or ‘dirtying process’: (i) concealment processconcealment process: separate and disguise : separate and disguise legal originlegal origin of of assets; (ii) assets; (ii) dirtying process:dirtying process: enjoy legal assets by purchasing enjoy legal assets by purchasing assets in the ‘informal’ or ‘parallel’ economy (e.g., some assets in the ‘informal’ or ‘parallel’ economy (e.g., some investments of criminal groups could be purchased in the investments of criminal groups could be purchased in the underground economy).underground economy).

2) International conventions (hard 2) International conventions (hard law instruments)law instruments)

1980s: 1980s: UN Vienna Convention UN Vienna Convention (adopted 1988, entered into force (adopted 1988, entered into force 1990).1990).

1990s: 1990s: EU “Strasbourg Convention” EU “Strasbourg Convention” (1990, entered into force 1993)(1990, entered into force 1993) and UN “Palermo Convention” and UN “Palermo Convention” (2000, entered into force Sept. 2003)(2000, entered into force Sept. 2003)..

After 11 Sept 2001 - 2002: After 11 Sept 2001 - 2002: (i) UN Convention Against (i) UN Convention Against Financing of Terrorism Financing of Terrorism (1999, entered into force April 2002)(1999, entered into force April 2002), (ii) UNSC , (ii) UNSC Resolution 1373 Resolution 1373 (adopted 28 Sept. 2001 – Chapter VII of UN Charter)(adopted 28 Sept. 2001 – Chapter VII of UN Charter), , (iii) Inter-American Convention against Terrorism (iii) Inter-American Convention against Terrorism (2002, entered into (2002, entered into force Oct. 2003)force Oct. 2003)..

2003: 2003: UN Convention against Corruption UN Convention against Corruption (2003, entered into force (2003, entered into force 2005)2005)..

2005: 2005: EU Convention against ML and FT (2005, entered into force EU Convention against ML and FT (2005, entered into force June 2008).June 2008).

3)3) Legal definition of the ‘international crime Legal definition of the ‘international crime of ML’ as drafted in the international of ML’ as drafted in the international

conventions.conventions. The international crime of ML is defined as follows: The international crime of ML is defined as follows:

(a) The conversion or transfer of property,(a) The conversion or transfer of property,

Variant 1:Variant 1: by any person who knows or should have known by any person who knows or should have known

Variant 2:Variant 2: by any person who knows or suspects by any person who knows or suspects

Variant 3:Variant 3: by any person who knows, should have known or suspects by any person who knows, should have known or suspects that such property is the proceeds of crime, for the purpose of that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of such property or of concealing or disguising the illicit origin of such property or of assisting any person who is involved in the commission of the assisting any person who is involved in the commission of the predicate offence to evade the consequences of his or her actions.predicate offence to evade the consequences of his or her actions.

(b) The concealment or disguise of the true nature, source, location, (b) The concealment or disguise of the true nature, source, location, disposition movement or ownership of or rights with respect to disposition movement or ownership of or rights with respect to property,property,

Variant 1:Variant 1: by any person who knows or should have known by any person who knows or should have known

Variant 2:Variant 2: by any person who knows, should have known or suspects by any person who knows, should have known or suspects that such property is the proceeds of crime.that such property is the proceeds of crime.

3) Legal definition of the ‘international crime 3) Legal definition of the ‘international crime of ML’ as drafted in the international of ML’ as drafted in the international

conventions (Cont.).conventions (Cont.).

(c) The acquisition, possession or use of property,(c) The acquisition, possession or use of property,

Variant 1:Variant 1: by any person who knows or should have known by any person who knows or should have known

Variant 2:Variant 2: by any person who knows or suspects by any person who knows or suspects

Variant 3:Variant 3: by any person who knows, should have known or by any person who knows, should have known or suspects [option: at the time of receipt] that such property suspects [option: at the time of receipt] that such property is the proceeds of crime.is the proceeds of crime.

The variable regarding the criminalization of ‘self The variable regarding the criminalization of ‘self laundering’ conducts:laundering’ conducts:

Variant 1:Variant 1: the offence of ML shall also apply to persons the offence of ML shall also apply to persons who have committed the predicate offence.who have committed the predicate offence.

Variant 2:Variant 2: The offence of ML shall not apply to persons The offence of ML shall not apply to persons who have committed the predicate offence.who have committed the predicate offence.

4) Towards a new international 4) Towards a new international convention with a uniform definition of convention with a uniform definition of

the international crime of MLthe international crime of ML The The mens reamens rea element: element: with intent, admitting with intent, admitting dolus directusdolus directus and and

dolus eventualisdolus eventualis (no negligent) both on the ‘origin of the crime’ and (no negligent) both on the ‘origin of the crime’ and the ‘ulterior intent’ to launder.the ‘ulterior intent’ to launder.

The predicate offence of ML:The predicate offence of ML: ‘all offences’ (including crime of tax ‘all offences’ (including crime of tax evasion), but only punishable if the value of the assets involved on evasion), but only punishable if the value of the assets involved on the operation of ML is over an specific economic value.the operation of ML is over an specific economic value.

The criminalization of ‘self-laundering’The criminalization of ‘self-laundering’: a ML offence that : a ML offence that applies to the person who committed the predicate offence.applies to the person who committed the predicate offence.

The The evidenceevidence that requires the term ‘proceeds of crime’ - What that requires the term ‘proceeds of crime’ - What about ML as a predicate offence of ML?about ML as a predicate offence of ML?

Abolition of the term ‘proceeds of crime’Abolition of the term ‘proceeds of crime’ – Why not criminalize – Why not criminalize also the ‘proceeds of legal’ activities?also the ‘proceeds of legal’ activities?

The different The different actionsactions of laundering (e.g., ‘conversion’, ‘transfer’, of laundering (e.g., ‘conversion’, ‘transfer’, ‘concealing’, ‘disguise’). Why not include also ‘… in any other way’?‘concealing’, ‘disguise’). Why not include also ‘… in any other way’?

Punishment:Punishment: fine and imprisonment? What economic value for the fine and imprisonment? What economic value for the fine? (e.g., two to ten times the amount of the ML operation). What fine? (e.g., two to ten times the amount of the ML operation). What maximum and minimum of imprisonment (e.g., 4-8 years, 2-10 maximum and minimum of imprisonment (e.g., 4-8 years, 2-10 years). years).

5) Cost – Benefit analysis on stating a 5) Cost – Benefit analysis on stating a uniform definition of the int. crime of uniform definition of the int. crime of

MLML Cost:Cost: reach a general consensus between several reach a general consensus between several

countries.countries. Benefit:Benefit: (i) Better chances of detecting criminal (i) Better chances of detecting criminal

groups when they shop around the world trying to find groups when they shop around the world trying to find the best legal jurisdiction for laundering;the best legal jurisdiction for laundering;

(ii) More efficient processes of request of information (ii) More efficient processes of request of information and extradition (mutual legal assistance) between and extradition (mutual legal assistance) between countries.countries.

(iii) Each country keeps the option to state the limits (iii) Each country keeps the option to state the limits and extension of the principle of ‘dual criminality’ – and extension of the principle of ‘dual criminality’ – The sovereignty of the countries is respected.The sovereignty of the countries is respected.

(iii) An easier and more effective fight against ML (iii) An easier and more effective fight against ML operations in the world.operations in the world.

6) Why include a uniform definition of 6) Why include a uniform definition of this crime under jurisdiction of ICC?this crime under jurisdiction of ICC?

International versus national jurisdiction:International versus national jurisdiction: (i) The duty of bring (i) The duty of bring ML perpetrators to justice rests solely on national criminal justice systems. ML perpetrators to justice rests solely on national criminal justice systems. Without adequate domestic capacity to discharge this duty, international anti-Without adequate domestic capacity to discharge this duty, international anti-ML efforts almost certainly fall; (ii) some governments could turn a blind eye to ML efforts almost certainly fall; (ii) some governments could turn a blind eye to ML operations, arguing that ML makes revenue to their jurisdiction (Takat, ML operations, arguing that ML makes revenue to their jurisdiction (Takat, 2007); (iii) ML is a trans-border and mutable process, so the prevention and 2007); (iii) ML is a trans-border and mutable process, so the prevention and combat of this process is difficult for national criminal justice systems.combat of this process is difficult for national criminal justice systems.

Social values protected by int. crime of ML:Social values protected by int. crime of ML: to defend the to defend the society as a whole from the expansion of criminal organizations. One purpose of society as a whole from the expansion of criminal organizations. One purpose of this criminal groups is to accrue profits and accumulate wealth and power. The this criminal groups is to accrue profits and accumulate wealth and power. The accumulation of profits promotes the expansion of criminal organizations, so accumulation of profits promotes the expansion of criminal organizations, so they can continue threatening the global socio-economic and democratic system they can continue threatening the global socio-economic and democratic system (See, e.g., Preamble ‘Vienna Convention’ and Res. 55/25 adopting ‘Palermo (See, e.g., Preamble ‘Vienna Convention’ and Res. 55/25 adopting ‘Palermo Convention’).Convention’).

Main purpose of ICC:Main purpose of ICC: this Court has jurisdiction over ‘serious’ cases that this Court has jurisdiction over ‘serious’ cases that ‘concern’ the whole international community (Preamble of the ICC Stature). In ‘concern’ the whole international community (Preamble of the ICC Stature). In particular, ‘when committed as part of a plan or policy or as part of a large-particular, ‘when committed as part of a plan or policy or as part of a large-scale commission of such crimes’. ML is a ‘serious’ crime that, according to scale commission of such crimes’. ML is a ‘serious’ crime that, according to international conventions, ‘concerns’ the whole international community international conventions, ‘concerns’ the whole international community (Important: the predicate offence of ML could be ‘all offences’ but with a HIGH (Important: the predicate offence of ML could be ‘all offences’ but with a HIGH punishable amount of values).punishable amount of values).

7) Cost-benefit analysis of this last 7) Cost-benefit analysis of this last suggestion.suggestion.

Cost: Cost: reach consensus among several countries not only reach consensus among several countries not only in drafting a uniform definition of the international crime in drafting a uniform definition of the international crime of ML but also in including this uniform definition under of ML but also in including this uniform definition under the jurisdiction of the ICC.the jurisdiction of the ICC.

Benefits: Benefits: (i) structure a more effective fight against (i) structure a more effective fight against ‘criminal organizations’ that commits serious crimes of ‘criminal organizations’ that commits serious crimes of genocide, crimes against humanity and war crimes: profits genocide, crimes against humanity and war crimes: profits is ‘the life blood’ of any criminal enterprise; (ii) protect is ‘the life blood’ of any criminal enterprise; (ii) protect socio-economic global regime: ML affects, principally ‘fair socio-economic global regime: ML affects, principally ‘fair competition’; (iii) reduce the degree of ambiguity and competition’; (iii) reduce the degree of ambiguity and vagueness of the definition of the international crime of vagueness of the definition of the international crime of ML; (iv) structure a more effective fight against ML.ML; (iv) structure a more effective fight against ML.