Money laundering masterminds slipping police radar, warns new FATF report
06 Aug 2018

Gangs specialising in advising drug dealers, fraudsters and other criminals on how to shift and launder dirty cash are thriving across various jurisdictions and posing a threat to the banking system.

Although governments have tried to create a hostile environment for criminals by rolling out various anti-money laundering (AML) laws, the brains behind scammers’ scams are finding some loopholes and making quick bucks.

How is this the case?

A key reason is that such criminals are not being prioritised in police investigations, indicates a new study.

Law enforcement agencies in various jurisdictions are focusing a lot more on self-laundering – which includes crooks laundering the proceeds of drug trafficking, fraud or other criminality – and not paying enough attention to professional money laundering (PML), which includes individuals, organisations and networks that are involved in third-party laundering for a fee or commission.

PML networks provide services to criminals and organised crime groups by laundering the proceeds of their illegal activities, and may act transnationally in order to exploit vulnerabilities in countries and particular businesses, financial institutions, or designated non-financial businesses or professions.

PMLs pose a threat to the financial system, as they facilitate money laundering and criminality more broadly, profiting from these illegal activities, the global anti-money laundering body said.

“The results of FATF’s fourth round of mutual evaluations reveal that many countries are not sufficiently investigating and prosecuting a range of money laundering activity, including third-party or complex money laundering,” FATF explained.

“Many countries continue to limit their investigations to self-launderers: criminals who launder the proceeds of drug trafficking, fraud, tax evasion, human trafficking or other criminality. While this may address in-house or self-laundering, it does not impact on those specialised in providing criminals with money laundering services.

“PMLs, professional money laundering organisations and professional money laundering networks can survive law enforcement interdiction against any of its criminal or organised crime group clients, while still standing ready to support the next criminal clientele.”

Effective dismantling of PMLs requires focused intelligence collection and investigation of the laundering activities, rather than the associated predicate offences of the groups using the services of the PMLs, FATF said.

“The dismantling of PMLs, can impact the operations of their criminal clients, and can be an effective intervention strategy against numerous criminal targets.”

PMLs may act in a professional capacity, such as a lawyer or accountant, and the report aims to identify those actors who serve criminal clients whether on a fulltime or part-time basis.

As the main purpose of PMLs is to facilitate money laundering, they are rarely involved in the proceeds-generating illegal activities.

Instead, they provide expertise to disguise the nature, source, location, ownership, control, origin and/or destination of funds to avoid detection.

Image by Geralt.

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