Beware of the Increased use of the Money Laundering Offense by countries around the world
On the 27th of April, the Jersey States Assembly – Jersey's elected parliament unanimously adopted an amendment to the Proceeds of Crime (Jersey) Law 1999 to create a new offence of FAILURE TO PREVENT MONEY LAUNDERING AND TERRORIST FINANCING.
And with this Jersey news it is worth also noting money laundering offences are being used by countries more often as part of prosecution alongside other charges or sometime autonomously, and as seen in Jersey in 2022
- On 25th April 2022, x3 defendants were sentenced to terms of imprisonment of up to four years by the Royal Court
- The case is also significant in that investigators and prosecutors then assembled a case strong enough to secure convictions on the "irresistible inference" that the funds were criminal in nature, despite the unknown nature of the original offending that generated the funds.
- Jersey money laundering case convictions are based on an "irresistible inference."03/05/2022
Today, it’s become almost impossible to violate many financial laws (e.g., tax evasion, insider dealing, corruption, etc) laws without committing a money laundering offense as well.
And the trend to use a Money laundering charge is gaining momentum in several different jurisdictions can be shown here:-
France has long used the money laundering offense in its financial crime cases, where it has been hard to secure a conviction on the predicate offense charge alone (i.e.. corruption). For example:-
- Money laundering offense was added to Carlos Ghosn’s charges by the French authorities.
- France has issued an international arrest warrant for Carlos Ghosn, the disgraced former Nissan executive who jumped bail in Japan and fled to Lebanon, prosecutors have said.
- The warrant was issued on Thursday over €15m (£12.6m) in suspect payments between the Renault-Nissan alliance that Ghosn once headed and an Omani company, Suhail Bahwan Automobiles (SBA), said prosecutors in the Paris suburb of Nanterre.
- The allegations involve misuse of company assets, money laundering and corruption.
In the US, several recent FCPA indictments have included money-laundering charges, the latest being:
- Former Goldman Sachs investment banker, Roger Ng who was found guilty of conspiring to violate the FCPA and commit Money Laundering in connection with the 1MDB scandal.
- Former Goldman Sachs (GS.N) banker Roger Ng was convicted by a U.S. jury on Friday of corruption charges related to his role in helping loot hundreds of millions of dollars from Malaysia's 1MDB development fund.
- The charges stemmed from one of the biggest financial scandals in history. Prosecutors charged Ng, Goldman's former top investment banker for Malaysia, for conspiring to violate an anti-corruption law and launder money.
- April 8(Reuters) - https://www.reuters.com/business/finance/hold-us-jury-reaches-verdict-ex-goldman-bankers-1mdb-corruption-trial-2022-04-08/
Furthermore, the DOJ continues to have an appetite to fight foreign bribery around the world, but that it will no longer be limited to the FCPA in its pursuit of this misconduct. HOWEVER, it has ALSO availed itself of other laws – namely, the money laundering and wire fraud statutes – to target individuals engaged in foreign bribery conduct that may be outside the scope of the FCPA based on conduct that takes place almost entirely overseas, often between non-US individuals.
Another recent example of such prosecution is the DOJ charging:
- Two former Bolivian government officials and three US citizens with money laundering violations
- For their roles in a bribery scheme to secure a Bolivian government contract for a US company.
- Here the US has been utilizing the money laundering statutes to accomplish what the FCPA could not accomplish directly charging a foreign official.
It is worth remembering that the relationship between the anti-bribery and anti-money laundering laws creates serious consequences for individuals and companies that knowingly transfer bribe payments or proceeds through the financial system.
A money laundering charge is a crime and often carries a more severe sentence than a corruption charge. Example:
- In the US one may face up to 30 years in prison for a money laundering charge vs.
- Up to five years jail for a FCPA charge.
Given the severity of money laundering charges, compliance officers in BOTH FINACIAL SERVICES AND NON-FINANCIAL SECTORS ought to introduce AML training in parallel to their other financial crime training (e.g., Anti-corruption training), so employees and executives may fully understand their risk exposure.
Strong policies, clear accounting controls, and employees properly trained will not solve all the problems a firm may face — but it is certainly a start to mitigate some serious financial crime risks.