Intro
Money laundering is a crime as defined by numerous statutes within the United States and internationally. Money laundering is the disguise or attempt to disguise money gained by criminal activity. The Treasury Department announced in its 2015 National Money Laundering Risk Assessment that approximately $300 billion is laundered through the United States each year. Money laundering co-exists and helps to facilitate other crimes, such as drug trafficking, human smuggling, and public corruption.
Enforcement Bodies
In the United States, the Department of Justice prosecutes money laundering and corruption crimes with the help of federal law enforcement, specifically the Federal Bureau of Investigation (FBI). While there are also financial regulatory bodies, such as the Securities Exchange Commission (SEC), the prosecution of money laundering violations is handled by federal prosecutors. The United States Attorney’s Office (USAO) works alongside the Money Laundering and Asset Recovery Section (MLARS) and Fraud Section (FRD) of the Department of Justice in tandem to hold accountable those who violate federal law.
Applicable Law
Money laundering has been a federal crime in the United States since 1986 upon enactment of the Money Laundering Control Act (Public Law 99-570). Numerous laws have since been legislated to address the ongoing challenges of money laundering across the country and the world. In 1968, the Bank Secrecy Act was enacted and created requirements outlined in Title 12 of the Code of Federal Regulations. These provisions require that every national bank is to file a Suspicious Activity Report (SAR) when there is detection of any suspected violation of federal law or suspicious activity related to money laundering, other criminal statutes, or regulations.
Title 18 of the U.S. Code criminalizes money laundering. For example, Section 1956 addresses the laundering of monetary instruments, and Section 1957 prohibits money laundering through monetary transactions. The USA PATRIOT Act, short for “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001," also addresses money laundering in the context of international monetary transactions in support of terrorist activities. The purpose of this legislation is to deter and punish terrorist acts in the United States and around the world. This Act is a valuable tool for prosecutors seeking to hold accountable money launderers who engage in financial criminal activities on an international scale.
Corruption + Money Laundering
Corruption does not exist in a vacuum. Corruption spans across industries and by nature is operated by discrete and off-the-record dealings. Money laundering facilitates corruption and vice versa. Often, money acquired through corrupt acts is laundered in effort to conceal its original origin. Many countries have established corruption to be a predicate offense of money laundering in order to encapsulate the combined criminal activities in prosecution.
When money is laundered because of corruption, the loss is felt globally. Corruption yields victims by those who are harmed through fraud, briberies, kickbacks, and other forms of illicit payments to those in trusted positions. Economies suffer when money is lost, increasing poverty rates and reducing private sector investment. Corruption is also shown to disproportionately affect the poor, inhibiting literacy and human development while increasing mortality rates. Further, monetary transactions are necessary to terrorist activity and provide a concrete way for law enforcement officials to intercept plans before they are executed by following the money. In the United States, anti-money laundering statutes are in place to protect national security both at home and abroad.
The prosecution of certain criminal activity can be maximized if corruption is legislated as a predicate offense to money laundering. Through multi-lateral cooperation, countries can work together to combat and seize property in order to pursue money laundering and corruption charges, as explained by the International Monetary Fund. Corruption and money laundering often go hand in hand and facilitate each other. In numerous cases, such as that of the Panama Papers, the ability to launder money in foreign financial institutions created the opportunity for corruption and allowed it to go undetected for a number of years.
Alternatively, the money laundering statutes in isolation can be useful to prosecutors to pursue crimes they could not otherwise indict, such as drug trafficking, where corruption is not necessarily involved. Charging corruption and money laundering, therefore, should be a matter of prosecutorial discretion based on the specific criminal conduct. To effectively combat corruption and money laundering, however, each country’s individual prosecutors must be prepared and equipped with the proper statutory framework under which they can most comprehensively address the facilitation of crimes through money laundering.
Conclusion
Failing to prevent corruption in all its forms either directly or inadvertently harms everyone. Money laundering statutes are only one way we can further combat illicit transactions, leading to larger schemes that usually facilitate other criminal activity. While the financial sector has evolving challenges, the criminal justice system can and should adapt to these by holding liable those who engage in money laundering and other illicit financial activity. Increasing communication across banking institutions, law enforcement, and among jurisdictions worldwide will contribute to a more connected system in which punitive action can be taken against corrupt activities and those who commit them.