This note considers money laundering, including the tracking
of assets (within and across borders) and recovery action.
The note covers -
overview - definitions, key issues and primers
- key global and regional agreements and agencies
- regulation of money laundering in Australia
- money laundering regimes overseas, including international
- controversies and mechanisms regarding tracking funds
transfers and assets
- principle and practice in recovering the proceeds
of crime or funds used in terrorism
- a perspective from corporate and government asset
cloaking and uncloaking in times of war.
note supplements discussion elsewhere on this site regarding
bank secrecy, security, privacy, governance, digital currencies,
capital, 100 Points identification regimes and confiscation
of publishing royalties under 'proceeds of crime' legislation.
What is money laundering? One image, perhaps dominant
through crime novels and film noir, involves gangsters
seeking to evade prosecution by law enforcement agencies
and accordingly forced to lug garbage bags stuffed with
cash to venues such as restaurants and laundries that
can be used to disguise illicit cash as legitimate commercial
Another, more recent image involves upmarket bankers using
electronic networks to send millions of dollars cascading
across borders and hundreds of corporate accounts so that
loot from a drug baron or a terrorist is indistinguishable
from standard transactions and thus immune from action
or even detection by the authorities. We are recurrently
asked whether alternative payment schemes such as e-Gold,
discussed elsewhere on this site, will enable laundering
by criminals or wearers of alfoil beanies.
As the following paragraphs indicate, the scope of 'money
laundering' - along with the focus of attention by government
agencies, academics and financial institutions - has changed
Attention initially centred on 'dirty money': unlawfully
obtained through offences such as drug trafficking, gambling,
prostitution and extortion. Money laundering has come
to include efforts to evade identification of illicit
use of 'clean money', for example terrorists spending
money donated to charities and autocrats transferring
state revenue to dictator-friendly regimes such as Liechtenstein.
This note accordingly encompasses regulation of individuals
and institutions directly or indirectly engaging in transactions
the origins of the proceeds of crime, typically serious
such proceeds, including their receipt, transfer and
and/or conceal access to and use of resources by terrorists
also notes the cloaking, uncloaking and seizure of enemy
assets during times of war.
laundering is not restricted to cash transactions. It
may for example involve real estate, art works, financial
securities and other assets. It may include padding payments
in international or domestic business dealings.
It is not restricted to one-off deals by members of organised
crime groups or those engaged in a crusade against the
West. It is clear that some government agencies on occasion
have sought (and arguably needed) to disguise the disbursement
or receipt of funds, for example in sanctions-busting
and in funding covert activity.
It may involve a number of intermediaries, including major
financial institutions, accounting groups and law firms.
It may involve 'washing' dirty money by physically transferring
cash offshore, mingling it with revenue in a legitimate
business operation or even depositing small amounts of
cash in each of a large number of bank accounts (sometimes
referred to as smurfing). It may instead be wholly digital,
with electronic transfers through entities within a particular
jurisdiction or across borders.
Unsurprisingly, it has provoked responses from a range
of government agencies and industry bodies at the national
and international levels. Those agencies include taxation,
organised crime specialists, privacy
watchdogs and finance sector regulators.
Responses include reporting regimes of increasing comprehensiveness
- or merely visibility - such as that under Australia's
Financial Transaction Reports Act 1988 (discussed
here). They include surveillance
of international money flows through cooption of choke
points such as SWIFT, a focus of US debate in June 2006.
They also include measures to freeze and seize assets,
moving from tracking to recovery or denial.
Globalisation means that conceptualisation and regulation
of money laundering involves a patchwork of regional,
national and international legislation and codes of practice.
It also involves substantial exchange of information across
Critics of some measures, such as RT Naylor, have argued
that particular responses are predicated on myths (for
example questioning claims about 'organised crime' or
links between terrorism, drug trafficking and intellectual
property abuses). Others have highlighted potential
erosion of civil liberties
or merely the ineffectiveness of specific initiatives.
Key literature on laundering, tracking and criminal finance
is surprisingly readable, in contrast to much writing
about areas such as globalisation and telecommunication
Works of particular value include Money Laundering:
A New International Law Enforcement Model (Cambridge:
Cambridge Uni Press 2000) by Guy Stessens, Dirty Money:
The Evolution of Money Laundering Counter-Measures
(Strasbourg: Council of Europe Press 2005) by William
Gilmore, Laundering & Tracing (Oxford: Clarendon
Press 1995) by Peter Birks, Confidentiality in Offshore
Financial Law (Oxford: Oxford Uni Press 2002) by
Rose-Marie Belle Antoine, The Scale and Impacts of
Money Laundering (Cheltenham: Elgar 2007) by Brigitte
Unger, Countering the Financing of Terrorism
(London: Routledge 2008) edited by Thomas Biersteker &
Sue Eckert, Responding to Money Laundering: International
Perspectives (Amsterdam: Harwood Academic 1997) edited
by Ernesto Savona and Terrornomics (Aldershot:
Ashgate 20070 edited by Sean Costigan & David Gold.
Discussions of economics, threats and responses feature
in The Economics of Organized Crime (Cambridge:
Cambridge Uni Press 1997) by Gianluca Fiorentini &
Sam Peltman, Money Laundering and Financial Intermediaries
(Boston: Kluwer Law 2001) by Sandeep Savla, Critical
Reflections on Transnational Organized Crime, Money Laundering,
& Corruption (Toronto: Uni of Toronto Press 2003)
by Margaret Beare, the revisionist Wages of Crime:
Black Markets, Illegal Finance, & the Underworld Economy
(Ithaca: Cornell Uni Press 2002) by RT Naylor and Criminal
Prosperity: Drug Trafficking, Money Laundering & Financial
Crises After The Cold War (London: RoutledgeCurzon
2003) by Guilhem Fabre.
Other works are highlighted in the following pages of
this note, for example Graycar & Grabosky's 1996 study
of risks and countermeasures in Australia.
Martin Lorenz-Meyer. Safehaven: The Allied Pursuit of
Nazi Assets Abroad. Columbia: University of Missouri Press,
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