Money Laundering

Money Laundering has been existing as long as human kind invented the concept of money. However, the legal concept of laundering has only developed quite recently. First and foremost, it is of utmost importance to explain what the meaning of the laundering of money is.

Money laundering means when the proceeds obtained from a criminal activity are “washed” by being passed through other legal sources so that these proceeds can be reused again either for the same or another criminal activity or even for other legal purposes. Thus, for the money laundering to arise, there shall always be a criminal activity and there shall always be proceeds flowing through that criminal activity.

The main offences of money laundering are when there is conversion, transfer, concealment, acquisition, possession and retention of such proceeds. However, other situations can lead to laundering like for example tipping off, which means when a person informs another person that a search is going to be carried out on that particular person. Again, this offence is highly criminalised in today’s society for the obvious reason that no one shall help another person in a criminal activity because otherwise, the person who helps out shall be considered as a co-accused.

The main activities that are funded by money laundering are drug trafficking and terrorism. Indeed, in Malta, there are the Dangerous Drugs Ordinance (Cap. 101) and the Medical and Kindred Professions Ordinance (Cap. 31) that regulate this offence with regard to drug trafficking. Terrorism is also controlled in Malta by the enactment of The Prevention of Money Laundering and Funding of Terrorism Regulations (Subsidiary Legislation 373.01) that implement the provisions of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purposes of the laundering of money and terrorist financing and also of Directive 2006/70/EC of the European Commission of 1 August 2006. Hence, it shows the huge importance of why one shall criminalize money laundering and trying to prevent it at all costs.

The question that might crop up is why the law has only evolved recently on such issue. The reason is mainly that money laundering is not a hard core criminal activity that shocks the people as for example killing someone or stealing but it is more of something intangible and looked at as a moral issue. Hence, people do not seem to worry much about such problem.

Nonetheless, there shall be laws that regulate this offence of money laundering because when people carry out this offence, they are not paying taxes on the proceeds they are gaining as any other citizen. Hence, if this offence is criminalized, the country in general will surely benefit.

Indeed, in Malta this offence of money laundering is regulated by the Prevention of Money Laundering Act (Cap. 373). This law puts a great emphasis on the due diligence that shall be exercised by any person concerned who somehow deals with finances, especially banks and other financial institutions. Also, certain categories of people, both legal and natural persons, like for example legal officers, bank officers, casinos, real estate agents and high value dealers need to fill out the annual compliance report every single year. There is also the Financial Intelligence Analysis Unit (FIAU) that investigates any complaint and which was indeed set up by the Prevention of Money Laundering Act (Cap. 373).

In fact, this process of money laundering can easily take place mainly in countries where there is strict bank secrecy like for example Lichtenstein and where there is the possibility to form a sham company.

Another issue is that the penalties imposed in Malta are quite hefty that can include imprisonment and even fines that are quite high while the proceeds obtained can be forfeited or if forfeiture is not possible, the person accused has to pay an extra amount of money or serving an extra time in prison.

Consequently, although money laundering can be looked at by some people as an easy way to gain a lot of money yet if one is caught, the price to pay back is quite high leading to the reasoning that it is not worth to risk everything for the high possibility to lose everything in a split of a second.