History

What is Money Laundering?

Taken at its simplest, money laundering is a process by which the origins and ownership of money, generated as a result of criminal activity, can be concealed. In effect, the money is ‘cleaned’ or ‘laundered’ through legitimate means and, as a result, the proceeds lose their existing criminal identity and appear to have originated from a legitimate source.

This process is usually completed several times. It is common for this process to occur in respect of the proceeds of drugs/human trafficking, prostitution, corruption, bootlegging, racketeering and illegal arms smuggling.

The process allows the money to be controlled, without the fear that the transaction will lead back to the originator(s) of the proceeds. Criminal organizations utilize this process to enable them to exploit further criminal opportunities in a systematic and large scale manner.

GHANA ANTI-MONEY LAUNDERING & COUNTER-TERRORISM FINANCING AGENCY

Anti-Money Laundering (AML)/ Countering Terrorist Financing (CFT) and Proliferation of Weapons of Mass Destruction (CPF) What are AML, CFT and CPF? Ghana AML, CFT and CPF are the measures put in place to combat money laundering, terrorist financing and proliferation of weapons of mass destruction.

What is SEC’s role in AML, CFT and CPF compliance of its licensees? SEC is one of the Supervisory Bodies in the Financial Sector which is empowered by the AML Act, Act 874 as amended to assist Capital Market Operators (CMOs) to comply with all the AML/CFT legislations.

What is AML/CFT Compliance Programme? It is a minimum document that indicates how the CMO is complying with all the AML/CFT legislations and SEC/FIC Guidelines. Its contents include Customer Acceptance Policy, Customer Identification Programme, red flags of money laundering, terrorist financing, detection and prevention of money laundering, filing of currency transaction report, filing of suspicious transaction report, etc.

Who is an Anti-Money Laundering Reporting Officer (AMLRO)?

An AMLRO is an appointed officer of a CMO supposedly at Senior Management position and is in charge of carrying out the day to day activities of AML/CFT compliance. Among his/her duties are as follows:

• Develop an AML/CFT Compliance Programme and ensures its effective implementation;

• Receive, vet and file Currency Transaction Report(CTR) and Suspicious Transaction Report(STR) with the Financial Intelligence Centre(FIC);

• Coordinate the training of CMO’s staff in AML/CFT awareness;

• Act as both a liaison officer with SEC and FIC. Current AML/CFT issues

The AMLROs have formed an Association called “Association of Capital Market Anti-Money Laundering Reporting Officers (ACAMRO). It has in place a Constitution and five Executive Officers to steer the affairs of the Association till November 2017 before elections will be held.

THE HISTORY OF MONEY LAUNDERING

What Is Money Laundering The phrase “money laundering” was first coined at the beginning of the 20th Century. The criminalization of the actual or attempted laundering of proceeds of crime is also quite recent. However, the practice of disguising income derived from illicit activities can be traced back to the 13th Century B.C, when the oceans and seas were originally used as international trade routes. Rife with pirates, the shipments were often purged and plundered for valuable commodities and assets. Pirates were arguably pioneers in the practice of laundering such articles as they and even the empires they served sought to profit from their treacheries in a way that did not attract any ramification. As the profile of money laundering has heightened, it has become an increasingly expensive, time- consuming process to undertake and ultimately dangerous. By placing proceeds into a bank account or other negotiable, redeemable or saleable instrument or object, the originator is attracting tax liability and other obligations, which if not fulfilled, can ultimately lead to the illicit origins of the proceeds being discovered.

Alphonse “Al” Capone or Scarface, probably the most famous mob gangsters, created a criminal organisation in America in the 1920s, during the US Prohibition Era, grossing an estimated $100,000,000 of illegally gained proceeds annually, which he laundered through a series of businesses. However, his subsequent incarceration in the 1930s was not as a result of money laundering or his criminal activities such as bootlegging, prostitution and gambling, but in fact was as a result of being found guilty of a $1,000,000 tax evasion. His imprisonment in Alcatraz ultimately brought an end to his Chicago based operations.

Al Capone’s incarceration, however ultimately backfired on the authorities as it forced criminals to become more “organised” in order to profit financially from their illicit activities. Later gangsters such as Meyer Lansky grasped the importance of creating businesses, not only as mechanisms to launder money, but also to provide “fronts” for their illegal activities. Casinos are notorious business “fronts” for illegal activities. Las Vegas was infamous in the 1940s for being a tool of money laundering, especially by the likes of Lansky and Benjamin “Bugsy” Seigel.

Lansky also understood and appreciated the usefulness of foreign countries that provide havens for criminal activities. Later in life, Lansky would hold untold millions in Swiss bank accounts and in banks and corporations in Hong Kong, Israel and throughout South America. He was an expert at exploiting flexible governments and their officials and was never convicted of any charges brought against him.

Today, Lansky can be credited for establishing the modern form of money laundering (described below) and tax evasion. Ironically, the extent and sophistication of his operations may never be fully understood as most of them still remain undetected. As mentioned above, money laundering is certainly not a new concept. Those who conduct criminal activities for financial gain have always attempted to profit from their efforts without drawing attention to their criminal activities. As demonstrated by Lansky’s pioneering operations, methods of concealment and money laundering have become increasingly sophisticated. There are a number of reasons for this:

  The globalization of the financial system: Advancements in communications and transportation have allowed the concealment of crime and its proceeds to become a much easier task in today’s world. Proceeds can be wired from one financial institute to another instantaneously;

  Crime has become more global. It is no longer sufficient for enforcement authorities to merely be aware of what is occurring within their own jurisdiction. They must anticipate and cooperate with other authorities and jurisdictions as criminal activities can become widespread in a matter of minutes;

  Also, criminals no longer have the desire to remain or limit their activities to one country. If fact, Lansky proved that it is safer for them to move their property and business between countries to avoid detection by local authorities. As a result, international criminal organizations have become skilled and experienced at moving property from one country to another, taking advantage of the notoriously lax legislation existent in some countries that provides safe havens for foreigners seeking to conceal their wealth. Many of these countries provide “dead ends” for investigators who attempt to follow the trail left by the proceeds.

Money laundering has ultimately become a successful tool for criminals because the financial system does not prevent the possibility of money laundering. In fact, if criminals are prepared to make concessions, the system can be most accommodating. The financial transaction system was set up to provide a safer exchange system for businesses all over the world. It generates detailed and often permanent records of all financial transactions. However, the standards of scrutiny, regulation and law are not consistently and universally applied. Flexibility is the key to success for money laundering. The lower standards and lax legislation afforded by many countries provide the necessary flexibility to allow criminals to exploit the system to launder their criminally obtained profits.