THE NATURE OF MONEY LAUNDERING; MONEY LAUNDERING AS AN EMERGING SECURITY THREAT AND HOW MONEY LAUNDERING AFFECTS NATIONAL ECONOMIES.
By FREMPONG-ANSAH FIIFI Institution: The Kofi Annan International Peacekeeping Training Centre, Ghana Email: email@example.com Contact Number: 024-424-3064
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Introduction There has been immense growth of financial services worldwide in the past few decades. This globalisation has led to increased cross-border activities enhancing global financial intermediation. Unfortunately, this development has been accompanied by a spate of transnational financial crimes. Financial crimes involve prohibited acts yielding financial benefit or the unlawful conversion by the wrongdoer of the ownership of property belonging to another person to the wrongdoer’s own personal use and benefit (Osei, 2013). The most prominent form of financial crimes that has attracted the attention of policy and law makers alike in recent times is Money Laundering.
Money laundering affects whole economies adversely and works against the economic, political and social development of economies worldwide. It has thus become pressing among the needs for countries to have strong antimoney laundering mechanisms coupled with the enhancement of transparent financial integrity to check the proliferation of this illegal act.
The Intergovernmental Action Group against Money Laundering in West Africa (GIABA) has been created by the Economic Community of West African States (ECOWAS) Authority of Heads of State and Government as a major response and contribution of the ECOWAS to the fight against money laundering. Ghana’s enactment of the Anti-Money Laundering Act, 2008 (Act 749), together with the ECOWAS initiative illuminate further, the effort of countries in the sub-region in joining in the global effort to minimise the scourge of money laundering.
This paper seeks to examine the causes and nature of money laundering as an organised crime and how it detrimentally impact on the wellbeing of national economies. It shall further delve into the regulatory efficacy of the anti-money laundering initiative in solving and minimising the illegal activity.
Money Laundering has been defined in a number of ways. This paper will however subscribe to the definitions adopted by the Financial Action Task Force (FATF) and that of the Vienna Convention of 1988. The Financial Action Task Force was established against the backdrop of mounting concern over money laundering by the G-7 Summit in Paris in 1989, among other things to develop a co-ordinated international response. As an international standard setter for anti-money laundering (AML) efforts, the Financial Action Task Force (FATF) defines money laundering as the processing of criminal proceeds to disguise their illegal origin in order to legitimise the ill-gotten gains of crime (FATF, 2012). The emphasis of FATF’s definition is on the illegal sources from which these monies originate. The 1988 Vienna Convention also known as the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, on the other hand defined money laundering as the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from an offense or offenses or from an act of participation in such an offense or offenses (UN, 1988). Money laundering is the basis by
which, the perpetrators of criminal or illegal acts seek to exert control over the proceeds of their activities without drawing attention to the underlying criminal acts (Deitz A. and Buttle. J, 2008).
It is deductive from these definitions however, that, the act of money laundering results from a prima facie case of crime. The goal of large numbers of criminal acts is to generate profits for the individual or groups that carry out the act. Thus, money laundering is...
References: Deitz.A. & Buttle. J., (2008) Anti-Money Laundering Handbook. Sydney: Thomson Lawbook Co Pg.4.
FATF-GAFI, Financial Action Task Force on Money Laundering. “Basic Facts about Money Laundering”, see www.oecd.org/fatf
Fiorentini, G. and S. Peltman. (1997). The Economics of Organized Crime. Cambridge: Cambridge University Press.
International Monetary Fund and World Bank: Enhancing contributions to combating money laundering,” April 2001, and “Financial System Abuse, Financial Crime and Money Laundering,” February 2001, atwww.imf.org
Levi, Michael (2002b) “Money Laundering and its Regulation”. Oxford University Press.
Osei, JA, Aduama KN. (2013) Judicial Power in the Recovery and Management of Proceeds of Financial Crime, [Lecture at a symposium organised by the Department of Finance, University of Ghana]. 27 February.
Schwartz, David Brian, (2009) Deficiencies in regulations for anti-money laundering in a cyber-laundering age including COMET: Central Online AML Merchant Enforcement Tool Iowa State University.
The International Monetary Fund and the World Bank, (2005), “Anti-Money Laundering and Combating the Financing Terrorism.”
United Nations (1988) Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
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