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THE DEFINITION OF «MONEY LAUNDERING» IN THE INTERNATIONAL LAW AND UKRAINIAN LEGISLATION: CONCEPTS AND APPROACHES TO UNDERSTANDING
Bysaga K.V.
PhD student, mechanisms of public administration Ivano-Frankivsk National Technical University of Oil and Gas
ABSTRACT
In the last years the vast majority of countries recognized that «laundering» of criminal incomes constitutes a serious threat not only to the normal functioning of the financial and credit system but also threatens democratic systems of governance and public administration. Legitimisation (laundering) of funds obtained by criminal means is a final stage of a conversion of a property gained illegally into legal assets, resulting in a socially dangerous concentration of the economic power, and then, through its use, also the political power in the hands of separate criminals and their groups and clans alike. In this context, the majority of countries today is working out methods and ways for combating money laundering and criminalise such actions. On 17 December 1997, Ukraine has ratified the Convention «On Laundering, Search, Seizure and Confiscation of the Proceeds from Crime» (1990). In conformity with the provisions of the Article 9 of the Constitution of Ukraine, duly ratified international agreements form a part of the national legislation. In this connection, there is a need to implement the norms of the said convention into the national legislation of Ukraine. However, the problem of criminalisation of the «laundering» of funds is not limited to this act only; after all, a well-grounded analysis of not only foreseeable essential elements of the future offence, the social conditionality of actions but also a definition of the respective term «laundering of funds» is required.
Key words: money laundering, laundering of criminal incomes, legislation, legalisation, code, definition, criminalisation, prevention, assets.
Statement of the problem. The significance of the international cooperation in combating the criminal incomes lies not only in creation of effective mechanisms to cope with the transnational forms of the laundering of proceeds generated from criminal activity, but also in a formation of a single global «anti-money laundering language», of a conceptual framework, without which an effective policy of combating the criminal incomes is impossible. Of particular relevance in this regard is the wording of the «money laundering» concept the definition of which in the national legislations is unjustifiable diverse.
The approximation of Ukrainian legislation to international standards, the implementation of the provisions of international documents in a critically important sphere of the fight against criminal incomes, is an expression of a strategic direction of the policy of Ukrainian state aimed at Ukraine's integration into the community of civilized countries. It seems that implementation of the aforementioned relevant tasks requires special studies of this matter.
The aim. The aim of this article is to conduct a comprehensive analysis of the provisions of international law and foreign legislation with respect to the concept of «money laundering» as a social-juridical phenomenon, definition of the specificity and
functions of this concept, determination of the characteristics of laundering of criminal incomes as an international phenomenon.
The aim above has led to setting and solving the following tasks:
• identification of the specificity of laundering of criminal incomes as an international phenomenon;
• formulation of general characteristics of Ukrainian legislation in terms of a definition of a concept of «money laundering» and its relation to the provisions of international documents:
• identification of major imbalances between Ukrainian and international legislation in this sphere and formulation of the respective proposals as to improvement of Ukrainian «anti-money laundering» legislation.
The subject matter and the scope of the study. The subject matter of the study are problems of the wording of the concept of «money laundering» in the national legislations and practice of the use in them of the legal framework of the international legislation as to combating legalisation of criminal proceeds.
The scope of the study are provisions of international legal documents on countering money laundering of Ukrainian
legislation, the scientific literature in the field if the international law, criminal law, materials of the legislative work as to elaboration of the international anti-legalisation conventions.
Literature review. In the domestic literature Bezcenyi A.P., Yakimov O.Y., Kuryshko O.O., consider money laundering offence as a whole and only superficially touched the issue of the international definition of «money laundering». Among foreign authors, most attention to this issue paid by Michael Levi. In his works he considers the definition of «money laundering», history of public and private sector to combat money laundering and their implementation in the USA and around the world. So, it is possible to say that the problem of research of the development of the concept of «money laundering» is not fully explored and requires clarification.
Normative basis of the study. As a normative basis of the study, the international legislation on combating the criminal proceeds legalisation was used as well as the international global and regional conventions and protocols to them, declarations and other documents of the international organisations; the Constitution of Ukraine, acting Ukrainian legislation in the sphere of fighting against laundering (legalisation) of criminal incomes, statutory acts of other branch law. Also certain provisions of the contemporary foreign criminal law were used.
The base material. The laundering of the criminal proceeds as a social phenomenon existed at all times. And although the term «money laundering» is seen as a relatively new one, the money laundering activity itself has many centuries. In this connection, today it is impossible to determine the source of the origin of the term «money laundering». There are many theories and versions with respect to the time of emergence of the term «laundering of criminal incomes». The most prevalent version is that this term has been coined by the famous criminal Al Capone who has mixed the funds obtained from illegal production and sale of alcohol with the cash flow of the American laundries. According to another version, the inventor of «money laundering» is said to be Salvatore Luciano nicknamed «Lucky» who in 1923 has proposed to the owners of illegal funds in the USA a new service - transfer of «dirty» money to Europe and its investment into shares of manufacturing enterprises of Switzerland, Germany and Italy. [1]
One of the «founding fathers» of the legaliiation of criminal funds is also deemed Meyer Lansky (born Meier Suchowlanski) known as the «Mob's Accountant», one of the major organized crime figures and creators of the «National Crime Syndicate» in the USA. At the expense of the Cuban gambling houses, he transferred the funds generated by illegal operations from Switzerland to Cuba and then sent them to Florida to make it appear that «foreign investments are legitimately returning to America».
In the official vocabulary, the phrase «money laundering» first appeared in the newspapers in the time of the Watergate scandal of 1973, and in the legal context this term was used in the USA as early as in the 1970. One of the first definitions of «laundering» was worded by the US President's Commission on Organized Crime in 1984: «Money laundering is an action by which one conceals the existence, illegal source, or illegal application of income, and then disguises that income to make it appear legitimate».[2]
Today, the term of «laundering of «dirty» money» in English is indicated by the word combination «money laundering». In the «Collins Dictionary of Law» stated: «Money laundering - the moving of the proceeds of crime through the financial system so as to conceal its nature. As a result of a European directive, the UK has implemented rules against this practice mainly through the Criminal Justice Act 1993. Aside from controlling the actual criminal, persons can be guilty of offence if they do not report suspicions or information as soon as reasonably practicable where the laundering concerns terrorism or drug -money. Assisting other person to retain the benefits of all type of crimes is also made an offence». [3]
In the fourth edition of «Oxford Dictionary of Law», it is mentioned: «Money laundering» - legitimizing money from organized or other crime by paying it through normal business channels. EU measures exist to control, on an EU - wide basis, the laundering of money, especially that resulting from organized crime». [4]
The «Black's Law Dictionary» gives next definition of «Laundering»: «Term used to describe investment or other transfer of money flowing from racketeering, drug transactions, and other illegal sources into legitimate channels so its original source cannot be traced. Money laundering is a federal crime». [5]
The procedure of criminal money laundering is very important to criminal participators. The British criminologist D. MacLean rightly points out: «From the point of view of an offender, no growth of profits from criminal activity will make sense unless there is an opportunity to use them. However, this is not as simple as it may seem. A certain portion of income obtained from criminal activity is usually sent for development of illegal activity; however, the offender intends to use the rest for other purposes. If he wants to do it without incurring unnecessary risk of disclosing the source of funds, he must first «launder» it i.e. fabricate for it a false but absolutely legal and respectable genealogy».
The legal definition this term has received, as already noted above, in the 1980s. The first document concerning this problem was a recommendation R(80) 10 of the Committee of Ministers of the Council of Europe on measures against the transfer and the safekeeping of funds of criminal origin dated 27 June 1980.[6] This document has first addressed the issue of money laundering at the international level. This was caused by the fact that: «... transfer of funds of criminal origin from one country to another and the process by which they are laundered through incorporation into the economic system leads to serious problems, assists in committing criminal actions and thus results in increase of this phenomenon on the national and international level».
As a response to this phenomenon, the Committee of Ministers of the Council of Europe has recommended to the governments of the member states to implement a number of measures within the banking system. In particular, to introduce a mandatory identity checks on customer, to limit rental of safe-deposits only to persons with whom the bank already had dealings or who have references, to arrange reserve stocks of banknotes that have been used in connection with criminal offences, to organize suitable training for cashiers in checking identity papers and detecting criminal behaviour, to establish
cooperation between the banks and the appropriate authorities, also at international level in exchanging information about the circulation of banknotes which have been used in connection with criminal offences and to set up an information system containing the list of banknotes used in connection with criminal offences.
In spite of this somewhat simplified approach, as of today (emphasis only on the cash flow) to the fight against money laundering, the Recommendation R (80) 10 contains methods to prevent money laundering that are widely used also today.
The fight against money laundering continued in 1986, when for the first time the money laundering was criminalised at the national level - the Money Laundering Control Act has been adopted in the USA.[6] Later amendments and extension of provisions of the Money Laundering Control Act took place in 1990, 1992, 1994 and 1996. Since then combating money laundering became one of the most dynamic spheres in the global fight against crime.
The definition of the concept of «laundering of proceeds generated from criminal activity» or «money laundering» may also be found in a number of the international legal acts such as UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988), Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (1990), Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering and many other international acts.
In the USA, the concept of «dirty» money laundering» did not exist until the 1970s. At the end of the 1960s, the Congress of the United States recognised the cash funds as an important source of the organized crime in the country. Therefore, in 1970 the «Currency and Foreign Transactions Reporting Act» was adopted which became a beginning of a confrontation between the state system and those who legalize the crime proceeds.
The Bank Secrecy Act (BSA) of 1970 did not qualify money laundering as a crime activity but it required the financial institutions to create and keep «paper trails» of various agreements and transactions. It obligated the banks:
• To inform about cash transactions exceeding $10,000;
• To thoroughly identify the person conducting the transaction;
• To maintain written data by means of keeping the respective records of the transactions.
In 1984, the US Congress declared that violations of the Bank Secrecy Act shall be deemed as a deed subject to the Racketeer Influenced and Corrupt Organizations Act (RICO Act). [7]
The most complete definition of «money laundering» is contained in the United States Criminal Code with the addition of 27 October 1986 which has an amendment «On countering money laundering». According to it, the crime of «money laundering» commits «whoever, knowing that the property involved into a financial transaction represents the proceeds of the unlawful activity aimed at:
• Conduct or an attempt to conduct a financial transaction which involves such proceeds with the intent to promote such kinds of unlawful activity involving evidence of criminal acts, organized crime and drug trafficking;
• Conduct of a financial transaction with the intent to violate the federal instructions of the Tax Code;
• Deliberate conduct of a financial transaction with the intent to conceal, in whole or in part, the nature of the matter, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity;
• Conduct of a financial activity with avoidance of the requirement on reporting cash flows». [8]
In the normative documents of the United States customs service, «money laundering» is defined as a process under which the criminal proceeds are conveyed, concealed, transported, converted or mixed with the lawful funds with the purpose of concealing the real character of the source, location, movement or ownership of such proceeds.
In the Great Britain, the Inter-Ministerial Group on Combating Money Laundering, in its Guiding Programme of 1993 defines this term as a process by which the offenders try to conceal the real origin and ownership of the proceeds from criminal activity. The Swiss criminal law experts understand under the concept of «funds laundering» transfer of cash into the non-cash resources.
The Federal Republic of Germany has ratified the United Nations Convention against illicit traffic in narcotic drugs and psychotropic substances on December 22 1993, and on July 15 1992, the Law on the fight against illegal drug trade and other manifestations of organized crime was adopted. In this connection, a new offence - money laundering - appeared in the German criminal law. It is set out in Section 261 of the Criminal Code.
The target of crime is property. The German experts interpret this concept very broadly. They consider that this includes not only cash and funds on the accounts but also foreign payment instruments, all movable and immovable assets - securities, precious metals and stones, land plots, shares in the companies and partnerships, debt obligations etc. In the Criminal Code all criminal offences are divided into crimes and offences. The property being «laundered» may be obtained as a consequence of a committed crime (murder, human trafficking, kidnapping of individuals for ransom, robbery, looting, money counterfeiting, criminal drug sale etc.). As to the offences, only those are meant that are defined in the Law against illicit traffic in narcotic drugs and other manifestations of organized crime.
The specific characteristics of the regulation of the responsibility for «money laundering» in the German legislation is the fact that the agent of this activity is not the person who has directly, by means of a criminal malpractice, acquired a certain asset but a person who carried out «money laundering». The person who has committed the previous criminal offence (acted independently or as an accomplice) according to Section 261 of the Criminal Code cannot be a criminal participant (perpetrator or an accomplice) of a crime of «money laundering».
The Criminal Code of Belgium and the Special law on money laundering of 11.01.1993 qualify as a base of «money laundering» virtually all crimes, including terrorism, organized crime, traffic in drugs, arms, use of illegal labour, trafficking in persons, prostitution, unlawful use of hormones in animals, trafficking in human organs, fraud, organized fraud as to taxes, corruption, atypical investments, hostage-taking, theft or robbery accompanied by violence and threats, pseudo-bankruptcy.
In Great Britain, money laundering is qualified as a crime related to traffic in drugs, terrorism, theft and deception, robbery, fraud, extortion, illegal deposit use, blackmail.
In Spain, the Criminal Code (Art. 301) places money laundering to the same group of offences as bribes and similar offences; all crimes with the term of imprisonment exceeding three years are assigned to this group.
At the same time, the EU does not have an unambiguous interpretation of the concept of «criminalisation». In the criminal legislation of EU member states there are different methods of criminalisation of criminal assets laundering. An analysis shows the tendency of the EU to resort to the «Vienna approach», i.e. criminalisation of legalisation predominantly of proceeds from crimes related to illicit traffic in narcotic drugs. However, at the level of the legislation of the majority of EU member states there is a visible trend towards the criminalisation of laundering of proceeds from various crimes, which indicates the use of the «Strasbourg approach».
The lists of such crimes are not final, they are complemented by the countries depending on the urgent needs. The law of Greece, for example, contained at first 16 clauses, and later it has been complemented by another law. The U.S. list has increased over several decades to 164 clauses, and now it includes not only grave crimes but also other deeds, less dangerous for the
Table 1
Legal approaches for understanding the concept of «legalisation (laundering) of proceeds acquired by criminal means» in the international legislative practice.
society and natural persons. The solution as to inclusion into this list of such crimes as tax evasion, trade secret infringement, corruption varies from country to country.
The above mentioned definitions of «money laundering» in the legislation of different countries are commensurate in their content with the classification of the characteristic attributes of this concept made by Kuryshko О.О., who identified three existing, as of today, ways to understand this concept as:
• Process of a formal legalisation of a property obtained as a result of criminal activity, into a legal form of possession if this property;
• The combined effect of negative consequences for the society, since this process is a result of already taken dangerous community actions as well as the economic basis for the subsequent criminal activity, including in the economic sphere;
• Legalisation of criminal proceeds as an intermediate stage of the general process of legalisation of criminal proceeds with the purpose of their subsequent saving or consumption.[9]
To graphically demonstrate the full existing diversity of the legal definition of the «proceeds legalisation» concept in the international legislative practice, we have prepared a summary table showing the systematized legal approaches for understanding this concept.
UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) Article 3(b): The conversion or transfer of property, knowing that such property is derived from any offence or offences established in accordance with subparagraph (a) of this paragraph, or from an act of participation in such offence or offences, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions;[10]
UN Congress in Havana (1990) the conversion or transfer of property, knowing that such property is derived from a criminal offense, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offense or offenses to evade the legal consequences of his actions; 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 a criminal offense; the acquisition, possession or use of property, knowing at the time of receipt that such property was derived from a criminal offense or from an act of participation in such offense;
Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (1990) Convention does not give direct definition, however describe money laundering as a process of manipulation of illegally obtained assets (primarily cash) in which these funds become fully legitimate;[11]
Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering Article 1: 'money laundering' means the following conduct when committed intentionally: - the conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such activity to evade the legal consequences of his action, - 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 criminal activity or from an act of participation in such activity, - the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity, - participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions mentioned in the foregoing paragraphs;[12]
United Nations Convention against Transnational Organized Crime and the Protocols Thereto (2000) Article 6: a) (i) The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action; ii) The concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime; (b) Subject to the basic concepts of its legal system: i) The acquisition, possession or use of property, knowing, at the time of receipt, that such property is the proceeds of crime; (ii) Participation in, association with or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the offences established in accordance with this article.[13]
Directive 2005/60/EC of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing Article 1 s.2: (a) the conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such activity to evade the legal consequences of his action; (b) 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 criminal activity or from an act of participation in such activity; (c) the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity; (d) participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions mentioned in the foregoing points [14].
International standards on combating money laundering and the financing of terrorism & proliferation The FATF Recommendations (2012) FATF does not give direct definition, however describe money laundering as the process of concealing the true sources of income; [15]
Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing The same definition as in Directive 2005/60/EC of 26 October 2005
As can be seen sustainable definition of money laundering started to be applied from the Council Directive 91/308/EEC of 10 June 1991. All other Directives and Conventions repeat this definition. For now it is universal determination that covers all
possible processes related to money laundering. That is why governments trying to use this same definition in their national legislation.
The money laundering is such an elusive concept that 18
definitions have been detected in national or supranational of the money or making it appear legal). Let see it on examples
legislations depending on how the law considers the money of ten European countries in Table 2: laundered (stock or flow), the feeder activities (illegal or criminal), and the goal of money laundering (hiding the source
the United Kingdom The Proceeds of Crime Act 2002 Section 340 (11) Money laundering is an act which— (a) constitutes an offence under section 327 (concealing), 328 (arrangements) or 329 (acquisition use and possession), (b) constitutes an attempt, conspiracy or incitement to commit an offence specified in paragraph (a), (c) constitutes aiding, abetting, counselling or procuring the commission of an offence specified in paragraph (a), or (d)would constitute an offence specified in paragraph (a), (b) or (c) if done in the United Kingdom;[16]
Germany Act on the Detection of Proceeds from Serious Crimes (Money Laundering Act) implemented the definition of Third EU Money Laundering Directive;[17]
Austria the Banking Act, the Trade Act implemented the definition of Third EU Money Laundering Directive;[18]
Italy Decree 231/2007, Decree 151/2009 implemented the definition of Third EU Money Laundering Directive;[18]
Poland The Act on counteracting the introduction into financial turnover of assets originating from illegal or undisclosed sources and counteracting the terrorism financing of 16 November 2000 article 2: 9) money laundering, it shall mean any deliberate action such as: a) conversion or transfer of asset values derived from criminal activity or from participation in such activity in order to conceal or disguise the illicit origin of asset values, or granting assistance to a person who participates in such activities in order to avoid legal consequences of actions undertaken by such a person, b)concealment or disguise of the true nature of asset values or property rights associated with them, of their source, location, disposition and an event of their dislocation, being aware that these values are derived from criminal activity or participation in such activity, c) acquisition, taking possession or use of asset values derived from criminal activity or participation in such an activity, d) complicity, attempt to commit, aiding or abetting - in the cases of behaviour referred to in a) -c); even if the activities leading to attain those asset values were conducted in the territory of another country than the Republic of Poland; [18]
France French Penal Code article 324 implemented the definition of Third EU Money Laundering Directive; [18]
Spain Act 10/2010 Dated 28th April For Prevention of Money Laundering and Financing of Terrorism, the law 10/2010, on the prevention of money laundering and terrorism financing, contains a wide definition of money laundering that includes any action related to funds, properties, assets, goods, etc. coming from any sort of criminal activity covered by the Penal Code.[18]
Czech Republic The Act N°253/2008 Coll. on selected measures against legitimisation of proceeds of crime and financing of terrorism implemented the definition of Third EU Money Laundering Directive;[18]
Lithuania Law on the prevention of money laundering an terrorist financing 19 June 1997 No VIII-275 article 2 s.17 implemented the definition of Third EU Money Laundering Directive;[18]
Slovak Republic Act o. 297/2008 on the «Prevention of Legalisation of Proceeds of Criminal activity and Terrorist Financing» implemented the definition of Third EU Money Laundering Directive;[18]
As it can be seen from the table above, Spanish legislation uses words «funds, properties, assets, goods» when describes objects of money laundering. Such using of words makes it possible more broadly outlines the relationship which may fall under the suspicion of money laundering. Polish law uses the word «assets» when gives the definition of money laundering in its national legislation. By the word «assets» means economic value that an individual, corporation or country owns or controls. So Polish law uses a slightly narrower concept when gives the definition of money laundering. British legislation uses the word «property» as it is in the 3rd EU Money Laundering Directive, however, there are no strict definition of money laundering, because the case law, which exist in the UK, gives an opportunity to the court to define which action would be constitute money laundering. Other seven countries prefer to use the word «property» and direct definition of money laundering as it is in s.2 art.1 of 3rd EU Money Laundering Directive. In addition, let's briefly discuss the anti-money laundering regulation in countries that are mentioned in the table above.
Therefore, the international community urges to understand under criminal proceeds laundering the actions (inaction) with respect to the property acquired by criminal means regardless of whether a person wishes to impart to this property the legitimate character, or not; in other words, this term is primarily considered as a process of concealing of a real, usually criminal, origin of the assets by means of conducting financial transactions through financial institutions and non-financial enterprises.
Having analysed the legal aspects of the phenomenon under consideration, it is possible to describe the «laundering of funds» also from the economic point of view. In our opinion, this process may be defined as a combination of actions of business entities aimed at imparting a legitimate appearance to possession, use or disposal of monetary assets or other illegally obtained property. The primary characteristic feature of this process is the criminal origin of the capital designated for legalisation (drug trafficking, corruption, smuggling of weapons, prostitution, deals in the sphere of the state procurement etc.).
In comparison with the money laundering, the financing of terrorism typically has another economic nature. The monetary assets are used for the achievement of the relevant goals, and not for concealment of the illicit profit. The terrorist capitals not always have the illegal origin sources. As a rule, they are aimed at covering of household expenses such as purchase of food and residential lease. Thus, these funds are used not only for direct financing of terrorist attacks. The terrorists often use legal organizations for their activities. While the collection of financial resources takes place within the law, the use of charity funds for terrorist purposes is outside the conventional scenarios of the «funds laundering». However, the terrorists also try to conceal their transactions and access to their monetary assets. Furthermore, both the terrorists and participants in the process of «monetary assets laundering» use the same methods to carry out the movement of these funds such as: structuring of payments aimed at circumventing regulatory reporting as well as an informal funds transfer system «Hawala».
In the framework of a study of the national experience, we note that Ukrainian legislation uses several definitions of the concept «legalisation (laundering) of proceeds acquired by criminal means».
The Criminal Code of Ukraine, in its Article 209 established legalisation of proceeds acquired by criminal means as a crime. According to the provisions of this Article, the legalisation should be understood as actions aimed as disguising the source, origin and ownership of funds and property obtained as a result of a commission of crimes and their transfer from the criminal circulation into the legal economy sector. As this takes place, the legalisation (laundering) of monetary assets or other property acquired by criminal means, differs from the crime referred to in Art. 198 of the Criminal Code «Acquisition, receipt, storage or sale of the property acquired by criminal means», in particular, in the following features: 1) the subjects of legalisation are also persons who have directly obtained the respective property by criminal means; 2) acquisition or sale of the property received through knowingly criminal ways, are qualified under Art. 209, but not under Art. 198 of the Criminal Code, if the intent of the person taking part in this agreement is aimed at legalisation (laundering) of monetary assets or other
property acquired by criminal means, their introduction into the legal circulation.
The legalisation of monetary assets or property received as a result of a commission of a crime referred to in Art. 198 of the Criminal Code entails liability under Articles 209 and 198 of the Criminal Code.
Article 306 of the Criminal Code additionally provides for a special case of money laundering, namely, the use of funds received from the illegal trade in narcotics, psychotropic substances and their analogues or precursors.
Pursuant to Article 209 of the Criminal Code of Ukraine, the target of money laundering offence is «funds or other property received in the consequence of a commission of a socially dangerous and unlawful act that preceded the legalisation (laundering) of proceeds». [19]
On 12 June 2003, the Law of Ukraine «On Prevention and Counteraction to Legalisation (Laundering) of the Proceeds of Crime» was enacted. This Law in Articles 1 and 2 gives the definition of the concept of «legalisation» (laundering) of proceeds", namely:
- Art. 1 - legalisation (laundering) of proceeds - commission of actions defined by Art. 2 of this Law, with a purpose to impart a legitimate appearance to possession, use or disposal of the proceeds or other illegally obtained property or actions aimed at concealing the source of origin of such proceeds;
- Art. 2 - according to this Law, legalisation (laundering) of proceeds includes actions aimed at concealing or disguising illegal origin of funds or other property or its possession, rights to these funds or property, sources of their origin, location, movement as well as acquisition, possession or use of funds or other property, subject to the awareness by the person that these were incomes. This law also defines the financial monitoring system and the list of the subjects of the primary and state financial monitoring, their tasks, duties, rights and powers.
The concept of «legalisation (laundering) of funds acquired by criminal means» has been further developed in Ukrainian legislation with the new Law of Ukraine «On Prevention and Counteraction to Legalisation (Laundering) of the Proceeds of Crime, Terrorism Financing and Financing of Proliferation of Weapons of Mass Destruction» of 2014.
In Art. 4 of this Law, legalisation (laundering) of proceeds acquired by criminal means includes any actions related to conducting a financial transaction or a deal with the assets obtained in the consequence of a commission of a crime as well as actions aimed at concealing or disguising illegal origin of such assets or their possession, rights to these assets, sources of their origin, location, movement, change of their form (conversion) as well as acquisition, possession or use of the assets received as a result of a commission of a crime.
An interesting issue in terms of the use of the international experience is the comparative analysis of a new Law of Ukraine «On Prevention and Counteraction to Legalisation (Laundering) of the Proceeds...» with the European legislative norms in interpreting the term «property».
Law of Ukraine «On Prevention and Counteraction to Legalisation (Laundering) of the Proceeds of Crime, Terrorism Financing and Financing of Proliferation of Weapons of Mass Destruction»: «Proceeds acquired by criminal means - any benefit obtained in the consequence of a commission
of the socially dangerous act that precedes the legalisation (laundering) of proceeds which may consist of a movable or immovable property, property and non-property rights, irrespective of their value».
Directive 91/308: «Property» means assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments, evidencing title to or an interest in such assets.
Council of Europe Convention of 1990: «Property» means assets of any kind whether corporeal or incorporeal, movable or immovable, and legal documents or instruments evidencing title to or interest in such property.
Vienna Convention: «Property» means assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in, such assets.
The definition of property in these international documents includes nearly all possible kinds of the property that are available in the legal systems of the European Union. Ukrainian wording of this concept, by its subject content, almost entirely covers the subject area of the compared documents, thus enabling us to claim that Ukrainian norm of the law is close to the European and the international norms.
Conclusions and suggestions. Based on the study conducted, we can make the following main conclusions and suggestions:
1. Legalisation (laundering) of proceeds acquired by criminal means - a historical phenomenon, a permanent companion of the state at all stages of its historic development. The laundering of criminal proceeds is a social phenomenon peculiar to the society and is determined by its contradictions in the economic sphere. The legalisation of criminal proceeds is a negative phenomenon, it destroys both the society and the state, devalues social values.
2. Legalisation (laundering) of proceeds acquired by criminal means is an international phenomenon and its consequences impact the worldwide development. The legalisation of criminal proceeds, criminalisation of which is determined by the international conventions, is classified as a crime of an international character and is a part in the international crime structure. Particularly dangerous are the transnational forms of the legalisation (laundering) of criminal proceeds. This underlines the necessity and importance of the international cooperation in the area of combating legalisation of criminal proceeds.
3. The legislative definition of the concept of the legalisation (laundering) of proceeds acquired by criminal means is of primary importance and necessity. In the criminal law it will help to carry out the maximum criminalisation of the legalisation (laundering) actions, in the prophylactic legislation - to build an efficient system of anti-legalisation policy.
4. In the national legal systems of European Union countries there are no agreed-to normative definitions of the concepts of «legalisation» or «laundering», «unlawful proceeds», «criminal proceeds» and many other concepts. The solution ofthis problem is related to the development of methodology and technique of a comparative and legal analysis of the norms of the criminal legislation; establishment of comparative terminological dictionaries which should sufficiently exactly specify the degree of convergence (identification) of the concepts that are used
in the administration of the law; preparation of comments to them; official recognition by different countries of the concepts in agreements on legal assistance in criminal cases.
5. The theoretical and legal approaches to the definition of the term of legalisation (laundering) of proceeds acquired by criminal means in the acting Ukrainian legislation (imparting of legitimate appearance to possession, use or disposal of monetary assets or other property obtained as a result of commission of a crime) correspond to the terminology which is today in the global law-enforcement practice.
6. In conclusion let us note that defining the concept of the laundering of criminal proceeds has not yet been completed. The emergence of the new schemes of the laundering of criminal of proceeds is of permanent nature, for which reason one can envisage the emergence of new subjects, objects and stages of the laundering of criminal proceeds, which, in turn, will with necessity result in emergence of new definitions of the «laundering of criminal proceeds» both in the legal practice and in the scientific literature.
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