Concerns over inactive money laundering law

BY SIMON NDONG'A

Corruption watchdog Transparency International -Kenya (TI) now wants the Proceeds of Crime and Anti-money Laundering Act fully operationalised.

Executive Director Samuel Kimeu said on Friday that the law which was assented to in December 2009 was yet to come into effect, which has hampered efforts to fight money laundering.

Mr Kimeu stated that the government needs to establish the institutions and processes necessary to fight money laundering and related crimes.

"It is worrying that the government is dragging its feet in putting into effect a law that will boost the war against corruption, piracy, drug and human trafficking and other similar crimes," he said.

"The legislation provides for a financial reporting centre to assist Kenya in the identification of the proceeds of crime as well as asset recovery agency."

He further urged the Ministry of Finance to devise a coordinated action plan to facilitate the implementation of the law in a bid to protect the economy and recover stolen assets.

"We are aware that the Central Bank of Kenya (CBK) has tasked one of its departments to pursue some provisions of this legislation. However for Kenya to fully combat money laundering activities, the institutions and processes provided for under the Act must be established," he stated.

"The continued delay in the implementation of the law allows corrupt individuals, drug traffickers and other individuals to benefit from this illicit activity."

The Proceeds of Crime and Anti-Money Laundering Act 2009 seeks to create a comprehensive legislative framework to combat the offence of money laundering in Kenya and to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime among other things.

Before the enactment of the Act, money laundering legislation in Kenya was weak and fragmented.

The Act, which repeals the anti-money laundering provision in the Narcotics Act, applies to all persons whether individual or corporate, and to the proceeds from any criminal activity.

The Central Bank of Kenya Guideline however remains in force and banking and financial institutions will therefore be required to comply with both the Act and the CBK Guideline.

Money laundering under the Act is wide and includes entering into a transaction involving property which one knows or ought to reasonably have known is or forms part of the proceeds of crime regardless of whether such transaction is legally enforceable or not, and which has the effect of concealing or disguising the nature or ownership of the property.

It also involves assisting a person who has committed an offence to avoid prosecution or concealing any proceeds of crime.

The definition also covers acquisition, use or possession of property which at the time of acquisition, use or possession, one knows or ought to reasonably have known that it is or forms part of the proceeds of a crime committed by another person.

Other related offences include assisting someone to benefit from proceeds of crime, malicious reporting, making false or fraudulent statement or entry, and failing to report suspicion of proceeds of crime.

Offences under the Act attract penalties of up to a 14-year jail term and/or a maximum fine of Sh5 million in the case of an individual and Sh25 million for a body corporate or the value of the property involved in the offence, whichever is higher.

Other penalties include criminal forfeiture of the proceeds of crime, civil forfeiture of property including civil proceedings for recovery of property.

Source: Capital

Drug money laundering ring with ties to Colombia and Italy busted in Boston

By Globe Staff

A drug bust in East Boston four years ago started an undercover investigation that has led to the seizure of hundreds of millions of dollars in laundered drug profits, the seizure of large amounts of heroin and cocaine, and charges against alleged organized crime figures in Colombia and Italy, officials said this afternoon.

The multi-agency and multi-government investigation spanned four years, and was built on the undercover work of an unidentified Massachusetts State Police trooper who traveled the world posing as a part the drug rings who shuttled money and drugs between the US, South America and Europe.

“This investigation not only been a lengthy one, but it’s been extremely complex,’’ US Attorney Carmen M. Ortiz said today of the US Drug Enforcement Administration-led investigation that was dubbed “Operation Fire and Ice.’’

She said some 20 people were arrested today in Massachusetts and in Colombia who will now be tried in a Boston courthouse for allegedly laundering drug money through the region. Officials estimated they seized some $200 million in cash, and more than 1,100 kilograms of cocaine and 46 kilograms of cocaine around the world.

Signaling the significance of the investigation to law enforcement in other countries, Ortiz was joined at an afternoon press conference at the Moakley courthouse by Brigadier General Cesar Augusto Pinzon Arana, commander of an elite anti-drug unit in Colombia, and Detective Vittorio Rizzi, commander of a special investigation unit for the Italian National Police in Rome.

With the help of a Spanish interpreter, Arana said the investigation targeted the remnants of the notorious Medellin drug cartel which now operates under the name of “La Oficina de Envigado” in Colombia.

Those arrested in Colombia will face trial in the US, officials said.

Three people with ties to Massachusetts were also arrested today. They were identified as Julissa Perez, of Malden; Henderson Martinez, who is also known as “Juan,” of Boston; and Roberto Torres-Colon, also known as “Chappa,” believed to be of Lawrence.

Authorities seized several bank accounts allegedly controlled by the Massachusetts residents and seized more than $2 million in cash. They face drug trafficking and money laundering charges here.

Source: BOSTON

PUBLICATION: Misuse of the Non-Profit Sector for Money Laundering and Terrorism Financing

The misuse of NPO-generated funds may occur in a number of ways. First, funds may be collected in the name of a legitimate NPO but be disbursed for terrorists rather than altruistic causes. Second, an NPO may be used to launder money or provide legitimate means for the transmission of funds between multiple locations. Third, funds may be misused by the recipients themselves. In any of these scenarios, the NPO may or may not be complicit in or aware of the abuse being committed. There could also be a misuse of NPO vehicles and property to transport or house terrorist operatives, money, and weapons. From the publicly available evidence, there is little to suggest that there is substantial misuse of NPOs for ML/TF. Case studies have shown that opportunities exist and are exploited for ML/TF, but the number of published cases studied is still relatively small. This could suggest that the prevalence of ML/TF misuse is itself low. Conversely, it could indicate there are low detection rates for this kind of illegal activity. The majority of the cases detected involved either the establishment of a sham NPO, in every case a charity, or the exploitation of a legitimate entity to raise, transfer, distribute, or launder funds. The current Australian regulatory regime for the nonprofit sector does not have an overt emphasis on ML/TF issues, although the encapsulation of designated services used by the NPOs under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 does afford good protection.

Author: Samantha Bricknell

Publication Date: 09/2011

Click here to download the Publication

Accountant jailed for laundering drugs money

A Manchester accountant has been jailed for laundering more than £1.2m for an international drug dealer, partly through property deals and living a luxury lifestyle in Wilmslow in Cheshire.

Malcolm Carle, (pictured left) 57, helped his boss Walter Callinan (pictured right) process money from importing and selling cannabis and bought a £1.2m hotel with the cash, according to the Manchester Evening News.

Police reportedly found evidence of a cash receipt of £973,000 in cash and details on the purchase of the Hadley Green Bowling Inn near Worcester.

Carle used the money to follow Chelsea FC around the world, drive a Jaguar and even took out a secret loan against the hotel to finance his own property purchase.

He was jailed for six years at Winchester Crown Court after admitting three offences of money laundering on 15 November.

His accomplice, Walter Callinan, 59, who lived in a mansion in Malaga, was sentenced to 11 years for two drug-dealing offences, five counts of money laundering and two passport offences.

When police raided Carle's home they found more than £10,000 in cash and uncovered a complex network of trusts and overseas companies, so well concealed the Serious Organised Crime Agency had failed to find them, according to evidence.

The clerk of Winchester Court confirmed the proceeds of crime investigation is still ongoing.

Five co-defendants were also jailed for their part in the drug scam.

Source: Mortgage Solutions by Vicky Hartley

Canada's New Currency Prompts Legal Money Laundering

When Canadians take the plastic out of their wallets, they're not holding a credit or debit card — it's cash, and it will foil would-be counterfeiters because it's harder to copy. The $100 note introduced this week is made from a sheet of polymer and features two transparent windows that add extra security. At the very least, the money is a technological wonder that could turn into the new dinner party game: How many hidden icons, colors, and numbers can you find in the bill?

According to CNET, the polypropylene substrate lasts twice as long as traditional paper-cotton money, so the Canadians will save taxpayers a bundle on printing. And, the bills are wipe clean and can be laundered without falling apart.

The technology was originally developed by the Reserve Bank of Australia, which issued the currency in 1988. As of 2011, at least seven countries have converted fully to polymer bank notes: Australia, Bermuda, Brunei, New Zealand, Papua New Guinea, Romania and Vietnam. A dozen or so more are testing the notes, presumably to check how they perform in ATM machines, and other mechanized pre-existing equipment.

The United States, in contrast to this high tech advance, has been toying with the idea of issuing dollar coins in lieu of paper money. Imagine carrying the weight of a coin instead of thin plastic. The Currency, Optimization, Innovation and National Savings Act bill, pitched to our crackerjack lawmakers, claims a savings of $5.5 billion over 30 years. Of course, the coins will last longer, since no one will want to use them.

Source: The Fiscal Times, By JACQUELINE LEO

Publication: Money Laundering: Concept, Significance and its Impact

Money laundering is the process by which large amount of illegally obtained money, from drug trafficking, Terrorist activity or other serious crimes, is given the appearance of having originated from the legitimate source. Money laundering has an adverse impact on economy and political stability of country and hence such an activity must be curbed with an iron hand. Therefore, nations of the world must join hands and adopt measures to dismantle syndicates engaged in money laundering by resorting to aggressive enforcement of law. An attempt has been made in this article to explain the Concept, Significance and its impact.

European Journal of Business and Management

by Vandana Ajay Kumar, Department of Laws, Panjab University, Chandigarh

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Publication: The Puppet Masters- How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It

Billions in corrupt assets, complex money trails, strings of shell companies and other spurious legal structures. These form the complex web of subterfuge in corruption cases, behind which hides the beneficial owner- the Puppet Master and beneficiary of it all.

Linking the beneficial owner to the proceeds of corruption is notoriously hard. With sizable wealth and resources on their side, they exploit transnational constructions that are hard to penetrate and stay aggressively ahead of the game.

Nearly all cases of grand corruption have one thing in common. They rely on corporate vehicles- legal structures such as companies, foundations and trusts -- to conceal ownership and control of tainted assets.

The Misuse of Corporate Vehicles takes these corporate vehicles as its angle of investigation. It builds upon cases, interviews with investigators, corporate registries and financial institutions, as well as a 'mystery shopping' exercise that provide factual evidence of a criminal practice. This approach is used to understand the nature of the problem and design policy recommendations to facilitate the investigative process by unraveling the complex world of CVs.

This lucidly written report is solidly built on step-by step arguments and designed to deliver practical, applicable and well substantiated recommendations. It is intended for use by policy makers in developing national legislation and regulation as well as international standard setters. It also provides helpful information for practitioners engaged in investigating corrupt officials and academics involved in the study of financial crime.

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Source: World Bank