Anti-Money Laundering Knowledge Manual

Author: Sun Changhua, Xu Jun, Song Zuoyong
Publisher:
Publish Date: 2007-01-01
Features:
1. What is money laundering? "Money laundering," literally translated, means cleaning dirty money. In the early 20th century, the owner of a hotel called St. Francis in San Francisco noticed that the coins in daily circulation were covered in grease. He feared they would dirty his customers' fine white gloves, so he used caustic soda to clean these coins. After cleaning, the coins were as clean as new ones, hence the name "money laundering." By the 1920s, large organized crime groups led by figures like Al Capone, Johnny Dorelli, and Legs Diamond emerged in Chicago, USA. They used modern mass production techniques from the country's economic development to expand their criminal enterprises and make huge illegal profits. One financial manager of the group purchased an automatic washing machine to wash clothes for customers and accept cash. He then declared this cash income along with his criminal proceeds to tax authorities, turning his illegal gains into legitimate income. From then on, the term "money laundering" in its modern sense came into use. The Financial Action Task Force (FATF) summarizes the meaning of "money laundering" as: concealing or disguising the true nature, source, location, and movement of property obtained through criminal conduct, or assisting any person involved in illegal activities to evade legal liability, all constitute money laundering. Generally speaking, "money laundering" refers to the unlawful act of transferring, converting, concealing, or disguising the nature and source of criminal proceeds through financial institutions or other means, making them appear as legitimate income. The constitutive elements are as follows:
(1) Money laundering is an unlawful act committed under the premise of having already committed a crime and obtained proceeds.
(2) The money launderer knows that the money is criminal proceeds and proceeds to launder it. "Knowing" includes both being aware and being aware that it may be criminal proceeds.
(3) The transfer or conversion of criminal proceeds may be carried out by the person who obtained the proceeds themselves, or by the criminal who obtained the proceeds someone or an entity to do so.
(4) The transfer or conversion of criminal proceeds is carried out through financial institutions or other methods.
(5) The intention is to conceal the criminal act and make the criminal proceeds appear legitimate.
2. Why do criminals launder money? The reason for money laundering is that the money in the hands of the money launderer is dirty money, i.e., proceeds from illegal activities. Without laundering, they cannot conceal the proceeds, the criminal act, or evade legal sanctions. Criminals launder money for several reasons:
(1) To evade legal sanctions and conceal or disguise criminal acts.
(2) To legitimize criminal proceeds.
(3) To allow the money launderer to use and spend the black money openly.
(4) The objective existence of crime, especially transnational crime, is the fundamental reason for money laundering.
(5) Strict financial, tax, customs, accounting, and other management systems in some countries make it difficult for criminals to conceal or disguise their proceeds.
(6) Some countries are eager to attract investment and lack sufficient awareness of the harmfulness of money laundering. They do not criminalize money laundering or establish strict financial, tax, and other management systems, allowing money laundering activities to infiltrate and spread to these countries.
(7) There is no unified global effort to combat money laundering.
3. Who engages in money laundering? The main participants in money laundering are drug traffickers.