1.3. The subsequent stages: better hiding techniques

The second stage. Meyer Lansky was born in 1902. By 1930s he became the “Mob’s Accountant”.

Commission of predicate offences in the U.S. (drug trafficking, prostitution, blackmailing, etc.)

A franchise for several gambling tables in the casino of Hotel National in Havana (Cuba)

Havana, Cuba

A bank in Switzerland

Proceeds from crime originated in Florida

Havana, Cuba

Florida

Money is repatriated to the mafia’s accounts in the U.S. as legitimate earnings on investments abroad

Meyer Lansky was fined only $2500. He died in 1983 in Miami Beach. The FBI believed he left behind over $300 million. They never found the money.

The third stage. The Watergate Scandal, 1973.

Mexico

$200 thousand illegal campaign contributions to U.S. President Richard Nixon

A company in Florida

It was Britain's Guardian newspaper that coined the term, referring to the process as “laundering.”

1.4. The appearance of “money laundering” expression in the legal context

1. U.S. Bank Secrecy Act (BSA, 1970).

Established requirements for recordkeeping and reporting by private individuals, banks and other financial institutions.

Designed to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the U.S. or deposited in financial institutions.

Required banks to (1) report cash transactions over $10,000 using the currency transaction report (CTR); (2) properly identify persons conducting transactions; and (3) maintain a paper trail by keeping appropriate records of financial transactions.

2. The expression “money laundering” (ML) first appeared in a judicial or legal context in 1982 in the U.S.

3. U.S. Money Laundering Control Act (1986):

• established ML as a federal crime,

• prohibited structuring transactions to evade CTR filings,

• introduced civil and criminal forfeiture for BSA violations,

• directed banks to establish and maintain procedures to ensure and monitor compliance with the reporting and recordkeeping requirements of the BSA.

4. United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention, 1988).

The term “anti-money laundering” (AML) was not used in the Convention and it is limited in scope to single predicate offence “drug trafficking”. However the Parties to the Vienna Convention introduce the AML approach by declaring the awareness that illicit traffic generates large financial profits and wealth, enabling transnational criminal organizations to penetrate, contaminate and corrupt the structures of government, legitimate commercial and financial business, and society at all its levels. Therefore the governments are determined to:

• deprive persons engaged in illicit traffic of the proceeds of their criminal activities and thereby eliminate their main incentive for so doing,

• eliminate the root causes of the problem of abuse of narcotic drugs and psychotropic substances, including the illicit demand for such drugs and substances and the enormous profits derived from illicit traffic.

Establishment of the Financial Action Task Force on Money Laundering (FATF, 1989). Its goal was to set out AML measures.

Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime (Strasbourg Convention, 1990).

The FATF 40 Recommendations (1990, revised later) – the international standard for anti-money laundering, it sets out minimal requirements for a national AML/CFT regime.