Compare and Contrast the legal approach adopted to combat Money laundering in the United Kingdom with that of a non-EU state with a view to ascertaining the most effective elements of anti laundering approaches. Introduction Money laundering permeates almost all facets of management or governance and several establishments have taken cognisance of its effect on their business, reputation, most especially as every society or body is challenged with the issue of combating fraud, financial crime and corruption in their immediate business community and in the larger society.
As is evident with several hydra headed problems plaguing any financial, business or corporate environment, money laundering has come to be a reference point in accountability in financial transactions. The legal approach in combating money laundering will be examined using Nigeria as an example of a non-EU state and comparing it with the legal approach as practised in the UK. Nigeria is favourably chosen as the country has seen a fair share of its public officers being investigated, prosecuted and shamed in the full glare of the international community in relation to money laundering charges.
The office of the presidency in Nigeria views money laundering as a dastardly crime and is passionately committed to curbing the menace. In light of this, it has set up different law machineries to monitor and control this anomaly witnessed in financial transactions and cutting across government establishments' officials, financial institutions and insurance corporations. This work will therefore look at the various legislations passed to this effect; highlight its failures while focusing on the most effective way in the approach of curbing it.
However a brief study of the term " money laundering" needs to be noted at this point for a fuller understanding of the topic as money laundering and legislations; the subject matter in this case is not perceived as a crime or worth all the hullabaloo after all in some countries. An example is when such practice is viewed as capable to raise a country's standard of living1 or as found in Seychelles where investors were given immunity from prosecution from all criminal proceedings whatsoever except criminal proceedings in respect of offences involving acts of violence and drug trafficking2.
There seems to not to be a settled definition of money laundering. J. Drage (1992) opined that money laundering is "a process by which criminals attempt to conceal the true origin and ownership of their criminal activities… 3" He goes further to state inter alia that it provides "a legitimate cover for their source of income as they maintain control over these proceeds"4 Other definitions include the "the process of converting or cleansing property, knowing that such property is derived from serious crime for the purpose of disguising its origin5.
Salva S (2000)6 submits that the Oxford English dictionary best suggests a practical definition and it is thus, to transfer "funds of dubious or illegal origin, usually from a foreign country and then later to recover them from what seem to be clean-legitimate sources"7. From the above therefore, money laundering can be succinctly described as a process by which the proceeds of crime are transformed into apparently legitimate money or other assets8.
It involves a three-stage process for its disguise and practice. Firstly, the proceeds of crime are converted into another form, for example by the purchase of an asset or investment which then is involved with series of further transactions to hide the link with its original source before the money finally appears as apparently legitimate funds which is then used to purchase legitimate assets or investments. Money laundering is the same in any society but the process of the actual laundering differ.
Having identified the subject matter, this work shall then go on to examine firstly, money laundering in the UK and legal approaches to combating same while also examining money laundering in Nigeria; legal approaches to anti money laundering therein, outline the similarities and differences in the approaches to anti money laundering in the two countries and finally examining the most effective way of combating money laundering.
Money laundering in the UK and its Anti Money laundering legislations. Money laundering did not exist as an offence in the UK until the mid 1980s when specific legislation against the laundering of the proceeds of drug trafficking in the DTOA (Drug Trafficking and other Offences Act) 1986 came into effect and has been responsible for the transition of UK primary legislation to now cover laundering of proceeds from drug trafficking, terrorism and extending to general crime.
According to the governor of the Bank of Namibia, "anti money laundering laws protects the rights of the individuals by providing for the articulation of what crime is, the acts and the punishment thereof, legislators in consultation with their constituents through legislation on crime, lay the foundation for basic individual human rights and the attainment of inner individual self fulfilment, crime and criminal acts work towards eroding these very basic individual rights"9.
Anti money laundering legislations that are being promulgated by most jurisdictions have and are criminalising the act of money laundering. This connotes that these laws make the act of money laundering a criminal offence and that to launder money derived from criminal acts constitutes committing a crime punishable by law. One unique feature of the anti money laundering laws is that it places requirement for reporting institutions to report suspicious transactions and failure of which constitutes an offence by both the institution and or officers of that institution.
The confiscation provisions in the DTOA 1986 remains a reference point as it came to fill the lacuna in the law created by the decision of the House of Lords in R v Cuthbertson10. Lord Diplock therein noted that section 27 of the Misuse of Drugs Act 1971 could never have been intended by parliament to serve as a means of stripping drug traffickers of the total profits of their unlawful enterprises11. This was seen as a shortcoming as it suggested that profits from Drug offences could still be benefited from after all.
This shortcoming therefore formed the genesis for the enactment of the DTOA 1986. The Secretary of State for Home Office thus explained that the intention behind the proposed DTOA 1986 was to remove the profit motive by allowing the confiscation of all the traffickers proceeds of drug trafficking, ensuring also that the drug trafficking proceeds could not be recycled so as to fund further drug trafficking. 12
The United Nations Convention against Illicit Traffic in Narcotics Drugs and Psychotropic substances of 1988 followed suit after the DTOA of 1986 and required signatories to the convention to criminalise production and cultivation of drugs, to the organisation, management and financing of trafficking operations. Its Article 3 most especially urged signatories to criminalise conspiracy, aiding and abetting and facilitating the commission of drugs offences including money laundering.
Next in line was the European Council Directive on money laundering13 which imposed a duty on European member states to implement anti money laundering provisions in their respective jurisdictions. The council directive was quite of significant importance on enactment as it advocated for sanctity in transactions involving financial institutions. It expressed the fears that confidence in financial institutions and market would be greatly prejudiced if the ill wind of money laundering and organised crime was to blow its way.