Dirty Business Exploring Corporate Misconduct

The general and more simplistic meaning of money laundering14 would be the conversion of 'dirty' money into 'clean' money. However, there are more explanatory and academic definitions, some of which include: 'Any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources'. (Interpol General Secretariat Assembly in 1995)

'The conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and 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 serious crime'.

(Article 1 of the 1990 European Communities (EC) Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime). The key principle behind the laundering of money is to conceal its criminal origins because it is often the expenditure or general disposal of ill-gotten gains that leads to the discovery of the original crime as a substitute to being caught in the act. Section 327 of the Proceeds of Crime Act 2002 creates a series of new money laundering offences, such as concealing, disguising, converting and transferring criminal property.

The concept of criminal property which lies at the centre of money laundering is effectively defined in section 340 (2) and (3). 15 Under section 330 of the Act, not only those who launder money commit an offence but also those who fail to disclose a case of money laundering. This is illustrated by the case of R v. Pitchley (1972)16 Though there are laws against money laundering, the rate of which the offence is committed is exceptionally high and still fairly undetectable; therefore they must not be strict enough.

However, from the 1st of March 2004, new rules came into force pulling a range of professions in the UK directly into the fight against money laundering. This means lawyers; accountants, casino bosses and estate agents could all now face prison if they fail to report suspected fraud. It comes under an extension to the Proceeds of Crime Act 2002, which previously only applied to banks, to further clamp down on money laundering. Under the act, anyone with suspicions is obliged to contact the National Criminal Intelligence Service (NCIS).

How money is laundered Money laundering has a diverse and often complex process, in its progression there are three stages, that of placement, layering and integration. The model below may be used in analysis of the methods. (Source from www. ex. ac. uk) The first stage of placement is the movement of cash from its original source. The aims of this stage are to remove the money from the location of acquisition so as to avoid detection from the authorities and the attention of other criminals.

This may be done by depositing money into the financial system, the retail economy or smuggling it out of the country to avoid suspicion. Payments are regularly mixed with 'legitimate' funds and invested in tangible assets and luxury items such as cars, jewellery, property etc. Once this is done, layering is the attempt to disassociate the funds from the criminal conduct17 of which it came from by deliberately creating a complex web of financial transactions aimed at concealing any audit trail as well as the source and ownership of funds.

The final stage is the process of integration. This is done by making it look as if the money was earned legally18 to deter probing officials. Having considered this offence, it is submitted that there are significant social costs and risks19 associated with money laundering. It drives up the cost of government due to the need for increased law enforcement and health care expenditures to combat the serious consequences that result. Among its other negative socio-economic effects, money laundering transfers economic power from the market, government, and citizens to criminals.

In extreme cases, it can lead to the virtual take-over of legitimate government, which permits the criminals to have a political impact upon the country (McDowell, 2001). Corruption Corruption is the abuse of public power for private benefit, and that private benefit is most often in the form of illicit money or in-kind payment from a client to the agent, i. e. a bribe. Corruption may be defined by common law or under statute. It is "The abuse of public power for private benefit" (Tanzi 1998).

At common law, "[a] man accepting an office of trust concerning the public is answerable criminally to the king misbehaving in his office… by whomever and in whatever way the officer is appointed" Bembridge (1783) 3 Doug 327 per Lord Mansfield. Corruption is committed by the person giving the offer and the person accepting it. The principal legislations dealing with corruption can be found in two Acts: Public Bodies Corrupt Practices Act 1889 (deals with corruption in public bodies20) and the Prevention of Corruption Act 1906 (Deals with corruption in the private sector).

Both Acts are supplemented by the Prevention of Corruption Act 191621 For the purposes f the Public Bodies Corrupt Practices Act 1889 the term 'corruptly' means "purposely doing an act which the law forbids as tending to corrupt, Weller (1979). 22A person who uses his position or 'power' to gain a benefit for himself or another person is also corrupt. See Parker (1986) 82 Cr App R 69. 23 In the case of Whitaker [1914], it was stated that "it is also corruption to bribe the holder of office and it is an offence for him to accept it" this was also the subject matter in the case of Smith [1960].

The corruption of agents is dealt with by the Prevention of Corruption Act 1906 chapter 34 under section1. The meaning of agents is very wide and applies both to the public and private or commercial field. See Morgan v. DPP [1970] 3 ALL ER 1053. Having looked at this offence, the key question is whether bribery and corruption are any different from each other; it is difficult to distinguish between the two. There is however a need to put in place constitutional and judicial safeguards that are replete with punitive provisions and are backed by enforcement.

More importantly, there should be some form of ethical revolution through which the virtues of hard work and honest reward and the dignity of labour would be fixed in continental awareness. Conclusion As the law presently stands, fraud covers a number of offences, some offences are probably not yet known about however, due to the growth of monetary crimes, it is suggested that replacing a number of offences of fraud and deception with a single, general offence of fraud, would simplify the law whilst retaining the same scope of severity.


1) Punch M (1996) Dirty Business Exploring Corporate Misconduct, Analysis & Cases, Sage Publications 2) Griew E, (1990) Theft Acts 1968 and 1978, 6th Edition, Sweet & Maxwell 3) Slapper G & Tombs S,(1999) Corporate Crime, Longman 4) Biggs S, Farrell S, Padfield N, (2002) The Proceeds of Crime Act 2002, Butterworths 5) Ashe M, Reid P, (2000) Money Laundering, Risks and liabilities, Sweet & Maxwell