As their name suggests, Professional Money Launderers (PMLs) offer specialist professional services to increase the effectiveness, scale, and obscurity of the movements of proceeds of crime. The expertise that PMLs can bring to this activity results in their popularity with criminals and criminal organisations. It should be stressed however that PMLs are not unwittingly caught in criminal activities: they are knowing participants whose own actions are criminal.
The FATF’s report on professional money laundering activities
The Financial Action Task Force (FATF) – an independent, transnational organisation that promotes global standards related to money laundering and serious financial crime – has recently released a report on international PML activities. [1]
From the ranks of what professions are PMLs drawn?
PMLs belong to a diverse range of jobs and professional backgrounds. These can include accountants, lawyers, bankers, brokers, tax advisors, precious metals and stones dealers, and owners or insiders of electronic or cryptocurrency exchanges.
Many PMLs also concurrently conduct legitimate businesses alongside their dealings with the proceeds of crime.
How and where do professional money launderers operate?
PMLs operate all over the world. According to the FATF, it is common for these activities to be conducted by PML organisations – structured and autonomous groups where each professional is responsible for distinct portions of the money laundering activities – and PML networks – associates or contacts that coordinate with each other to facilitate money laundering. Such groups frequently conduct their activities and transactions across multiple borders and countries.
When engaged in international money laundering activities, PMLs may utilise a variety of techniques. These include foreign bank accounts and credit cards, creating or purchasing foreign shell (non-trading) companies, shadow accountancy, and using a variety of infrastructure around the world that is controlled by PMLs.
Other activities of PMLs can include physically carrying cash to a foreign country, investing in foreign real estate / luxury goods, mixing illicit monies with legitimate funds when conducting international transfers / transactions, moving money through bank accounts in relatively lax regulatory jurisdictions, conducting a scheme of transfers through cryptocurrency accounts, or establishing proxy networks to move the proceeds of crime around the world.
Why are PMLs difficult to detect?
The complexity, global scale, and expertise in the provision of services make combatting the activities of PMLs a challenging task for law enforcement.
Something that contributes significantly to this is ‘layering’. Layering is the process through which proceeds of crime received by PMLs are funnelled through an intricate and complex web of transactions, often via multiple countries, to disguise the origin of the funds, prior to their being returned to the criminal organisation from which they originated. This can involve cross-border cash movements and underground banking, the intermingling of funds through international bank transfers, and multiple virtual currency transfers (which are frequently anonymous).
Proxy networks are one layering technique that serves as a prime example of the difficulty posed by PMLs to law enforcement in identifying and investigating this type of criminal conduct. A PML proxy network uses a series of international money transfers – for example fake trade contracts and loan agreements – through shell companies ‘located’ in a variety of jurisdictions to launder the proceeds of crime into seemingly legitimate funds.
This activity is designed to eliminate the traceability of the original funds: the networks of PMLs involved are often diverse (including geographically) and the trail of transactions is intricate. These factors contribute to the challenge that authorities face when seeking to identify and combat such actions.
As is clear, the complexity and geographical spread of actions involved make it difficult for authorities to pin down this criminal activity and, even then, gather complete evidence of the source and movement of funds. Consequently, law enforcement is increasingly reliant on international assistance and partnerships to effectively detect and repress PML activities.
References
[1]Financial Action Task Force, Professional Money Laundering (July 2018) <http://www.fatf-gafi.org/media/fatf/documents/Professional-Money-Laundering.pdf>.
