What is Money Laundering?

A person commits an (money laundering) offence if—

(a) person engages in any of the following acts in relation to property that is the proceeds of criminal conduct:

(i) concealing or disguising the true nature, source, location, disposition, movement or ownership of the property, or any rights relating to the property;

(ii) converting, transferring, handling, acquiring, possessing or using the property;

(iii) removing the property from, or bringing the property into the State, and

(b) the person knows or believes (or is reckless as to whether or not) the property is the proceeds of criminal conduct.

It has become a society wide problem and while there is no concrete evidence as to how much it is costing the IMF as well as FATF estimate that 2-5% of Global GDP emanates from the black economy or involves laundered money.

Applying the 2-5% rule of thumb to Ireland, money laundering in:

  Credit Institutions: up to €8.4bn (5% of €167,235,000,000 of Irish Private Sector deposits: May 2012)

 Mutual Funds: up to €101bn (5% of €2.0 trillion of funds administered in Ireland – IFIA statistics July 2012)

 Insurance: up to €2.0bn (5% of €40.2bn under-written in 2009 – Financial Regulator statistics)

 Credit Unions: up to €695m (5% of €13.9bn – ILCU 2010 Financial Year review)

Stages in Money Laundering

Money Laundering has three distinct phases:

PLACEMENT:

Stage where criminally obtained money is first put into the financial system (e.g. credit entry on a bank account.)

LAYERING:

The movement of the money through a series of transactions with no real economic purpose, in order to make it more difficult to prove the criminal origin of the funds and disguise ownership.

INTEGRATION:

Taking the money out of the financial system for genuine economic use

What is Terrorist Financing?

There are two specific types of Terrorist Financing:

 • Type 1: Obtaining, collecting or disguising funds for terrorist movements

• Type 2: Obtaining or collecting funds for specific terrorist attacks.

There is little difference between terrorists and money launderers in their use of the financial system. Terrorist groups  build and maintain financial infrastructures to support their activities and seek different sources of funding including donations from charities sympathetic to their cause, engaging in criminal activities, voluntary payments from expats, extorted money from expats, legitimate business activities carried out by front companies sympathetic to the cause.

The 2 key differences of Terrorist Finances are:

 Sums that fund terrorist attacks are not always large and the associated transactions are not necessarily complex

Terrorists can be funded from legitimately obtained income ( E.g. charitable donations)  .it is difficult to identify the stage at which legitimate funds become terrorist property