Money Laundering: a New International Law Enforcement Model - Research Paper Example

Conclusion Conclusion for Chapter 3 Various measures have been reported against the growing institution of money laundering from the European end. The 1990 convention was introduced by the Council of Europe at a time when the global awareness of money laundering was minimal and the combat against it was in its initial phases. The 1990 convention was modeled on the forum of FATF developed by the G-7 countries, but over the years with increasing developments in the tools for fighting money laundering the convention has become increasingly inadequate. The need for rectification has forced the member states into revisiting the convention and drawing up a protocol that would adapt the effective features of the 1990 convention combined with recent developments in line with current requirements of sophisticated technology and vulnerability of the non financial sector against money laundering. Moreover the Council aims at adopting policies that would aim at enhancing the preventive aspects of the issue as it recognizes the failure of other foras in addressing the critical phase. The Council of Europe intends at developing a strategy that would conform to the global objectives, be easily adaptable in varying domestic structures and centre on the international fight against terrorism. Conclusion of chapter 4 European Union’s efforts against money laundering have been far more comprehensive and elaborated as compared to the Council of Europe. It has subjected its directives to repetitive rectification in order assimilate latest developments in the international standards and to adopt a model based on FATF’s globally acclaimed measures. Despite a huge time lapse in issuance of its 1st and 2nd Directive EU has imposed continuous changes in its basic structure in order to improve the efficiency of its mandate. This was evident from the centralizing of reporting system, introduction of FIU, extension of membership to non EU trade partners in the 2nd Directive and assuming the global policy of war against terrorism in its 3rd and most recent Directive. EU stresses on the importance of identification and maintenance of original client records and has therefore expanded the roles of FIU and has given them access to government databases so as to spot suspicious cases. The inclusion of countries like Bulgaria to EC however would severely harm EU goals as their domestic structure recognizes money laundering as permissible as long as the government is receiving taxes. Dissertation Conclusion In the aftermath of the 9/11 attacks at the twin towers, efforts against terrorism have gained momentum in the Western World and struggle is being made to cut the roots of such activities. Terrorism funding is an issue that has been repeatedly addressed in the media and on political forums, but the concern about money laundering, which is a superset of terrorist financing, is not novel and has been a matter of apprehension for long. Concerted efforts have been made in order to combat the increasingly complex issue and various organizations like the FATF, Egmont Group, UN councils, EU were developed to design strategies in order to effectively solve the money laundering problems. Over the last three decades the world community has amplified its efforts against money laundering. It was initially associated with drug trafficking but in the advent of September 11 attacks its connection with terrorist financing has further obscured the issue. Traditionally considered to be a three stage process comprising of cash related proceeds, money laundering has developed into a notorious institution incorporating a list of techniques which further challenge the law enforcers and augment the sensitivity of the matter. The Annual Typology Reports published by the Financial Action Task Force (‘FATF’) demonstrated a list of techniques that have been utilized by the launders in legalizing their illicit proceeds. This not only portrayed the level of interest displayed by the criminal elements in money laundering but to an extent even expressed the failure of the legal bodies in trying to curb the evolution of this criminal activity. Report published by the IMF estimated the size of worldwide money laundering at somewhere between 1.5% and 5% of the Gross World Product, further reflecting gravity of the problem and emphasizing the need for a full fledge action. Developments in business, technologies, and trade links have provided various loopholes that have aided the growth of money laundering. The free movement of financial resources amongst EU member states, for example, has given an opportunity to the launders to easily relocate money across state borders. The growth of non financial sectors has also aggravated the situation as it allows increasingly vast opportunities for the criminals to escape the risk of confiscation. In the meantime improvements in technology apart from offering a variety of advantages have also supported the growth the money laundering industry. Least fear of audit and a high degree of anonymity allows launders to easily legitimize their proceeds obtained from illegal sources thus promoting the recently developed channel of Cyber laundering. Economies and governments are faced with the critical circumstances of choosing between the technical development of population and prevention against internet based cyber laundering thus the need of the hour is to adopt policies that would help not only in blocking the latest channels of money laundering but would even enable nations to minimize the loopholes. Money laundering is however an issue that has its stakes on the entire global community and in this regard rigorous efforts are required to devastate this institution of crime. Development of Financial Action Task Force (‘FATF’) by the G-7 countries was the first such comprehensive effort undertaken following the UN convention on illicit drugs and psychotropic substances. Observing these worldwide developments the European countries also began to take initiatives on the basis of a global mechanism. The introduction of the 1990 convention by the European Council was thus considered to be a major development and it was based on drafting anti-laundering measures that would be applicable worldwide despite the distinctions of domestic structures. The convention was primarily met with a lot of popularity as it came at a time when the world was in its initial period of money laundering combat. But its role became inadequate with the passage of time due to the failure of adapting to the changes in anti-money laundering measures and the development in the channels of laundering. The effectiveness of the 1990 convention was thus overshadowed by the developments in the knowledge of money laundering techniques and the change in the global goals regarding money laundering. Currently the council of Europe are in the process of rectifying the convention by introducing new protocols so as to conform to the worldwide strategy and to offer a platform that would assure the adaptation and implementation of the procedures in order to ensure maximum effectiveness. In comparison with the Council of Europe, EU has been more focused and up-to-date with developments at the global level. Its initiatives matched the global policies and were effectively based on the principles of FATF and UN convention. EU pressed on its member states to elaborate their identification processes and to develop effective reporting systems in order to trace suspicious activities. It realized the effectiveness of the FIU in curbing the criminal activity and thus expanded their authority. EU effectiveness can also be stemmed from the fact that it has been extremely adaptive to global changes and has altered its goals in line with the FATF’s reccommendations. Since the 9/11 attacks EU has revolutionized its policies and has begun focussing on Terrorist financing as the greatest setback of money laundering and rates it as a serious crime. Despite the perceived effectiveness of initiatives taken by the European Union the ultimate goal has not yet been achieved. The policies that have designed until recently have failed to focus on the prevention aspect of the issue. Moreover the failure to restrain increasing use of technology in terrorist financing reflects the inadequacy of the policies and that further efforts are required. Bibliography 1. STESSENS, Guy. Money laundering: a new international law enforcement model. Cambridge: Cambridge University Press, 2000. pages 1-28, 82-113, 251-283; Read More