#53: Money laundering: typologies vs. indicators
In the international fight against money laundering, the Financial Action Task Force (FATF) is the international organization that indicates money laundering typologies, by studying methods or techniques of money laundering. These typologies are used in criminal investigations as facts and circumstances which can construe a suspicion of money laundering. In the Netherlands, the Financial Intelligence Unit (FIU) is the national organization where unusual transactions can be reported. The FIU also publishes money laundering typologies. However, on 16 April 2020, the Dutch Anti Money Laundering Centre (AMLC) published an updated version of money laundering indicators. The question is: what is the difference between indicators and typologies and can all indicators be used as facts and circumstances to create a suspicion of money laundering?
According to AMLC, money laundering indicators can be divided into three different subgroups: 1) money laundering typologies, 2) facts which are considered common knowledge and 3) other indicators. The AMLC also states that these categories of money laundering indicators play an important role in raising suspicions of money laundering as well as in the actual evidence of money laundering. We wonder whether each money laundering indicator can play a role in establishing a suspicion or proof of money laundering.
First of all, AMLC gives an exhaustive list of the money laundering typologies. These typologies are the same as established by the FATF and by the FIU. These are more or less objective characteristics that, as studies show, indicate laundering of the proceeds of crime.
The second subgroup concerns facts which are considered common knowledge; these are facts which everyone is expected to know. On the basis of case law, the AMLC has drawn up a list of common knowledge facts established by case law. It should be noted that this list is not exhaustive and that a large number of these facts have only been established as facts of general knowledge by lower courts. This means it is still possible to argue whether such fact is indeed a fact of common knowledge. After all, the question what can be considered as common knowledge is by no means always clear. Nevertheless, AMLC states that these facts can be used as indicators at the start of an investigation. In our opinion, this should be treated with caution, especially since the interpretation by the AMLC can only be judged in a much later stage in legal proceedings.
Finally, the AMLC pays attention to other indicators. These are characteristics that according to the AMLC indicate money laundering, but are not a fact of common knowledge and have not (yet) been identified as money laundering typology. With regard to the other indicators, reference is made in particular to the OECD handbook and to various FATF reports. The status of these other indicators is unclear to us. We believe that this ‘other’ list cannot yet be used to create suspicion or be used as evidence of money laundering. After all, it is with good reason that this group of other indicators has not yet been identified as a typology. The Explanatory Memorandum to the Dutch Money Laundering Act states clearly that the Public Prosecutor’s Office and judges can use money laundering typologies for evidence of money laundering. The subgroup of other indicators has not been mentioned here and thus should not be used.
In our opinion it is important to remain critical of the money laundering indicators used to construct a suspicion of money laundering. There is a risk that the Public Prosecution Service will conduct investigations on ‘vague’ grounds. It is therefore important that the defense is alert here. But that also applies to the Public Prosecution Service itself. It must be prevented that the Public Prosecution Service only investigates money laundering indicators without actually investigating the heart of the matter: the question of whether there has been a predicate offence. Such a lenient attitude in the investigation would not benefit the finding of the truth and increasingly places the burden of proof on the accused. We also wrote about this problem in Lawlunch #40.
Moreover, it is important to always place certain money laundering indicators in the right time frame the alleged facts took place. After all, the fact that something is seen as a money laundering indicator now, does not mean that this also yielded a red flag ten years ago. On 11 December 2019, the District Court of Rotterdam also rendered an enlightening judgment on this. The Court ruled that the so-called money laundering indicators in that case can not be qualified as that a-typical in that period of time that the suspect should have known that the money derived from a crime.
In short, if the Public Prosecutor’s Office starts an investigation solely on money laundering indicators, it is important to be extremely critical. In any case, you should ask yourself the following question: is the money laundering indicator a money laundering typology or a fact of common knowledge? And, can these facts and circumstances also be qualified as money laundering indicators at the time the alleged facts took place?