#09: Money laundering struggles

If the public prosecutor does not know for what crime he has to prosecute, he can always rely on money laundering. At least, this seems to be the latest strategy. The offence money laundering is often used by the authorities as a ‘safety net’ to come to an easy conviction. In the Netherlands the legal framework for money laundering is broad. Although the Supreme Court has set some boundaries the Public authorities wish to have a catch-all clause. However, judges keep on setting boundaries. We will give a brief overview of the (money) laundering jurisprudence in The Netherlands and the recent developments.

The aim of the legislator regarding criminalization of laundering was to protect the integrity of the financial and economic transactions and the public order. The penalization includes, inter alia, deprivation of liberty and fines. The government can also deprive offenders of their criminal benefits (‘pluk-ze-wetgeving’). The Dutch Penal Code contains the legal basis for penalization of laundering. The Dutch Penal Code specifies three types of money laundering in the articles 420bis, 420ter and 420quarter. Article 420bis refers to intentional laundering, which in accordance with paragraph a is qualified as follows: he who hides or conceals an object’s true nature, origin, location, it disposition or movement, or hides or conceal whom the recipient of an object is or has possession of such object knowing that the object has been obtained – directly or indirectly – by means of an offence .

In accordance with paragraph b of article 420bis, one can speak of intentional laundering when he who acquires, has at his disposal, transfers, sells or uses an object, while he knows that the object has been acquired – directly or indirectly – by means of an offence. One can assume (conditional) intent when at the time of the act, a suspect knows that the object that he hides or conceals originates from any crime. The terms ‘hide’ and ‘conceal  imply premeditation.

Article 420ter defines habitual  laundering as when a person is repeatedly found guilty of intentional laundering. Habitual laundering can be seen as a lex specialis of article 420bis. Article 420quarter penalizes culpable laundering. Culpable laundering requires a reasonable suspicion on the side of the suspect that the object is acquired from any offence.

The aforementioned legal provisions show that the Dutch legislator chose a broad definition with regard to the qualification of (money) laundering. The Supreme Court however slightly restricted this broad definition in a judgement in 2010.  It considered that if a suspect merely possesses an object originating from a crime he committed himself, he does not contribute to concealing or hiding the criminal origin of this object. Such conduct then does not qualify as (culpable) laundering. If it would, a suspect would also automatically commit money laundering. Via this consideration the Supreme Court prevented double criminality of a single action. This rule is referred to as the qualification exclusion clause.

The Supreme Court has broadened the scope of this qualification exclusion clause in two judgements in 2012. The first judgement stated that not mere the possession of an object originating from a crime committed by the suspect himself falls under this qualification exclusion clause but also when the suspect acquires such an object. The second judgement stated that this exemption clause does not only count for crimes committed by the suspect itself but also when it is committed with an accomplice.

The aim of the Supreme Court was to prevent double criminalization of acquisition and possession of objects originating from a crime the suspect himself committed. Only if his behavior comprises more than mere acquisition and possession and is also focused on concealing and disguising the criminal origin of the object, the suspect can also be convicted for laundering

In Dutch politics a majority of the politicians seem to just not agree with this qualification exclusion clause. Recently a motion was adopted which led to the adjustment of laundering legislation. The motion inserts a new paragraph to the articles 420bis and quarter. The adjustment focusses on the acquisition and/or the possession of any object that originates from any crime committed by the suspect himself. This enables to prosecute the suspect for both the underlying offense as well as laundering itself. However, the maximum penalty for laundering objects originating from any offence committed by the suspect himself is lower as it would be if a prosecution would only be based on a charge on laundering. In the legislation process it was noted that acquisition and possession of objects originating from any crime is an unlawful situation which must be halted under any circumstances. Maintaining that situation is in itself undesirable which should give rise to a penal reaction. Up until now it is unclear when this law will be implemented.

From the explanatory memorandum it follows that the proposed adjustment is aimed at cases where application of the qualification exclusion clause leads to no condemnation for laundering and where condemnation does not or cannot happen with regard to the predicate offense. There however is no quantitative evidence of how often such a situation occurs. Therefore it is uncertain whether the situation reported by the Minister actually is such a serious problem which requires legislative adjustment to straighten this problem.

The sole aim of the Supreme Court by creating the qualification exclusion clause was to prevent automatic double criminality of a suspect; when there is no indication that the acquisition and possession of the ‘criminal’ object is aimed at actually hiding or disguising the criminal origin of the object, acquired via a crime committed by the suspect himself. It follows from the jurisprudence of the Supreme Court that not has to be proven who committed the crime from which the money originated or at what moment or where. If ‘there is no other explanation possible that the source of an object is a crime or if it is ‘common knowledge’ it is sufficient to come to a conviction. The circumstances on which it is based that the objects derived from a crime vary greatly. As soon as money laundering typologies are at stake an explanation can be asked from the accused about the source of the money. This statement has to be concrete, verifiable and not beforehand unreliable.

The situation as described in the explanatory memorandum would just be applicable if the authorities would not have enough evidence to prosecute the underlying offence and the suspect would state that the money derives from a crime that he committed himself. However it is not clear if the Supreme Court would accept such a statement in order to apply the qualification exemption clause.

Nevertheless, before the Supreme Court could give further explanatory decisions, action was taken by the politicians as they observed jurisprudence by the Supreme Court that in their opinion was undesirable. Which left u with soon to be implemented legislation which created possible double criminality of an offence.

The foregoing shows that (money) laundering in the Netherlands seems like a cat and mouse game where there is still and again a lot of territory to win for the defense.

What are the chances and hick-ups regarding money laundering in your country?