#57: Colored laundery
The doctrine of money laundering knows many complex issues. Issues that can be addressedd for example are: when is there a casual link between the predicate crime and the object that has been laundered? And if money has been laundered when does it qualify as illegally obtained gains which can be confiscated? Or when can an action be qualified as an act of concealment? These issues are frequently discussed by us. However, one aspect of the money laundering problem has not yet been discussed often. It concerns the blending problem: what if ‘white’ money mixes with ‘black’ money? A recent judgment of the Supreme Court gives reason to discuss this topic.
In the underlying case the Court of Appeal established that approximately half of the turnover was not accounted for and was not involved in the levying of corporate income tax and sales tax. This means that the tax that was not paid derives from a crime and can in principle be laundered. The Court of Appeal also established that there was a mixture of legally obtained and illegally obtained funds. In any case, it was established that part of the cash that was kept off the books was brought to Switzerland. Loans were subsequently granted with this money and real estate was purchased; these were allegedly acts of concealment on the basis of money laundering. The Court of Appeal therefore considers all unjustified turnover as “deriving from crime”.
The question is whether all non-responsible turnover was obtained from crime or just the part that was not taxated? First of all, the Supreme Court finds that assets that were made available as a result of tax evasion can be regarded as derived from crime. This is therefore not the entire turnover that was kept out of the books but only the amount that should have been paid in tax. Subsequently, the blending theory comes into play. In case assets that derive from crime are mixed with assets obtained through legal activities, the mixed assets can be regarded as ‘partly’ derived from crime. The Supreme Court concludes:
“The findings of the court of appeal cannot therefore support the conclusion of the court of appeal that “all turnover that was kept outside of the book” can be regarded as “deriving from a crime”.”
It is just that the part that was made available as a result of tax evasion. However, this part was mixed with the turnover and could therefor be laundered as part of this turnover derived from a crime.
It is noteworthy, however, that the Supreme Court subsequently came to the conclusion that although the plea was rightly put forward, this could not lead to cassation. The Supreme Court ruled that, despite of the Court of Appeal’s consideration, it was proved that a considerable sum of money can be regarded as derived from crime and that, also in view of the other circumstances of the case, the accused has insufficient interest in setting aside the judgment under appeal and reopening the case.
It is difficult for us to resign ourselves to this judgment. In fraud cases, the amount laundered often plays a role in the level of punishment. It makes a big difference whether ‘all’ unjustified turnover from crime has been obtained or ‘only’ the portion that has not been paid to the Tax and Customs Administration.
However, the judgment of the Court of Appeal has not been published, so it cannot be ascertained to what extent the amount laundered played a role in the level of punishment. In our view this probably had some effect which would have made cassation obvious to us.