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Money laundering part 3

The final stage in traditional money laundering, after placement (see part one) and layering (see part two) is integration. That is the final destination for the proceeds. That is when the money is invested in something legitimate which for all practical purposes seems to have a non-criminal origin. That could be shares, property (as in land or residential commercial buildings), or other apparently legitimate asset.

Although this in itself is an apparently legitimate asset, it still constitutes the proceeds of crime, even though steps have been taken to disguise that. When looking at money laundering law and the way it applies to people, it is important to bear in mind that even assets which in themselves are not objectionable and apparently legitimate can constitute the proceeds of crime for money-laundering purposes. Thus for example a criminal could own a building which is a legitimate office block which is in fact leased to Her Majesty's Government. Nonetheless if someone working with the criminal (not in order to commit a crime, perhaps somebody who is acting as an adviser or who gets to know them believing they're working in a legitimate business transaction) discovers or suspects that this represented in whole or in part the proceeds of crime (or in certain circumstances as we shall see, even if not in fact knowing or suspecting has reasonable grounds for knowing or suspecting this) if they then undertake prohibited acts (and we will in due course see what those are) they can be guilty of money-laundering offences leading to possible imprisonment. Therefore it is always vital in money-laundering not to confuse the fact that an asset is apparently legitimate with the possibility that it may be nonetheless the proceeds of crime.

The starting point the money laundering therefore is to look at the substantive money laundering offences. That means the criminal offences which set out what each money-laundering offence is and how you commit it. In order to understand those provisions it is necessary to spend quite some time explaining and consequently understanding what the definitions are on which the offences are based. If you do not understand the definitions, you do not have any hope of understanding what the offences mean.

The first thing to consider is the definition of criminal conduct. This is defined in section 340 (2) as being conduct which is an offence in any part of the United Kingdom or would be an offence in any part of the United Kingdom if it occurred there. There are some qualifications to this broad definition in some of the offences themselves, as we will see.

This therefore means that, insofar is relevant, you have got to decide what the alleged criminal conduct was, and whether it was a crime in the United Kingdom. In general if it would be an offence in the United Kingdom if committed there, then it is still treated as a defence and hence criminal conduct for the purposes of this legislation even though it was committed in another country. Although it can make a difference in some circumstances if the conduct is legal if committed abroad (as we shall see) it is still criminal conduct for these purposes.

Next week we shall begin to develop how this works.

Michael J. Booth QC