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          The FSC Sentinel         

Money laundering refers to activities involving the processing of criminal proceeds to disguise their association with criminal activities. Under Section 3(1) of the Money Laundering Act, 1996 (“MLA”):

 “A person shall be taken to engage in money laundering if that person-

(a) engages in a transaction that involves property that is derived from the commission of a specified offence; or

(b) acquires, possesses, uses, conceals, disguises, disposes of or brings into Jamaica, any such property; or

(c) converts or transfers that property or removes it from Jamaica, and the person knows, at the time he engages in the transit action referred to in paragraph (a) or at the time he

does any act referred to in paragraph (b) or (c), that the property is derived or realized directly, or indirectly from the commission of a specified offence.”

Traditionally money laundering was associated with drug trafficking offences but as the methods/measures employed by money launderers increased and the means of laundering have become more sophisticated the offences comprising the list of predicate offences, or specified offences as referred to under the MLA, has been expanded accordingly. A “specified offence” means an offence listed in the Schedule to the MLA which includes but is not limited to: any offence involving fraud, dishonesty or corruption, involvement with any narcotic drug or any psychotropic substance contrary to the provisions of the Dan

gerous Drugs Act, the transportation, importation or exportation of firearms in contravention of the provisions of the Firearms Act; OR an act or omission that occurred outside Jamaica which, had it occurred in Jamaica, would have constituted such an offence.

Money laundering generally involves a series of multiple transactions used to disguise the source of financial assets so that those assets may be used without compromising the criminals who are seeking to use them. These transactions typically fall into three stages:

(1) placement –  the initial and the most vulnerable stage of the money laundering process, as the chance of discovery of the illicit origin of the money is the greatest here,

involves  placing unlawful proceeds into financial institutions through deposits, wire transfers, or other means;

(2) layering -- the process of separating the proceeds of criminal activity from their origin through the use of layers of complex financial transactions; and

(3) integration -- the process of using an apparently legitimate transaction to disguise illicit proceeds, by this stage, it is exceedingly difficult to distinguish legal and illegal wealth.

 

Through these processes, a criminal tries to transform the monetary proceeds derived from illicit activities into funds with an apparently legal source.   The stages of the money laundering process can be carried out through a
number of means as is illustrated in the table.

 

For more in-depth information on the subject of money laundering  including the penalties for such, please see  our Anti-Money Laundering & Counter-Financing of Terrorism Guidelines on our website at http://www.fscjamaica.org/index_files/COMPREHENSIVE%20GUIDELINES.pdf

The stages of the money laundering process can be carried out through a number of means as is illustrated in the table below:

Placement Stage	Layering Stage	Integration Stage
Cash paid into financial institution (sometimes with staff complicity or mixed with proceeds of legitimate business).	Wire transfers abroad (often using shell companies or funds disguised as proceeds of legitimate business).	False loan repayments or forged invoices used as cover for laundered money.
Cash exported Currency smuggled	Cash deposited in overseas banking system.	Complex web of transfers (both domestic and international) makes tracing original source of funds virtually impossible.
Cash used to buy high value goods, property or business assets.	Resale of goods/assets.	Income from property or legitimate business assets appears "clean".
Large Structured deposit of funds	Cash converted into monetary instruments such as banker’s draft and money orders.	Front companies that are incorporated in countries with corporate secrecy  laws.

 

Adopted from the International Money Laundering Information Bureau.