Money laundering

Money laundering risks

Combating fraud, including money laundering, is an international priority. Prompted in particular by European rules and regulations, the Netherlands has implemented a system that allows service providers such as banks to collect a variety of information about money laundering risks. This information is subsequently used for investigative purposes. Based on this system, a bank’s screening of a specific transaction (link to article in Dutch) may cause the prosecution to initiate a retrospective criminal investigation.

 What is money laundering?

Money laundering is the process of concealing the origins of illegally obtained proceeds. Money laundering always involves an item of property acquired from an earlier criminal activity – the underlying offence – that is moved into the legitimate economy as if it had a lawful origin. An example would be fictitiously increasing restaurant revenues and reporting them as normal income. Another example would be tax fraud[1]. But money is not necessarily always involved; trade in cryptocurrencies or luxury goods can also be used for laundering purposes.

What if we do not know what the underlying offence is?

First and foremost, an activity will not qualify as money laundering unless the property is of illicit origin. Rather than having to prove the basic offence, all the prosecution has to do is prove that the property or proceeds were "obtained from criminal activity". It is quite common for there to be a suspicion that property was obtained from criminal activity without it being possible to identify the underlying offence. The following procedure, which has been developed in case law, is used in such cases:

1. There is no evidence of a specific underlying offence.
2. Based on established facts and circumstances that the prosecution is expected to prove, there is a suspicion that the property was obtained from criminal activity.
3. Given that suspicion, the accused may be instructed to explain the origin of the property. This is an important step: any refusal by the accused to explain the origin of the property may be taken into consideration when determining whether the property was obtained from criminal activity.
4. The statement by the accused must be specific, more or less verifiable and not highly improbable to begin with. The fact that such a statement can be demanded from the accused does not make it incumbent on him to prove or argue convincingly that the property is of lawful origin. The accused does not, in principle, have to provide any documents in support of the statement.
5. If the accused gives a statement, the prosecution is required to verify it.
6. The findings from the prior investigation or screening are used to assess whether it can be established with a sufficient degree of certainty that the property was indeed obtained from criminal activity.

The screening framework comes with many challenges, particularly in the investigative stages. We have found that, when a person is suspected of money laundering, it is in their best interest to mount an active defence. While the prosecution quite frequently asks persons who are accused of money laundering to give a statement, it tends to take its own obligations under the procedure described above less seriously. It is important to ensure that the procedure does not cause the burden of proof to shift to the accused in a criminal investigation. The fact is that it always rests on the prosecution.

Please do not hesitate to contact us if you are under suspicion of money laundering. We can help you mount a successful defence.

Dutch Supreme Court, 7 October 2008, ECLI:NL:HR:2008:BD2774 (in Dutch).