In the year of 2019 we witnessed an unprecedented record of Money laundering (ML) cases in courtrooms. Prominent figures ranging from business tycoons, politicians, journalists, activists, among others have recently been ensnared into the wiles of the ignominious crime of ML.
The streets in Dar mostly in formal places such as work places, and in virtual streets such as in WhatsApp groups or Instagram, stories about ML dominate the conversations especially when there’s a breaking news about either arrest or arraignment of a person for ML related charges. This has prompted emergence of a slew of theories from regarding ML. Some say only government critics are targeted, others say ML is such a serious offence that should realistically not be a concern to petty financial criminals. Thus, the quandary surrounding ML has proved to be a recipe for confusion rather than clarity. The discussions in both physical and virtual fora infer limited understanding of ML.
ML is criminalized under s.3 of anti-money Laundering Act, 2006 that’s in pari material with Article 6 of Palermo Convention of which Tanzania is a member state. Tanzania is among the founder members of the Eastern and southern Africa anti-money Laundering Group and the EGMONT group of Financial Intelligence Unit- a body of 164 Financial Intelligence Units (FIUs) to provide a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing (ML/TF) in the world. For ML to exist, there must be an a-priori predicate criminal activity that surmise the washing of the proceeds of the crime. Section 3 of the Act provides a list of predicate offences. The list is not exhaustive because the minister for Finance retains the power to add such offences by way of notice in the government gazette. There are 3 major theories that are used to identify predicate offences. First, a model that includes all crimes (all crimes approach). Second, a model limited to a list of offences (the list approach) which seems to be the case of Tanzania as identified above. Third, a model that identifies serious crimes and puts a threshold for the identification of predicate offences (the threshold approach). ML cycle involves three stages; Placement, Layering and Integration.
Placement stage is always focused on entering of criminal proceeds ‘dirty money’ into the financial system. The criminal washes the dirty money by injecting it into legitimate financial system. This may involve mixing of dirty money with clean money or smuggling of cash or other financial instruments across the border or gambling that cashes out winnings as clean money. Sometimes, others pay back loans with proceeds obtained out of money laundering.
Layering. At this stage, the purpose is to disguise the origin of the money. It’s geared at ensuring multiple transactions to obscure and further distance the money from its dirty origins. It may involve moving funds from the country where the predicate offence took place or multiple transfers between many accounts. The BoT policy on money laundering defines layering as “a process of executing variety of transactions intended to disguise the audit trail and true source of ownership of the funds or property. This stage involves the concealment of the “illicit origin” of funds by creating complex layers of transactions to and forth in order to prevent traces in terms of “audit trails. Integration. At this stage, the dirty money is invested into legitimate business owned by the criminal. Such as, criminal withdrawing salaries from shell companies, Purchase of real estates or luxury assets among others. At this stage the laundering arrangement or engagement is complete, which means the funds are “clean” and the illicit origin is completely concealed.
In the case of DPP vs. Elladius Tesha (2013) Arufani J ruled that, ‘’ the offence of money laundering is a new phenomenon which despite the fact that our law relating to money laundering has been in existence for ten years now, from when it was enacted in the year 2006, but it has not been tested in our courts sufficiently enough to give enough light to the users of that law as to its applicability”. The judge was concerned about the lack of a guiding jurisprudence in relation to the Anti-Money Laundering Act and the new crime thus, calling for utmost care in prosecuting the crime lest wrong interpretation of the law would lead to innocent people being convicted.
The author is a consultant on international Crimes and teaches law at Tumaini University, Dar es salaam College