What is money laundering?

The term money laundering originates from the early 20th century. During the industrial revolution of the United States dollars were still made of cotton. These dollars were quick to be dirtied and they regularly had to be replaced, which was a costly business. Since then, the polluted dollars have taken on a different meaning; criminal money. 

Definition of money laundering

There are many different definitions for the act of money laundering. Some definitions focus more on the role of financial institutions in the money laundering process, while others focus more on relationships with the criminal circuit. The Dutch Tax Office defines money laundering as follows:

''Money laundering means that illegally obtained assets are made legal, so that the illegal origin is no longer traceable.''

The definition of money laundering initially only concerned drug-related crimes, but in recent years the definition has grown to be much broader, based on a wider spectrum of basic offences. The Fourth European Anti-Money Laundering Directive provides a broader definition for money laundering. For the purposes of this Directive, the following acts, if committed intentionally, shall be considered as money laundering:

• The conversion or transfer of property, knowing that these have been acquired from a criminal activity or from participation in such an activity, with a view to concealing or concealing its illegal origin or helping a person involved in that activity to escape the legal consequences of his actions
• Concealing or masking the true nature, origin, location, disposal, changes, rights to, or ownership, of property, knowing that they have been acquired from a criminal activity or from participation in such activity;
• The acquisition, possession, or use of property, knowing, at the time of acquisition that such property has been acquired from a criminal activity or from participation in such activity;
• Participation in, aiding, abetting, aiding, inciting, facilitating, or giving advice for committing any of the acts referred to in the preceding letters.

A punishable offence

Anyone directly or indirectly responsible for money laundering is punishable. There is no singular or common penalty for money laundering. The punishment depends on the circumstances and the extent of the crime. The maximum penalties are known however, for intentional money laundering the maximum punishment is 4 years imprisonment or a fine of up to 78,000 euros. Debt laundering is punishable by a maximum penalty of one year in prison, or a fine of up to 78,000 euros. In addition, a person may be prohibited from practising certain professions, including the profession in which he has engaged in money laundering.

If someone only attempted to launder money but got caught, the maximum penalty is one third lower than if the crime is completed. If someone commits money laundering multiple times, there is a higher maximum penalty. The judge will consider that the previous sentence did not appear to have helped to prevent money laundering, making it more likely that a higher sentence is imposed. In addition, any suspended sentence will be converted to an unconditional sentence.

Money laundering is a criminal offence because socially the norm is that when someone obtains something unfairly, it should be taken away in a fair manner. Therefore, if a person illegally withdraws money, it will have to be taken away under criminal proceedings.

Conclusion

In short, money laundering is the process in which money from the criminal circuit ends up in the legal economy. There are different types of money laundering and money laundering is a crime punishable by penalties. These penalties depend on the circumstances and extent of money laundering, and, it will play a role whether the crime has been completed or not, and whether this is the first time such a crime has been committed. The penalties will be harsher the larger the extent of the crime, whether it was successful, and when it is a repeat offence of money laundering.