Dirty money, terrorist money & criminal money

Dirty money is usually earned legally, but it is not declared to the tax authorities. This means that tax has not been paid on it. The taxable person did not declare these flows of money as income from labour, investments, or for example income from rental property. Owning or dealing with dirty money is considered to be a criminal offence. Its existence means that someone didn't truthfully fill out and sign his or her tax returns. Despite the act of dirtying money being considered criminal, it should not be confused with criminal money. The latter solely originates from criminal activities whereas this is not the case with dirty money, which is acquired through legal channels. Legally, having dirty money is considered as a basic offence under money laundering. Wwft-liable institutions may not advise clients to set up constructions to evade tax. This is set in stone in the codes of conduct of the relevant institutions. If an adviser does give such advice, or personally gets involved, there is a chance that the Wwft-liable institution will lose its licence and is therefore no longer allowed to perform its services.

Terrorist money is money used to finance terrorist activities. Since the 9/11 attacks in the United States, terrorist financing has become a much more important issue after many people have experienced the impact of it. It has become an important social issue after more terrorist attacks happened since then. Some examples are the Madrid attacks in 2004, the murder of Theo van Gogh in 2004, the London bombings in 2005, and the Boston Marathon bombing in 2013. Terrorists need a lot of money to carry out terrorist activities, such as to carry out attacks and to cover the cost of involved weapons and materials. The financing of terrorism is punishable by Article 421 of the Penal Code.

Criminal money is money which is earned by committing a crime, and it is thus considered as part of the illegal economy. The practice of money laundering is used to introduce these funds to the legal economy, this is done in several steps. The first step is placement, here the illegal funds are introduced into a legal economy. The second step is to obscure the origin of the money, for example by producing counterfeit bills of service or clients. In the third step the money is associated with a legal source of income, and finally it is invested by the criminal into a fully legal endeavor in the integration step.

The difference between terrorist money and criminal money is that terrorist money is used to finance terrorism, while criminal money will be laundered to invest in the legal economy. Criminal money is always earned in the criminal world, while terrorist money can also be legally earned and is not required to cover large sums. There are also similarities between criminal money and terror money. Financing terrorist attacks can also take place with criminal money, and for terrorist money it is important to obscure the origin of the funds as well. If the origin can be traced this could expose the involved terrorist groups.

Dirty money, terrorist money, and criminal money are all international phenomena. It is therefore important that countries work together to tackle these money flows and ensure that the perpetrators are caught. Some of the characteristics of dirty money, terrorist money, and criminal money flows are that they require large international networks of companies of which the internal structure is obfuscated. These networks are intertwined with the legal economy, often through the real estate investment with falsified documents to legitimize the turnover in bank accounts.

CDD On Demand can help you track down crimes of dirty money, terror money and criminal money. For example, during a compliance check, a geographical risk is considered, because certain countries are more likely to be involved in such activities than others.

It also looks at whether your clients appear on a Sanctions List and have therefore been involved in such a crime before.Curious what CDD On Demand can do for you? Request your trial account today and try it for yourself! Better be safe than sorry!