Abstract
The paper explains the reasons for modern money laundring legislation, namely to reduce the incidence of certain primary offences. Whereas enactment and effectuation of this legislation is costly, its postive effects typically materialize in other jurisdictions (positive external effects). The paper shows that international covenants seek to give direct incentives to overcome the possible underprovision in anti-money laundering legislation and enforcement. The paper also shows how, in such an international context, anti-money laundering legislation can be easily misused as a political weapon in the cross-border fight against "unwanted individuals" and gives concrete examples for such an arbitrary enforcement.
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As a secondary crime it can only be committed by a different person to the original perpetrator (“thief”). With respect to the thief himself, it is commonly assumed that he is only punishable for the original offences, not for acts by which he makes use of the stolen goods.
The extent to which this overlapping takes place depends, of course, on technicalities of positive law, e.g. on whether the provisions against “receiving stolen goods” also cover claims and not only physical assets.
In a further line of policy considerations, it has been argued that anti-money laundering legislation is needed to protect the purity of commercial transactions and the banking sector and to protect the banking sector from “infiltration” by organised crime. See e.g. the first recital to Council Directive 91/308/EEC: “Whereas when credit and financial institutions are used to launder proceeds from criminal activities, the soundness and stability of the institution concerned and confidence in the financial system as a whole could be seriously jeopardised, thereby losing the trust of the public”. It is not clear, however, to what extent the economy would distinguish between “good” and “bad” money. Instead, the regular economy is burdened by the costs of enforcement and, in order to avoid criminal proceedings or the freezing of accounts, “decent” companies are likely to “over-comply”.
For a general treatment of the economics of law enforcement, see e.g. Lewisch (1995).
In these cases, the Prisoner′s Dilemma situation, with respect to enforcement, remains even after conclusion of any such contract. The best option is to free ride on the enforcement of the others.
Art 6 subpara 6: “In considering requests received pursuant to this article, the requested State may refuse to comply with such requests where there are substantial grounds leading its judicial or other competent authorities to believe that compliance would facilitate the prosecution or punishment of any person on account of his race, religion, nationality or political opinions, or would cause prejudice for any of those reasons to any person affected by the request”.
Confiscation measures are such legislative and other measures as may be necessary to enable the confiscation of instrumentalities (meaning any property used or intended to be used in any manner, wholly or in part, to commit a criminal offence or criminal offences) and proceeds (meaning an economic advantage from criminal offences) or property (meaning property of any description) whose value corresponds to such proceeds.
The actual violation will depend on the technicalities of the positive law, namely on the fact that the pertinent money laundering legislation refers to a crime of that class and severity, as in concreto committed in country A, as a possible underlying criminal offence.
The Moldovan laws treat them, as if they were (still) Moldovan authorities, so that payments made to them are acknowledged in Moldova as valid customs payments on the side of the companies.
References
Lewisch, P. (1995). Punishment public law enforcement and the protective state. Vienna-New York: Springer.
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Lewisch, P. Money laundering laws as a political instrument: the social cost of arbitrary money laundering enforcement. Eur J Law Econ 26, 405–417 (2008). https://doi.org/10.1007/s10657-008-9073-7
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DOI: https://doi.org/10.1007/s10657-008-9073-7