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Money Laundering And The Concept Of Willful Blindness

Article Submitted by: Paul Freeman

Friday, 12 March 2010

Well, money laundering, quite simply, is the process of making dirty money appear clean. The Financial Action Task Force, FATF for short, is the multinational body that sets the global tone for AML efforts. Formed in 1989, it is based in Paris.

Its working definition of Money Laundering:

1. The conversion or transfer of property knowing it is derived from a criminal offense, for the purpose of concealing or disguising its illicit origin or of assisting any person who is involved in the commission of the crime to evade the legal consequences of his actions,
2. The concealment or disguising of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property knowing that it is derived from a criminal offense, and
3. The acquisition, possession or use of property, knowing at the time of its receipt that it was derived from a criminal offense or from participation in a crime

As you see, in each part of the definition, the word "Knowing" is used. While that is a critical element, the concept of Willful Blindness - which generally will prevent someone from just saying, "I didn't know" and getting away with it.

The integral component of the definition of money laundering is the "knowledge" that the money is of illicit origin. However, in the United States (and other jurisdictions around the world), the concept of willful blindness now can be employed by law enforcement.

For those of you old enough to remember "Hogan's Heroes," Sgt Schultz with his "I know nothing" is the epitome of willful blindness. He would totally disregard all facts and circumstances around him, preferring to live in his world where there were no problems, no issues.

But with money laundering and the concept of willful blindness, if even a cursory view of the facts and circumstances could lead one to believe that the money being dealt with is illegal money, it is the same as "knowing" that it is illegal money.

This concept can have far-ranging effects, from tellers who don't question the circumstances of dubious deposits from "friendly" or "best" customers to major corporations who all were unwittingly involved in money laundering on an international level. Time, fines and forfeitures (plus hefty legal bills) can await those who do not remain vigilant.

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About The Author:

Paul Freeman has been a member of the Association of Certified Anti-Money Laundering Specialist or ACAMS Education Task Force since 2007. His focus is on providing quality Anti Money Laundering (and Fraud) educational information for the front line investigators. He is the creator and owner of the LinkedIn Groups ACAMS / CAMS Exam Study Forum (unofficial) and AML Investigators' Forum.

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