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Money laundering and terrorist financing are two crimes that are often mentioned in conjunction with one another. This is not because they are the same, but because there is often a lot of overlap. But what is the difference between money laundering and terrorist financing?
Money laundering is defined in the Proceeds of Crime Act 2002 (POCA) and includes all forms of handling or possessing criminal property, including possessing the proceeds of one’s own crime and facilitating any handling or possession of criminal property. Typically perpetrators of money laundering move the relevant funds (the criminal property) into the financial system through cash-based laundering (casinos or cash businesses), money transmission (international or otherwise) and property transactions. The purpose of money laundering is to make criminal property look legitimately earned.
Terrorist financing comprises the financial support of terrorists, terrorist organisations or terrorist acts. This money can come from many sources, both legitimate and illicit. The terrorist financing process involves gathering, storing, transferring and, finally, using that money
In both cases, funds are being withheld and deliberately hidden from authorities, and the techniques used in both money laundering and terrorist financing are very similar. The process of terrorist financing overlaps with that of money laundering, and money that has been laundered might then be used as terrorist funds.
An important distinction between money laundering and terrorist financing is the source of the funds. In money laundering, the source of the funds will be some sort of criminal activity. In terrorist financing, the source of the funds is largely irrelevant – the greater concern is where the money goes and who it supports. The sources of terrorist funds can vary greatly, including illegal and legitimate means.
The Financial Action Task Force (FATF) is an inter-government body that covers an array of countries worldwide. It is a watchdog established in 1989 to help combat money laundering, and in 2001 it extended its reach to incorporate terrorist funding. The core goals of the FATF are to implement global policies to target and combat money laundering.
Although they share many similarities, the law enforcement bodies that deal with each are different. For example, as well as the FATF, the Home Office works with intelligence agencies to prevent terrorist financing.
For money laundering, multiple agencies play a part, including:
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
The Regulations (and as amended by the Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020) set out the duties and responsibilities of private sector firms deemed to run a higher risk of money laundering, including auditors, estate agents and casinos. The Regulations involve assessing your company’s money laundering risk, registering relevant people in your organisation, and carrying out customer due diligence. The Regulations are extensive, onerous and complex.
Instances of money laundering and terrorist financing can carry heavy penalties, including suspension, removal of authorisation and prohibitions on management, as well as up to fourteen years in prison and unlimited fines. If you are suspected of, or under investigation for money laundering or terrorist financing, hiring an experienced barrister will make a huge difference to your case and/or that of your lay client.
We hope that this has cleared up what the difference is between money laundering and terrorist financing. If you or your client are under investigation or have been accused of money laundering or terrorist financing, we can help. Our team of fraud barristers are experts in cases of financial fraud; please contact us today.
Chambers is centrally located within walking distance of the train station, secure car parks and the Courts.
St Pauls Chambers
Park Row House
19-20 Park Row
Leeds
LS1 5JF
For out of hours assistance please call the senior clerk on 07854170429.
The switchboard will open from 08:30 until 17:30
Phone: +44 (0)1132 455 866
Email: [email protected]
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