Judicial aspects on money laundering

• Author: Georgeta Modiga
• Position: Ph. D Lecturer. DANUBIUS University of GALATI
• Pages: 136-152

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JUDICIAL ASPECTS ON MONEY LAUNDERING

Ph. D Lecturer Georgeta Modiga

DANUBIUS University of GALATI

Abstract:

“Dirty” money – a notion as innovating as it is unclear. Mainly, it is used

by criminal organizations, or by other subjects, as a means of getting some income

and not paying taxes. It is difficult to trace “dirty” money, because it takes

different shapes, and the destructive force of the “dirty” money circuit is called

money laundering.

The notion itself of “money laundering” is relatively recent in the judicial

vocabulary, but the need of hiding the nature or the existence of criminal, or at

least doubtful income, already appears in the 20th century.

“Dirty” money destroys the honest business, corrupt the state institutions,

create a favorable environment to develop corruption and organized crime, thus

endangering the entire economic system of the state.

The problem of money laundering has been approached, in an organized

way, in the contents of the United Nations Convention against the illicit drugs

traffic, which has been adopted on December 20th of 1988 in Vienna, in the context

of raising the awareness of the international community for fighting the drugs

traffic. The signing parties of this convention, being aware that the illicit traffic is a

means of considerable financial earnings, which allow criminal organizations to

penetrate and corrupt the state structures, the lawful commercial and financial

activities, as well as the society at all its level, adopted the first measures of

stopping the actions of recycling the funds that came from the drug trade.

Key words: juridical aspect, money laundering.

“Dirty” money – a notion as innovating as it is unclear. Mainly, it is used by

criminal organizations, or by other subjects, as a means of getting some income and

not paying taxes. It is difficult to trace “dirty” money, because it takes different

shapes, and the destructive force of the “dirty” money circuit is called money

laundering.

The notion itself of “money laundering” is relatively recent in the judicial

vocabulary, but the need of hiding the nature or the existence of criminal, or at least

doubtful income, already appears in the 20th century.

“Dirty” money destroys the honest business, corrupt the state institutions,

create a favorable environment to develop corruption and organized crime, thus

endangering the entire economic system of the state.

The problem of money laundering has been approached, in an organized

way, in the contents of the United Nations Convention against the illicit drugs

137

traffic, which has been adopted on December 20th of 1988 in Vienna, in the context

of raising the awareness of the international community for fighting the drugs

traffic209. The signing parties of this convention, being aware that the illicit traffic

is a means of considerable financial earnings, which allow criminal organizations

to penetrate and corrupt the state structures, the lawful commercial and financial

activities, as well as the society at all its level, adopted the first measures of

stopping the actions of recycling the funds that came from the drug trade.

In a very short time, the sources of dirty money as well as the possibility if

recycling it extended and thus important income coming mainly from activities of

the subterranean economy are infiltrated in the real economy.

Both national and international normative acts kept the term of “money

laundering”, this being used more frequently than the expression “legal income

obtained in an illegal way”.

Thus “money laundering” is just a slang used not only in the common

language, but also in the judicial one. So we mustn’t give a direct interpretation of

the term, in the way that only money can be legalized, and this made some states

stipulate in their legislations the term “legalizing income obtained in an illegal

way”.

Of course, money laundering is not a new activity, the tendency of hiding

the illicit origin of some money and of giving an apparent legality and implicitly

honesty and respectability to its owners, has old origins. We can mention in this

context the merchants and the moneylenders of the Middle Ages, which, in order to

hide the interests gained for their loans, in a time when the Catholic church had

forbidden the money lending, appealed to a various range of financial tricks which

correspond greatly today to the funds recycling techniques. The term of money

laundering began to be used in the 1920s, when in the USA some criminal groups

(the very well known are Al Capone and Bugsy Moran) opened laundries and car

wash shops with the role of washing “dirty money”, in order to justify the money

that came from different criminal activities. Probably, this is where the term of

“money laundering” came from (washing the money) which in time gained a

judicial consecration. Describing the danger of money laundering, some considered

that this was the heart of the organized crime, this is what makes it exist.210

Nowadays, fast-food shops, casinos and trading companies that use cash are

used to this purpose. Money laundering is a complicated process that takes several

stages and implicates many people and institutions. Recycling the funds is a

complicated process by which the income from a criminal activity is transported,

transferred, transformed or mingled with legitimate funds, for the purpose of hiding

the provenance or the right of ownership over those profits211. The necessity of

recycling money comes from the urge of hiding a criminal activity. It is the most

209 Dr. Florescu Viorel, Banking and Exchange Law.

210 Rance Pierre, de Baynast Olivier, L’Europe judiciaire. Enjeux et perspectives, Paris, Dalloz,

2001, p.89.

211 Nicolae Cristis, Tax Dodging and Money Laundering, Hamangiu Publishing House, Bucharest,

2006.