The Research on Money Laundering

He Ping

References

William C. Gilmore, Dirty Money, The evolution of Money Laundering Counter-measures, Council of Europe Press, 1995

The Journal of Money Laundering Control The Fight against Money Laundering: A

Comparative Perspectivehttp://www.fatf-gafi.org/

阮方民《洗钱犯罪的惩治与预防》中国检察出版社 1998 年 7 月；《洗钱罪比较研究》中国人民公安大学出版社 2002 年 1 月

邵沙平《跨国洗钱的法律控制》武汉大学出版社1998 年 3 月；《控制洗钱及相关犯罪法律问题研究》人民法院出版社 2003 年 7 月

李德等《金融运行中的洗钱与反洗钱 》中国人民公安大学出版社 2003 年 3 月

徐汉明等《中国反洗钱立法研究》法律出版社 2005 年 9 月

何萍《中国洗钱犯罪的立法和司法—兼与欧盟反洗钱制度比较研究》上海人民出版社 2005 年 7月；《洗钱与反洗钱动态研究》，法律出版社 2012 年 6 月版。

1 、中国人民银行—反洗钱局： http://www.pbc.gov.cn/publish/fanxiqianju/452/index.html

2 、中国反洗钱监测分析中心： http://www.camlmac.gov.cn/com/CAMLMAC.do

3 、中国反洗钱研究中心： http://www.ccamls.org/ 4 、中国人民银行—上海总部： http://shanghai.pbc.gov.c

n/ 5 、中国法院网： http://www.chinacourt.org 6 、美国金融犯罪执法网络： http://www.fincen.gov/ 7 、澳大利亚交易报告分析中心： http://www.austrac.gov.

au/ 8 、香港联合财富情报组： http://www.jfiu.gov.hk/ 9 、 APG 亚太反洗钱组织 :http://www.apgml.org/ 10 、 EAG ： http://www.eurasiangroup.org/

Erasmus University, RotterdamPh.D. Thesis Propositions

（命题，主张）The Fight against ML:

A Comparative Perspective （视角）

ML is a process, often a highly complex one, rather than a single act. One complete process of ML includes three stages: Placement ( 放置 ) stage, layering （分层） stage and integration （融合） stage.

Original banking secrecy aims at protecting individuals from arbitrary （任意的） or unlawful interference （干涉） . Unfortunately, banking secrecy does provide a safe harbor for ML activities and makes criminals launder money more audaciously （大胆） nowadays.

Lawyers, notaries and accountants, as independent legal professionals, should not only be reliable ‘watch dogs’ for their clients, but also for public interests.

The development of high technology is a double-sided sword. It does raise people’s living standards on the one hand; on the other hand, it also provides great opportunities for money launderers.

Criminal law and administrative law, regarded as ‘red warning’ and ‘yellow warning’ respectively, play suppressive and preventive roles in the fight against ML.

China is a country with the legal tradition of laying too much stress on criminal law and paying too little attention to civil law.

In compliance with ( 依照 ) the world trend, the penalties in China are getting much more modest than ever.

Balance is essential （本质的，重要的） on all fronts （领域） . Criminal policies should keep balance between suppression （抑制）and protection. In China, the emphasis is still too much on suppression.

Doing Ph.D. research is like mountaineering. Both activities need courage, perseverance（毅力） and good luck.

These is no everlasting banquet in the world. The friendship, however, will live forever.

When I was doing Ph.D. research in Rotterdam, I collected Euro coins of 12 countries as a present for my son. I laundered the dirty coins to make them look nice. My laundering money, however, has nothing to do with my research topic ‘money laundering.’

Case:The Kingdom of the Netherlands: ---Holland ( in Europe) ---the Netherlands Antilles （安第列斯） ---Aruba （阿鲁巴） In the Caribbean near Venezuela （委内

瑞拉）Euro and guilder （荷兰盾）

Chapter 1:General Remarks on Money Laundering

1.1 The Emergence of MLML is a process to legalize dirty money g

enerated from crimes. In the modern world, organized crimes ar

e getting tremendous （巨大的） profits（利润） .

It is no use making a large profit out of a criminal activity if the profit cannot be put to use.

1.2 The Status Quo （现状） of MLMake use of financial institutions(deposit, loan, acceptance, discount, foreign

exchange, settlement)Make use of non-financial institutionsTurn to the expertise （专门技术） of prof

essionalsTake advantage of high technologyPrefer to launder money in developing cou

ntries

How to launder money?

A segment （片段） of Shawshank Redemption （肖申克救赎） Andy (banker) ： prisoner

Red ： prisoner, Andy’s friend

Norton ： warden （监狱长）， bribee （受贿人）

Ned ： briber （行贿人）

Two questionsWhere is Norton’s dirty money from?

How does Andy launder the dirty money?

The ways to launder money

Make use of straw men （稻草人）

Use of shell company

Use of legitimate business

Cash smuggling

Use of anonymous （匿名的） assets

1.3 The Definition of ML ML is a process to legalize dirty money generat

ed from crimes. Elements ：—scope of underlying crimes/predicate offences

（基础犯罪）—subject 主体（ individuals or organizations ）—mens rea （犯罪意图）（ intentional 故意 or n

egligent 过失） —Behavioral patterns （行为方式）

Key words: Underlying crimes: 基础 / 上游犯罪 Predicate offences: 基础 / 上游犯罪 Generate: 产生 Proceeds: 收益 Individual: 个人 Behavioral pattern: 行为方式 Conversion: 转换 Transfer: 转移 Concealment: 隐藏 Disguise: 伪装 Acquisition: 获得 Possession: 占有

1.4 The Characteristics of ML

A secret crime, without direct victimsA transnational crimeA professional crimeA complicated crime: ---placement stage ---layering stage ---integration stage

Placement stage: cash derived directly from criminal activity is first placed either in a financial institution or used to purchase assets.

Layering stage: the stage at which there is the first attempt at concealing or disguise of the source of the ownership of the funds.

Integration stage: the stage at which the money is integrated （合并 ）into the legitimate （合法的） economic and financial system and is assimilated （吸收） with all other assets in the system.

1.5 The Significance of the Fight against ML

Effective check （制止） on ML affects the incidence （发生） of other crimes.

Actions against ML ensure the integrity（廉正） of financial system.

Effective control on ML will contribute to a favorable （良好的） figure （形象）of a country.

Case (Egmont. 15) Harry was an owner of a local car service station in a

small village in Europe and appeared extremely cash rich as result of his business. However, some years before he had embezzled a sizeable amount of money from another company for which he had used to work, and had been able to live off these stolen funds for many years. As time passed, he had managed to spend a sizeable amount but had begun to consider which locations - other than his home - he could use to hide the money, as it was still in cash and vulnerable to theft or detection. He decided that a better method was to hide the money in the banking system itself, using his company as a cover, by claiming that the cash was part of his regular income.

To avoid difficult face-to-face questions from the local bank employees, he deposited approximately US$14,000 - the majority in old bills - into the bank’s night safe（夜间保险箱） , claiming this amount to be the daily sale from his garage （修车厂） . However, Harry did not take into account the inquisitiveness （好奇，好问） of the bank personnel. As they emptied the night safe the following day, Harry’s deposit immediately raised suspicions. How could a car service station get so many old currency bills, and how could any business in such a small location attract so much income in one day? The bank disclosed the deposit transaction to the national FIU. After analyzing the disclosure, the FIU decided to disseminate （传播） a report to the police.

Based on the given information, the police conducted a house search at Harry’s place. The search quickly discovered a great deal more money - in his own safe he held more than US$50,000 and, according to notes the police found, he had also deposited a large amount of money in his mother’s safe deposit box （银行保管箱） at another financial institution. The police obtained legal permission to search the safety deposit box, and found another US $ 62 5,000.

Harry realized that the financial evidence was damning （导致定罪的） . He told the police about another US$95,000 that he had hidden at his mother’s home, and about the fraud, embezzlement and tax evasion he had been concealing for some time. Thanks to the disclosure of an alert bank, Harry was sentenced to two and a half years imprisonment and nearly US $ 700,000 was confiscated.

Watergate scandalDemocratic Party ：民主党Republican Party: 共和党Wiretap ：窃听Run for ：竞选Exculpate ：开脱 Investigation: 调查 Indict: 控告

House of Representatives: 众议院Authorize: 授权Judiciary Committee ：司法委员会 Impeachment: 弹劾Proceedings: 程序Resign/ Resignation: 辞职

Under Richard Nixon’s administration,Operatives from the Committee to Re-

elect the President, or CRP, broke into the Watergate office complexDemocratic Party National Committee install detectaphone, wiretapWashington Post A Check for $25,000 was deposited in

the bank account of one of the burglars

Exculpate In early 1974, seven staffs were indicted

by grand juryThe House of RepresentativesThe Judiciary Committee Impeachment proceedingsResign from his term as president

Watergate: The Scandal That Brought Down Richard Nixon

Overview of Watergate scandal "Watergate" is a

general term used to describe a complex web of political scandals between 1972 and 1974.

The word specifically refers to the Watergate Hotel in Washington D.C.

Watergate hotel in Washington

Watergate has entered the political lexicon( 词典 ) as a term synonymous with corruption and scandal, yet the Watergate Hotel is one of Washington‘s plushest ( 豪华的 ) hotels. Even today, it is home to former Senator ( 议员 ) Bob Dole and was once the place where Monica Lewinsky laid low ( 藏匿 , 击倒 ).

The Burglary The Watergate

scandal was a 1972 break-in at the Democratic National Committee headquarters at the Watergate Hotel in Washington, D.C. by 5 members of Richard Nixon's administration .

The Watergate “five”

Bob Haldeman, John Mardian, Kenneth Parkinson, John Ehrlichman, John Mitchell, Dec. 30, 1974.

Nixon reacts to Watergate Nixon made three major speeches on the Wa

tergate scandal during 1973 and 1974. The first was on April 30, 1973, in which he announced the departure ( 离开 , 违背 , 偏离 ) of Dean, Haldeman and Ehrlichman.

A more defiant ( 挑衅 ,目中无人的 ) speech was delivered on August 15, 1973.

Perhaps the politically most difficult speech was the one on April 29, 1974, in which Nixon released partial transcripts (抄本 ) of the White House tapes.

The investigation Initial investigations of Watergate were heavily inf

luenced by the media, particularly the work of two reporters from the Washington Post, Bob Woodward and Carl Bernstein, along with their mysterious informant ( 告密者 ), Deep Throat. Political investigations began in February 1973 when the Senate (参议院 ) established a Committee to investigate the Watergate scandal.

The Committee also uncovered the existence of the secret White House tape recordings, sparking ( 发动 ) a major political and legal battle between the Congress and the President.

Bob Woodward and Carl Bernstein

因报道“水门丑闻”而获普立策奖的记者 伍德沃德（右）和伯恩斯坦（左）。 两人于七三年摄于《华盛顿邮报》报社内。

In 1974, the House of Representatives authorized the Judiciary Committee to consider impeachment ( 弹劾 ) proceedings against Nixon.

The work of this Committee was again the spotlight (聚光灯 ) a quarter of a century later when Bill Clinton was impeached.

Washington Post find the “Deep throat”

Former FBI official W. Mark Felt

Mark Felt, Watergate's `Deep Throat,' dies at 95 (Dec. 18, 2008)

SAN FRANCISCO – , the former second-in-command who revealed himself as “Deep Throat” 30 years after he tipped off reporters to the Watergate Scandal that toppled a president, has died. He was 95.

While some — including Nixon and his aides — speculated that Felt was the source who connected the White House to the June 1972 break-in at the headquarters of the Democratic National Committee, he steadfastly denied the accusations until finally coming forward in May 2005.

"I'm the guy they used to call Deep Throat," Felt told O'Connor for the Vanity Fair article, creating a whirlwind of media attention.

Critics, including those who went to prison for the Watergate scandal, called him a traitor for betraying the commander in chief. Supporters hailed him as a hero for blowing the whistle on a corrupt administration trying to cover up attempts to sabotage opponents.

Ironically, while providing crucial information to the Post, Felt also was assigned to ferret out the newspaper's source. The investigation never went anywhere, but plenty of people, including those in the White House at the time, guessed that Felt, who was leading the investigation into Watergate, may have been acting as a double agent.

Woodward and Bernstein said they wouldn't reveal the source's identity until he or she died, and finally confirmed Felt's role only after he came forward.

"People will debate for a long time whether I did the right thing by helping Woodward," Felt wrote in his memoir. "The bottom line is that we did get the whole truth out, and isn't that what the FBI is supposed to do?"

Money Laundering & Watergate1972 年 4月 7日，在水门案发前两个月，一部有关监控美国国内选举时政治捐款的新法律生效。这部法律要求参加选举的政治组织公布其竞选期间所获得的所有政治捐款的来源和用途。

水门事件 :将各种秘密政治捐款（无论是支票、证券、股票期权）全部越境转移到墨西哥的一家银行。美国无法对这家银行进行监控。开设这个银行账户的人是无党派倾向的人士。然后从这家银行里将会源源不绝地流出各种资金，进入“争取总统连任委员会”的财务主管施坦斯的保险柜里。

Judge in Tom DeLay case is removed Austin, Texas ─ Former House Majority Leader

Tom DeLay, won an early round in his money laundering and conspiracy trial Tuesday by successfully getting a judge aligned with Democratic candidates and causes removed from the case…

DeLay is accused, along with his associates Jim Ellis and John Colyandro, of soliciting(恳求 , 获得 ) $190,000 in corporate donations and sending them to the Republican National Committee. The committee subsequently donated a total of $190,000 to seven Republican candidates for the Texas Legislature, circumventing Texas election law that bans direct corporate contributions to state campaigns.

---San Jose Mercury News

《法制日报》 2011 年 1 月 12日 据新华社电 美国前众议院多数党领袖汤姆 ·迪莱因犯有

合谋洗钱罪，于 1 月 10日被判入狱 3 年。 得克萨斯州法官帕特 ·普里斯特当天还宣布，迪莱还犯有洗钱罪，须入狱 5 年，但可缓期 10 年执行。

得克萨斯州一个陪审团去年判定，迪莱的洗钱罪名和合谋洗钱罪名成立。

迪莱在宣判后坚称自己是清白的，是被有政治动机的对手所陷害。他的律师表示，将就判决结果进行上诉。

现年 63岁的迪莱于 1984 年首次当选议员进入国会众议院，并于 2002当选众议院多数党领袖。 2005 年 9 月，迪莱因涉嫌违法使用政治捐款帮助得克萨斯州议会共和党候选人竞选而被该州检察官起诉。随后，他宣布辞去众议院多数党领袖职务。

Another term, another jinx

Nixon had Watergate,Clinton had Monica,And Now Bush has Iraq and Katrina,

and Harriet.Bush: Rough seas in his second term.

Bush has to make amends (赔礼 ) for folly (愚蠢 ) of Miers Nomination.

Next Nominee will need qualifications (资格 ) beyond loyalty to president.

---San Jose Mercury News (圣何塞信使报 )

Chapter 2: Global Responses to

Money Laundering

Case Study 1

A Brazilian company signs a contract to export soybeans to a German company.

The German company prepays the Brazilian company for the shipment.

The Brazilian company immediately transfers the funds to a third party that is unrelated to the transaction.

The soybeans that were purchased by the German company are never shipped.

Case Study 2 A criminal organization exports a relatively small

shipment of scrap metal, but falsely reports the shipment as weighing several hundred tons.

Commercial invoices, bills of lading and other shipping documents are prepared to support the fraudulent transaction.

When the cargo is loaded on board the ship, a Canadian customs officer notices that the hull of the ship is still well above the water line. This is inconsistent with the reported weight of the shipment of scrap metal.

The cargo is examined and the discrepancy between the reported and actual weight of the shipment is detected.

It is assumed that the inflated value of the invoice would have been used to transfer criminal funds to Canada.

Case Study 3 In Norway in January 2004 a person reported

a break-in in his house to his insurance company. The person reported that some of the stolen goods were jewellery worth NOK 110,000. Pursuant to his report he had sold a boat for NOK2.7m and received jewellery worth NOK 500,000 as part of the payment for the sales amount. This person was on a low income and had no assets. In 2000 he had no income or assets at all. In 2001 his income was NOK 43,000 and in 2002 his income increased to NOK 233,000. Either it was not possible for him to have been the real owner of this valuable boat or it was the case that he paid for the boat with illicit funds.

2.1 The Basel Committee StatementCustomer identificationCompliance with laws （遵守法

律）Cooperation with law enforcement

authoritiesPolicies, Procedures and training

2.2 United Nations Conventions against Illicit （非法的） Traffic in （买卖） Narcotic Drugs （麻醉药品） and Psychotropic Substances （精神药物）

Criminalization of drug-related ML

(mandatory and permissive obligations)Confiscation （没收）International cooperation

2.3 United Nations Convention against Transnational Organized Crime ML as an independent crimeCriminalization of non-drug related MLExtraterritorial jurisdiction （域外管辖）Legal person’s criminal responsibilitySuppressive and preventive measures

44. (Egmont) Peter was a sales manager at Baking & Freezing

Inc, a company that sold kitchen equipment to restaurants. To earn some extra money in addition to his regular salary, he decided to sell some of the company’s equipment for his own purposes. As a sales manager, it was easy for him to arrange orders in such a way that goods were removed from the warehouse （仓库） without invoices（发货单） having to be raised. As the theft of this equipment included cookers （炊具） and other large consumer items, it was a labour intensive task and Peter received assistance from his brother Johan.

Peter sold the stolen goods to different restaurant owners he knows that have no problems with buying cheap goods of unclear origin. Peter’s sister Harriet was more than willing to open a new company account for these selected ‘customers’ to use to deposit their payments.

In order to give additional legitimacy to the account, Harriet formed a company with a similar name to Baking & Freezing and was able to use the company documentation at the bank. The boss of Baking & Freezing reported the thefts to the police when the missing stock was brought to his attention.

Peter had stolen equipment totaling approximately US$196,000 from the company. In order for the police to gain more insight into Peter’s financial transactions, the help of the national FIU was requested. The FIU subsequently learnt that Peter purchased a house with the money he earned from selling the stolen goods. Thanks to the co-operation and investigations of both the police and the FIU, the money in Peter’s and his family’s accounts were frozen.

Subsequently, Peter was prosecuted for both ‘stealing by an agent’ and money laundering. In 1999, Peter was convicted for 18 months imprisonment for ‘stealing by an agent’ and an additional 18 months for money laundering offences. The house that he bought with the proceeds of the sale of the stolen goods was confiscated and sold, and as a result, the owner of Baking & Freezing was compensated for the theft.

2.4 Financial Action Task ForceThe only international body which

specializes in and concentrates solely upon the fight against ML.

After terrorist attack in US, FATF also pays attention to terrorist financing.

Focusing on the following major tasks:

---Monitoring members’ progress in applying measures to counter ML

---Reviewing ML techniques and countermeasures

---Spreading the anti-ML messages to all continents and regions of the globe.

The most important achievements of FATF: Recommendations

---1990 Original Forty Recommendations

---1996 Revised Forty Recommendations

---2003 Revised Forty Recommendations

---Eight Special Recommendations on TF

2.4.1 1990 Recommendations

Improvement in national legal systems

---criminalization of ML

---identification, freezing and seizure of assets related to ML

Enhancement of the role of financial institutions

---customer identification

---suspicious transactions reporting

---record keeping

Strengthening international cooperation

---encourage authorities to exchange information

---suggest cooperation should be supported by agreements

---encourage countries to take steps to improve mutual assistance

2.4.2 1996 RecommendationsExtension of predicate offencesApplication to non-bank financial

institutionsApplication to financial activities of non-

financial businesses or professionsMandatory reporting of suspicious

transactions

Application ‘customer identification’ to legal entities

Special attention to cross-border cash movement

Special attention to shell companyEncouragement of the use of ‘controlled

deliveries’ techniques

2.4.3 2003 Recommendations Specifying a list of crimes that underpin(支撑 )

ML Expansion of the customer due diligence proce

ss for financial institution Enhanced measure for correspondent banking

and politically exposed persons Application to non-financial business and profes

sions Inclusion of key institutional measures

2.4.4 Nine Recommendations on Terrorist FinancingRatify （批准） and implement （执

行） UN instrumentsCriminalize the financing of terrorism, te

rrorist acts and terrorist organizationFreeze, seize and confiscate terrorist as

setsReport suspicious transaction linked to t

errorism

Provide the widest possible range of assistance to other countries for terrorist financial investigations

Impose anti-ML requirements on money remittance （汇款） system

Strengthen customer identification measures in wire transfer （电汇）

Ensure that entities （组织） cannot be misused （滥用） to finance terrorist

Ensure cross border declaration and disclosure

2.4.5 Monitoring the Implementation of These Recommendations Self-assessment exerciseMutual evaluation processPolicy on non-compliance （不顺从）

members （ five steps ）Designating （指明） non-cooperative j

urisdiction

For China:An Observer, in Jan. 2005A Member State, in June 28, 2007On 29 June 2007,

Summary of the Third Mutual Evaluation Report on Anti-money Laundering and Combating the

Financing of Terrorism

Background Information 1. This report provides a summary of the anti-

money laundering (AML)/counter-terrorist financing (CFT) measures in place in the People’s Republic of China (China) as of 24 November 2006, and shortly thereafter. The report describes and analyzes those measures, and provides recommendations on how certain aspects of the system could be strengthened. It also sets out China’s levels of compliance with the Financial Action Task Force (FATF) 40+9 Recommendations.

2. In a very short time, China has made significant progress in implementing AML/CFT measures. China first began seriously focusing on AML/CFT issues in 2003, with the enactment of three sets of regulations that imposed some relevant AML/CFT requirements on the banking, trust and finance sectors. In 2004, the People’s Bank of China (PBC) began conducting on-site （现场的，实地的） AML compliance inspections across the country, and also filed an application for FATF membership. Shortly after becoming an observer to the FATF in 2005, China enacted its AML/CFT law and two related regulations in October 2006 which are applicable to all financial institutions. Since then, China has actively continued to refine （提炼） and enhance its AML/CFT regime.

3. The FATF and the Eurasian Group (EAG) have jointly assessed China’s AML/CFT standards. Among the major findings of the report are as follows:

With the enactment of the AML Law and the amendment of the Penal Code in 2006, China has in a very short time made significant progress in implementing and enhancing its AML/CFT system.

There seems to be a reluctance to pursue money laundering as a stand-alone （独立的） offence, except as an offshoot of a known predicate criminal activity. Overall, the effectiveness of the money laundering offence should be enhanced by raising awareness with the prosecutorial and judicial authorities and by criminalizing self-laundering.

Comprehensive preventive measures have only recently been enacted and continue to be expanded, but are still relatively limited to meet the FATF requirements.

The AML/CFT measures presently apply to a broad range of financial institutions; however, the FATF recommends that comprehensive AML/CFT measures should also apply to a wider range of non-financial businesses and professions.

The FATF noted a robust (坚实的 ) basic framework to fight the misuse of legal persons and arrangements. Nonetheless, information on beneficial ownership is not available which presents a major shortcoming.

With respect to terrorist financing, China does not have a separate preventive mechanism to freeze terrorist assets, however, China’s efforts to proactively （主动地） address alternative remittance systems is commendable.

40 FATF Recommendations

C LC PC NC

Amount 8 12 13 7

Rate 20% 30% 32． 5% 17． 5%

9 FATF Recommendations

C LC PC NC

Amount 0 4 3 2

Rate 0% 44% 33% 22%

2.5 Interpol (International Criminal Police Organization)

Headquarters: 总部Misunderstand:误解Super-national police authority reliable:可靠的Communication system: 通讯系统Antenna: 天线

Working definition:---Any act or attempted act to conceal or d

isguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.

Elements:---act---mens rea---underlying crimes

Three ResolutionsSuggest MS to take legislative measure

s to suppress and prevent ML Suggest MS to alleviate（减轻）

the difficulties encountered by law enforcement authorities

Suggest MS to collect and circulate dada, particularly through Interpol channels

Case Study

Department of HealthCGMP: current good manufacture practi

ceCode:编码pill: 药Pharmaceutical: 药物 / 制药的

Mr. Tsai intended to expand his pharmaceutical （制药） company to the CGMP level in 1996, and required capital of about NT$0.1bn, to build factories and purchase equipment. He had NT$70m on hand and requested a loan from a bank. However, since the economy and his company subsequently became poor, the bank required Mr Tsai to pay back the loan. Mr Tsai had learned of the Yeh brothers who issued loans to people, and borrowed from them at usurious （高利贷的） interest rates.

In early 1998, the Yeh brothers introduced Mr. Tsai to Mr. Chen, claiming that Mr. Chen could help sell Mr. Tsai’s company’s shares. However, Mr. Chen also loaned money to Mr. Tsai at an inappropriate percentage rate. The Yeh brothers and Mr. Chen received many cheques from Mr. Tsai, and deposited them into numerous dummy （虚假的） accounts in seven banks to hide the profits of the usury （高利贷） . Later, they withdrew all the cash from those banks.

Tai’s Company

Yeh Brothers Chen

Dummy accounts in banks Dummy accounts in banks

Analysis: some characteristics of money launderingA customer suddenly receives a large a

mount of money that is inconsistent with his status or salary and occupation.

A customer always asks the bank to manage his transactions in cash.

All the deposited and withdrawn amounts are almost the same within short intervals （间隔） .

Mr Tzeng used to work at a bank in Kaohsiung （高雄） . In 1999, he was transferred to the Credit Information Section(信用调查部 ) in the Tzu Kuan Branch. However, he used the names of some of the bank’s customers to request false loans to play the “Mark Six Lottery” and to purchase stocks. He opened six dummy accounts, forged （伪造） loan application to attain illegal loans.

He cooperated with his friend, Mr. He, and transferred money to Mr. He’s account from the dummy accounts in an attempt to cover his steps. He later remitted money to the accounts of other people, retained some cash, and used the money to purchase stocks and pay off his gambling debts.

Banks

Six dummy accounts He’s account

Other people’s accounts

Analysis: Characteristics of money launderingAn employee leads a lavish （奢侈的）

lifestyle that cannot be supported by his salary.

A customer repeatedly remits large amounts of money to a certain account on behalf of other people, or using different third parties.

Chapter 3: Western European Responses to ML

3.1 The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime

Criminalization of non-drug related MLPermitting but not requiring the criminali

zation of negligent ML Investigative, provisional measures and

confiscation both at national and international level

Legal remedy （救济） and the rights of bona fide third parties （善意第三人）

3.2 Council Directive of 10 June 1991 on Prevention of the Use of the Financial System for the Purpose of ML

(The Council of European Communities)

Prohibiting but not criminalizing money laundering

General coverage of the whole financial institutions

Criminal activities replacing drug trafficking offences

Concrete obligations for financial institutions

3.3 Directive 2001/97/EC of the European Parliament and of the Council of December 2001, Amending Council Directive 91/308/EEC on Prevention of the Use of the Financial System for the purpose of Money Laundering

The coverage of financial institutions and non-financial institutions

The widening of scope of predicate offences

The obligation of suspicious transactions reporting

The obligation of customer identification

Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing

Coverage

---Trust or company service providersPredicate offences:

---all offences punishable by deprivation of liberty or a detention order for a maximum of more than one year;

---all offences punishable by deprivation of liberty for a minimum of more than six months.

Chapter 4: Chinese Criminal Law

Concerning Money Laundering

4.1 Evolution of the Provisions on Money Laundering

“Decision on Suppressing Drug Dealing” (1990)

The 1997 Criminal Code

( Overtly Politically; Dreadfully ambiguous;

Inconsistent with international standards )The Third Amendment to the 1997

Criminal Code (2001)The Sixth Amendment to the 1997

Criminal Code (2006)

4.2 The elements of ML by Chinese Criminal Law

The scope of the predicate offencesThe mens rea of MLThe subject of MLThe behavioral patterns of MLThe legal interest that ML infringes

4.3 The Relationship Between Money Laundering and Relevant Offences

The legislative forms of MLConcealing, transferring, purchasing

and disposing of plunder (Art. 312)Harboring, transferring or covering up

narcotic drugs or gains from relevant crimes (Art. 349)

4.4 The punishment for Money Laundering

Loss of freedomFinancial penaltyConfiscation of illegal gains

Chapter 5: The Chinese Financial Institution Campaign

Against Money Laundering

Three rules (Jan.3, 2003)

The Rules for Anti-money Laundering by Financial Institutions

The Administrative Rules for the Reporting of Large-value and Suspicious RMB Payment Transactions

The Administrative Rules for the Reporting by Financial Institutions of Large-value and Suspicious Foreign Exchange Transactions

Main Contents The coverage of financial institutions The definition of money laundering The principles of anti-money laundering Customer identification Large-value transaction reporting system Suspicious transaction reporting system Account information and transaction record

keeping

Law of the PRC on Anti-MLAdopted at the 24th meeting of the

Standing Committee of the 10th National People’s Congress, on Oct. 31, 2006.

narrow coverage, low hierarchy

C 1 ---General Provisions, C 2 ---Anti-money Laundering

Supervision and Administration, C 3 ---Anti-money Laundering

Obligations of Financial Institutions, C 4 --- Anti-money Laundering

Investigation, C 5 --- International Anti-money

Laundering Cooperation, C 6 --- Legal Liabilities,C 7 ---Supplementary Provisions.

Two Rules (Nov. 14, 2006)

The Rules for Anti-money Laundering by Financial Institutions

Administrative Rules for the Reporting of Large-Value and Suspicious Transactions by Financial Institutions

Main Contents The Coverage of financial institutions (new):

---securities companies, future brokerage companies and fund management companies;

---insurance companies and insurance asset management companies;

---trust and investment companies, financial asset management companies, finance companies, financial leasing companies, auto finance companies and money brokerage companies;

---other financial institutions specified and announced by the People's Bank of China.

4 kinds of large-value transactions (Art.9); 18 kinds of suspicious transactions for

Commercial banks, urban credit cooperatives, rural credit cooperatives, postal savings institutions, policy banks and trust and investment companies (Art.11)

13 kinds of suspicious transactions for securities company, future brokerage companies and fund management companies (Art.12)

17 kinds of suspicious transactions for insurance companies (Art. 13)

5.2 ConclusionsObligations are mainly focused on

financial institutions.Anti-ML rules fall under the hierarchy of

national laws and the rules of administrative agencies.

FIU is very recent, its role is ambiguous.

Chapter 6: Current Situation of ML

Crime in China

6.1 Predicate offencesOrganized underworld crimesSmuggling crimesDrug crimesTerrorism crimesCrimes of disrupting the order of finical

administrationCrimes of financial fraudCrimes of embezzlement and bribery

Lai Chang xing Case Lai Changxing, who

se Yuan Hua group is said to have smuggled 6 billion US dollars in luxury goods, cars, oil and raw materials into China during the early 1990s.

The funds would then be cleansed

1.deposit money into underground banks

3.Partner transfer money to Lai’s bank

Account abroad

2. transfer moneyto the partner in Hong Kong

It is said that at least 12 billion yuan has been laundered through "underground banks”.

it is still unknown how much money the Chinese government will recover.

6.2 Other factors conducive to ML

CorruptionUnderground money shopShell companies

6.3 Judicial situation of ML: Few has been prosecuted yetML is often masked by legal business.ML has no direct victim.ML is a professional crime. Investigative authorities lack superb

investigative capability for white-collar crime.

The owner of money can’t be regarded as a money launderer.

The scope of predicate offences is not as wide as that of other countries.

The CL only provides intentional laundering.

The burden of proof is heavy.

6.4 Endeavors to be made Criminal law on ML should be improvedThe weakest link in the process of ML

should be recognizedFinancial institutions should truly

implement relevant obligationsNon-financial institutions should assume

anti-ML obligations Special investigative techniques should

be used

Case Study: In March 1989, Zhang, a resident of Hong Kon

g was desirous to transfer proceeds, which were derived from his smuggling activity, from mainland of China to Hong Kong. He consulted with Qiuyi Company in Hong Kong about his payment on behalf of the latter to another company in Jiangsu Province, which sold cotton yarn to QiuYi Company. This sum of payment is about 830,000 RMB. After that, Qiuyi Company remitted Hong Kong dollars to the account of Zhang in Hong Kong.

In 1989, Wu Da-peng, an employee in Beijing branch of the Bank of China, colluded with businessmen in Hong Kong and Tai Wan and stole 4 bills of exchange by taking advantage of his position and remitted one draft, with the amount of $ 870,000, to several foreign financial institutions, with the purpose of investing in China with these booties.

In February 1993, Dong, a Chinese American, and Zheng, an overseas Chinese, entered our country with 1.4 million US dollar, which was derived from drug dealing. They attempt to launder the proceeds via Chinese financial institutions.

First ML Case (Mar. 5, 2004) Drug Dealer: Ou Wei neng and Ou Li er Money Launderer: Wang Zhao Way: buying a a company, Bai Ye Forest Indu

stry Ltd. in Guang Zhou Court: Hai Zhu District Court in GZ Sentence: 18 months (imprisonment)

275,000 Yuan (fine)

Mercedes Benz car (confiscation)

Second ML Case (May 9, 2005) Drug Dealer: Cai Qinghai Money Launderer: Cai Jianli, Cai Huaize Way: Cai Qinghai remitted illicit funds to undergro

und banks in China from the Philippines. He then ordered Cai Huaize and Cai Jianli to deposit the dirty money into their own accounts at the ABC and CBC (农行和建行 ).

Court: Intermediate People Court of Quanzhou Sentence: Cai Jianli (3 years, 330,000 Yuan)

Cai Huaize (2.5 years, 175,000 Yuan)

Third ML Case (Aug. 23, 2006)15 Smugger: Huang Xi tian, Huang Chu

dong and others, committed cigarette smuggling from Vietnam to China.

Funds: 174 million YuanHuang Guang rui: deposited them into do

zens of dummy accounts first, then withdrew the cash from banks, and sent them to A Nan, who transfer them into foreign currency, and sent them into the accounts in Hong Kong, specified by the smugglers, through underground banks.

Court: Bei Hai Intermediate people’s Court in Guang Xi, and Guang Xi High People’s Court

Sentence: 5 years

6 million Yuan (fine)

1 million Yuan (confiscation)

Fourth ML case (Oct. 22, 2007, Shanghai)

被告人潘儒民等四被告人明知是金融诈骗犯罪的所得，为掩饰、隐瞒其来源和性质，仍提供资金账户并通过转帐等方式协助资金转移，其行为构成洗钱罪。

结果 :潘儒民： 2 年，罚金： 6万元。 祝素贞： 1 年 4 个月，罚金： 2万元。 李大明： 1 年 3 个月，罚金： 2万元。 龚媛： 1 年 3 个月，罚金： 2万元。

Chapter 7: Comparison of anti-ML

System between the EU and China

7.1 Criminal measures

7.1.1 Money laundering offencesScope of predicate offencesMens rea of ML offenceSubject of ML offence

7.1.2 Confiscation and provisional measuresValue confiscationConfiscated assets sharing measuresReversal of the burden of proofProtecting the rights of bona fide third

parties

7.2 Preventive measures

7.2.1 Coverage of anti-ML measuresFinancial institutionsNon-financial institutions

7.2.2 Customer identificationExemption of the obligationKnotty issues

---Smurfing practice

---Non-face to face transactions

---Overseas private companies

---Shell companies

7.2.3 Suspicious Transaction ReportingCriteria of suspicious transaction

---subjective system

---objective system

---hybrid system

Categories of FIU

---administrative authority

---police authority

---judicial authorityNew issues

---report attempt ML

---make feedback

---protect staff

Chapter 8: Several Special Issues

8.1 Banking secrecy and ML

8.1.1 Origin and foundation of Banking secrecy

The first banking secrecy law in 1930sJustification （认为正当，理由）---Individual privacy right

---Contractual （契约的 ） nature

---Professional secrecy

8.1.2 Lifting （撤销） of banking secrecy In the course of suppression

---Confiscation

---International cooperation In the course of prevention

---customer identification

---record keeping

---suspicious transaction reporting

8.1.3 Banking secrecy in ChinaThe Law on Commercial Banks (1995)Anti-ML Rules in 2003 and 2006

---customer identification

---record keeping

---large-value transactions reporting

---suspicious transactions reporting

8.1.4 Conflict between banking secrecy and the fight against crime

Know-Your-Customer Principle in USA in 1998

After terrorist attack in 2001Conclusion:

---Privacy interests are highly valued, so are the interests of being safe.

8.2 Lawyers, notaries, accountants and ML

8.2.1 A new trend of ML methodsReasons:

---ML is a complicated process.

---The Professionals provide a wide range of services.

---The Professionals have respectable status.

---Professional secrecy exists.

8.2.2 Different role between the professionals and financial institutions

About customer identification

---easy or difficult to identifyAbout suspicious transactions reporting

---structuring practice

---single, isolated transaction or all ?

8.2.3 Perplexity(困惑 ) of the Professionals’ anti-money laundering obligations

Conflict with professional privilege Insufficient protection of clientsSerious risk to professionals

8.2.4 The solution to this conflictMake a difference between activitiesReport to self-regulatory bodies

Chapter 9: High technology and Money Laundering:

----From realistic world to cyberspace

9.1 The inconvenience of traditional methodsCurrency smugglingVia financial institutionsVia Non-financial institutions

currency + intermediary

---limited face amount

---large bulk

---taking time

---customer identification

---record keeping

---suspicious transactions reporting

9.2 New challenges to current anti-ML measuresElectronic money

---smaller bulk

---easier and quicker to transfer

---much more anonymous

Internet banks/ Internet casinos

---Easy to access

---Prompt and convenient

---Anonymous

---difficult to control

9.3 Responses to high technology launderingLimit the functions and capacity of smart

cardsLink new payment technology to

financial institutions and bank accountsRequire standard record keeping

procedures to enable the examination, documentation, and seizure of relevant records by investigating authorities

Develop new information technology capabilities that will detect and verify the suspicious transactions and customer.

Restrict on-line transactions only to those accounts that have been established in a traditional way.

Ensure that the information be maintained for a reasonable period and be made available internationally in a timely manner.

The statement requires banks to take these measures:

---making reasonable efforts to determine the true identity of all customers requesting the institution’s services;

---instituting （制定） effective procedures for obtaining identification from new customers;

---refusing to conduct business with customers who fail to provide evidence of their identity;

---paying particular attention to identify the ownership of all accounts and those using safe-custody facilities.

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Banks should ensure that business is conducted in conformity with （符合） high ethical standards and that laws and regulations pertaining to （附属的） financial transactions are adhered to（遵守） .

Banks should not set out to offer services or provide active assistance in transactions which they have good reason to suppose that they are associated with money-laundering activities.

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Banks should cooperate fully with national law enforcement authorities.

Banks should avoid providing support or assistance to customers seeking to deceive law enforcement agencies through the provision of altered, incomplete or misleading information.

Where there are reasonable grounds for suspecting money laundering, take appropriate measures that are consistent with the law, for example, to deny assistance, sever （切断） relations with the customer and close or freeze accounts.

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Banks should formally adopt policies consistent with the principles set out in the Statement.

Banks should ensure that all members of their staff concerned are informed of the bank’s policy in this regard.

Attention should be given to staff training in matters covered by the Statement.

Banks should implement specific procedures for customer identification and for retaining （保留） internal records of transactions.

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Under Article 3(1)(b), the crime of money laundering is:

(ⅰ) The conversion or transfer of property, knowing that such property is derived from any offence or offences established in accordance with subparagraph (a) of this paragraph, or from an act of participation in such offence or offences, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions;

(ⅱ) The concealment or disguise of the true nature, source, location, disposition, movement, right with respect to, or ownership of property, knowing that such property is derived from an offence or offences established in accordance with subparagraph (a) of this paragraph or from an act of participation in such an offence or offences.

In addition, Article 3(1)(c) of this Convention requires signatory states to criminalize the following acts under its domestic law, subject to its constitutional principles and the basic concepts of its legal system:

( ) The acquisition, possession or use of property, ⅰknowing, at the time of receipt, that such property was derived from an offence or offences established in accordance with subparagraph (a) of this paragraph or from an act of participation in such offence or offences;

…… ( ) Participation in, association or conspiracy to ⅳ

commit, attempts to commit and aiding, abetting, facilitating and counseling the commission of any of the offences established in accordance with this article.

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Article 6 rules the criminalization of the laundering of proceeds of crime, which reads,

“Every State Party shall adopt, in accordance with fundamental principles of its domestic law, such legislative and other measures as may be necessary to establish as criminal offences, when committed intentionally:

(a) (i) The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action;

(ii) The concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime;

(b) Subject to the basic concepts of its legal system:

(i) The acquisition, possession or use of property, knowing, at the time of receipt, that such property is the proceeds of crime;

(ii) Participation in, association with or conspiracy （同谋） to commit, attempts to commit and aiding, abetting （教唆） , facilitating and counseling(商议 ) the commission of any of the offences established in accordance with this article.

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predicate offences shall also include offences committed both within and outside the jurisdiction of the State Party in question. However, “offences committed outside the jurisdiction of the State Party shall constitute predicate offences only when the relevant conduct is a criminal offence under the domestic law of the State where it is committed and would be a criminal offence under the domestic law of the State Party implementing or applying this article had it been committed there. Art. 6(2)(c)

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In the 1990 Strasbourg Convention, laundering offence is formulated under Article 6(1). It states: “ Each party shall adopt such legislative and other measures as may be necessary to establish as offences under its domestic law, when committed intentionally:

a. the conversion or transfer of property, knowing that such property is proceeds, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of the predicate offence to evade the legal consequence of his action;

b. the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is proceeds;

and, subject to its constitutional principles and the basic concepts of its legal system:

a. The acquisition, possession or use of property, knowing, at the time of receipt, that such property was proceeds;

b. participation in, association or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counseling the commission of any of the offences established in accordance with this article.

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the 1990 Strasbourg Convention permits, but does not require, the criminalisation of negligent laundering, which is formulated under paragraph 3 of Article 6. It reads,

“ Each party may adopt such measures as it considers necessary to establish also as offences under its domestic law all or some of the acts referred to in paragraph 1 of this article, in any or all of the following cases where the offender:

---ought to have assumed that the property was proceeds; …”

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Firstly, it requires the identification of customers and beneficial owners when entering into business relations “particularly when opening an account or savings account, or when offering safe custody facilities.” The identification requirement shall also apply for any other transaction involving a sum amounting to ECU 15000 or more, “whether the transaction is carried out in a single operation or in several operations which seem to be linked.

Furthermore, “Credit and financial institutions shall carry out such identification even where the amount of the transaction is lower than the thresholds laid down, wherever there is suspicion of money laundering.”

Secondly, the directive requires member states to keep certain records for use as evidence in any investigation into money laundering for a period of at least five years. The certain records include, “in the case of identification, a copy or the references of the evidence required” and “in the case of transaction, the supporting evidence and records, consisting of the original documents or copies admissible in court proceedings under the applicable national legislation.”

Thirdly, obligations are imposed to ensure cooperation between relevant institutions and the authorities responsible for combating money-laundering activities. There are two kinds of cooperation:

---one is about informing the judicial or law enforcement authorities competent, on their own initiative, of any fact which might be an indication of money laundering;

---the other one is about furnishing those authorities, at their request, with all necessary information, in accordance with the procedures established by the applicable legislation.

Finally, the directive requires the establishment by credit and financial institutions of procedures of internal control and training programs in this field.

Adequate procedures of internal control and communication can forestall and prevent operations related to money laundering. Appropriate training programs can help the employees recognize operations which may be related to money laundering as well as to instruct them as to how to proceed in such cases.

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-----credit institutions

-----financial institutions

-----auditors, external accountants and advisors;

-----real estate agents;

-----notaries and other independent legal professionals;

-----dealers in high-value goods, such as precious stones or metals, or works of art, auctioneers, whenever payment is made in cash, and in an amount of EUR 15000 or more;

-----casinos return

-----any of the offences defined in Article 3(1)(a) of the Vienna Convention;

-----the activities of a criminal organizations as defined in Article 1 of Joint Action 98/773/JHA;

-----fraud, at least serious, as defined in Article 1(1) and Article 2 of the Convention on the protection of the European Communities’ financial interests;

-----corruption;

-----an offence which may generates substantial proceeds and which is punishable by a severe sentence of imprisonment in accordance with the penal law of the Member States

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“In the case of the notaries and independent legal professionals referred to Article 2a (5), Member States may designate an appropriate self-regulatory body of the profession concerned as the authority to be informed of the facts referred to in paragraph 1 (a) and in such case shall lay down the appropriate forms of cooperation between that body and the authorities responsible for combating money laundering. ”

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“member states shall in any case, ensure that the institutions and persons subject to this Directive take specific and adequate measures necessary to compensate （弥补，抵消） for the greater risk of money laundering which arises when establishing business relations or entering into a transaction with a customer who has not physically present for identification purposes (non-face to face operations).”

Furthermore, several measures are illustrated under this article, “by requiring additional documentary evidence （书面证明） , or supplementary measures to verify or certify the documents supplied, or confirmatory (证实的 ) certification by an institution subject to this Directive, or by requiring that the first payment opened in the customer’s name with a credit institution subject to this Directive.”

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“Whoever, while clearly knowing that the funds are proceeds illegally obtained from drug-related crimes or from crimes committed by mafia or smugglers and gains derived therefrom, commits any of the following acts in order to cover up or conceal the source or nature of the funds shall, in addition to being confiscated of the said proceeds and gains, be sentenced to fixed-term imprisonment of not more than 5 years or criminal detention and shall also, or shall only, be fined not less than 5 percent but not more than 20 percent of the amount of money laundered;

if the circumstance are serious, he shall be sentenced to fixed-term imprisonment of not less than 5 years but not more than 10 years and shall also be fined not less than 5 percent but not more than 20 percent of the amount of money laundered :

---providing fund accounts;---helping exchange property into cash or any finan

cially negotiable instruments;---helping transfer capital through transferring acco

unts or any other form of settlement;---helping remit funds to any other country;---covering up or concealing by any other means th

e nature or source of illegally obtained proceeds and gains derived therefrom.

Where a unit commits any of the crimes mentioned in the preceding paragraph, it shall be fined, and the persons who are directly in charge and the other persons who are directly responsible for the crime shall be sentenced to fixed-term imprisonment of not more than 5 years or criminal detention.”

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First, the predicate offences of money laundering expand to four kinds of crimes; they are smuggling, drug-related crimes, mafia and terrorism.

Second, raising the maximum term limit of statutory sentence for units committing money laundering. The amendment to the article reads: “…If the circumstances are serious, the persons who are directly in charge and the other persons who are directly responsible for the crime shall be sentenced to fixed-term imprisonment of not less that 5 years but not more than 10 years. ”

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Art. 312:

“ Whoever knowingly conceals, transfers, purchases or helps to sell illegally acquired goods shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also, or shall only be fined.”

---Proceeds;

---Cover up, Disguise.

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Art. 349: “ Whoever harbors, transfers or covers up, for

such offenders, narcotic drugs or their pecuniary and other gains from such criminal activities shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance; if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years.”

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A. banks; B. credit cooperatives;C. postal savings institutions;D. non-bank financial institutions,

including finance companies, trust and investment companies and financial leasing companies;

E. foreign capital financial institutions.

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Art. 3 “Money laundering in these rules refers to any

action that legalize the ill-gotten income and yields generated from criminal activities like drug trafficking, organized underworld crime, terrorist act, smuggling or other crimes through various means in which the source and origin of such income and yields are disguised.”

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Article 4

Financial institutions and their employees shall abide by these rules to fulfill their due obligation to combat money laundering activities in real earnest and identify suspicious transactions on a prudent basis, and shall not engage in any unfair competition that may run counter to their anti-money laundering obligations.

Article 5

Financial institutions and their employees shall abide by relevant rules and regulations and refrain from disclosing any information on anti-money laundering activities to their customers and other personnel.

Article 6

Financial institutions shall assist the judiciary and law enforcement departments including the customs and taxation authorities in combating money laundering in accordance to relevant laws and regulations through making inquiry of, freezing or suspending the transfer of suspicious customers’ deposits.

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Provide for the criminal prosecution of money laundering;

Give law enforcement officials the power to identify, trace, freeze and confiscate the assets derived from illegal activities;

Allow for the possibility of sharing out confiscated illicit assets among law-enforcement services;

Customer identification, record keeping and suspicious transactions reporting return

Lift banking secrecyReverse burden of proofSimplify relevant proceduresConsider circumstance or indirect

evidenceUse techniques, such as covert

investigation, technical surveillance, and controlled deliveries return

The number of reports on suspicious transactions received from financial institutions and the number of such reports referred for further investigation;

The number of convictions for money laundering and related charges;

The number of cases where assets were seized and/or confiscated and the value of the assets forfeited.

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Art. 4 defined that, the act, covering up and concealing the source or nature of the proceeds from drug trafficking, shall be sentenced to fixed-term imprisonment of not more than 7 years, criminal detention or public surveillance and also can be fined.

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Two kinds of criterion:

---fixed-term imprisonment of not more than 5 years or criminal detentions;

---fixed-term imprisonment of not less than 5 years but not more than 10 years.

Serious circumstances:

---laundering money in especially huge amounts;

---making laundering a profession;

---organizing a money laundering group;

---being involved in organized international money laundering.

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“---Money launderers will also, or will only, be fined not less than 5 percent but not more than 20 percent of the amount of money laundered.”

---Principle of proportionality;

---Criminal’s economic situation;

---Stability and continuity of the Criminal Code.

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Shortcomings under this article:

---the legislation of confiscation is duplicated.

(Art. 64)

---the location of confiscation is not correct.

---no value confiscation or substitute confiscation

---no confiscated assets sharing system

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EU

EEC Foreign, Justice,

ECSC Security Home

EAEC Policy Affairs

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Qi Huo-gui, the former secretary of Dongfang City in Hainan province took a bribe of 230,000 RMB. Then somebody helped him to open a bank account of 230,000 RMB under a false name of Ye Ke-jian and with the password “777777” in Chinese Industrial and Commercial Bank.

Li Yu-shu, the former vice Mayor of Leshan City in Si Chuan Province, took a bribe of 8.16 million of RMB. Then he founded a company, which had assets of 6.58 million in the name of other people.

Lu Cong-you, the former vice Mayor of Lian Yun Gang City in Jiang Su Province, registered a chemical industry with his illegal money in the names of his parents who are in their eighties.

Cong Fu-kui, the former vice Provincial Governor of Hu Bei Province, established Long Yin Company in the name of other people. Cong Fu-kui transferred his bribery funds to this company and made them look like profits from operation.

Cheng Ke jie Case

1.Give dirty money1.Give dirty money to Zhang, a Hong Kongto Zhang, a Hong Kong

dealerdealer

2.Transfer dirty money to2.Transfer dirty money to a shell companya shell company

which is in the name Li Pingwhich is in the name Li Ping

3.Through cookbook,at a cost of paying

business And personal income tax,

Launder dirty money

4.Transfer these money to 4.Transfer these money to Cheng’s banking accountCheng’s banking account

Cheng Ke-jie, the former Vice Chairman of the Standing Committee of the National People’s Congress, together with his mistress Li Ping asked a businessman from Hong Kong, named Zhang Jing-hai, to transfer RMB 41 million yuan from bribes to Hong Kong and paid Zhang Jing-hai more than RMB 11 million yuan for the laundering cost. Cheng Ke-jie committed the most serious bribe crime among all the investigated high-ranking officials since the foundation of the P.R.C. Also he is the highest official who was subject to the death penalty for economic crimes.

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“Each country should empower the court or other authorities to order that bank, financial or commercial records be made available or be seized. A party cannot refuse to act on the grounds of banking secrecy.”

---1988 Convention, Art. 5(3)

---1990 Convention, Art. 4(1)

---2000 Convention, Art. 12(6)

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“When dealing with mutual legal assistance, each party cannot involve banking secrecy as a ground for refusing cooperation.”

---1988 Convention, Art. 7(5)

---1990 Convention, Art. 18(7)

---2000 Convention, Art. 18(8)

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Chinese Criminal law Drug-related crimes Smuggling Mafia Terrorism Embezzlement and bribery Crimes of disrupting the order of financial

administration Crimes of financial fraud

The story of Monkey King(Journey to West)On the way to seek for Sutra, the Buddh

ist holy book, why they did not commit corruption?

---Tang: high moral standard---Sun: no desire for money and beauty---Sha: timid, cautious, loyal to Tang---Pig: lazy, greedy, indecentEducation + Supervision

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Proceeds, except for drugs, equipment and instrumentalities used in the commission of offences

Substitute confiscation and value confiscation (commingle:混合 )

Confiscated assets sharing system

(motivation: 动机 )

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All-sided mutual assistance

---mutual legal assistance in investigation, prosecution and judicial proceedings

---cooperation in administration of justiceNot as detailed as those in bilateral or

regional agreementsFlexibility is necessary.

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All serious crimes include those offences punishable by a maximum deprivation of liberty of at least 4 years or more serious penalty, and the other three crimes stipulated by this convention.

---participation in organized criminal group

---corruption

---obstruction of justice return

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Ask the member state to provide a reportSend a letter to the relevant ministerArrange a high level mission to the

member state to reinforce this message Issue a statement to other member

statesSuspend its membership of FATF until

the Recommendations have been implemented

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Nazi Government 纳粹政府 Prohibit 禁止 Jew 犹太人 Movement of assets out of Germany Seize 查封 Geographic proximity 地理位置的邻近 Switzerland’s unofficial policy of confidentiality

over banking deposits Enactment 颁布 Execution 执行死刑 Push 推动 Codify 编成法典 return

Art. 29 (1):

“In handling savings(储蓄 ) deposits（存款） for individuals, commercial banks shall adhere to the principle of

---voluntary deposit,

---unimpeded （未受阻止的） withdrawal,

---interest payment on deposits and

---confidentiality for the depositors.”

Art. 29(2):

“Commercial banks shall have the right to refuse to answer the inquires into and, to refuse to freeze, deduct or transfer an individual’s savings deposits---as made or requested by any organization or individual, excepted where otherwise provided by law.”

11 institutions have the right to enquire into an individual’s savings deposits:

---People’s Court

---People’s Procuratorate

---Public Security Sector

---State Security Organization

---Army

---Customs

---Tax authority

---Auditing office

---Administrative organization for Industry and Commerce

---Supervisory department

---Notary organization

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Professionals’ activities can be divided into:

---Litigation

---Non-litigious matter/non-contentious case

Such as:

---creation of corporation

---buying or selling of property

---performing financial transactions

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First, the predicate offences of money laundering expand to seven categories of crimes.

Second, the behavioral patterns of money laundering are adjusted slightly. “helping exchange property into cash or any financial negotiable instruments or any portfolios”.

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Case ExampleA drug trafficker used drug trafficking proc

eeds to purchase a property of which part was paid in cash and the remainder was obtained through a mortgage （抵押） . He then sold the property to a shell corporation, which he controlled, for a nominal sum. The corporation then sold the property to an innocent third party for the original purchase price.

Drug trafficking

Property Shell company

Innocent thirty party

ResultsThe accused pled guilty （认罪） and a

n order of forfeiture （没收） was granted. The property which was part of the money laundering scheme is being disposed of by the authorities.

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Art. 1 of the 1979 CC:

“The CL of the PRC adopts Marxism-Leninism-Mao Ze-dong thought as its guide and the Constitution as its basis. It has been drawn up according to the policy of combining punishment with leniency and integrates the concrete experiences

and actual conditions of the various nationalities in our country in their practice of the people’s democratic dictatorship, that is, the proletarian dictatorship led by the proletariat and based on the alliance of workers and peasants, in carrying out the social revolution and socialist construction.”

Art. 90 of the 1979 CC:

“A crime of counterrevolution was any act with the aim of overthrowing the political power of the dictatorship of the proletariat and the socialist system and endangers the People’s Republic of China.”

Art. 79 of the 1979 CC:“A crime not specifically prescribed under

the specific provisions of the present law may be confirmed a crime and sentence rendered in light of the most analogous article under the special provisions of the present law; provided, however, that the case shall be submitted to the Supreme People’s Court for its approval.”

Art. 117 Speculation:

It is “bag” crime which has been as big as the courts want it to be. It concludes false advertising, publishing pornographic materials, trading in endangered species, manipulating prices, violating state monopolies and ticket scalping.

Art. 160 of 1979 CC:

Hooliganism is an offence, “where an assembled crowd engages in affrays, creates disturbances, humiliates women or engages in other hooligan activities that undermine public order.”

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Use of straw menBreak the link between the assets （财

产） and the criminals.Even if the criminal is imprisoned, he ca

n enjoy the assets after his release from prison.

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Shell company

Those companies, don’t have funds or enough funds required by law, don’t have organizational structure （组织结构） or fixed premises （经营场所） for production and operation, are called shell companies.

Reasons Companies often have legitimate （合法的）

reasons for funds moving. Funds pass through the companies accounts

may be sizable and fluctuant. （波动的） Some business deals with cash, which can be

mixed up with dirty money. If criminals are the owner of the company or h

ave a close relationship with the owner, they are unlikely to be reported.

The cost of company formation may be very low, and company formation agents exit worldwide.

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Legitimate business BanksSecurities companies （证券公司） Futures companies （期货公司） Insurance companies （保险公司）LawyersNotaries （公证员）Accountants （会计师）

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Cash smugglingExploration （探究） of loopholes （漏洞） between different countries

—different laws

—difficult in getting information

—high cost of overseas investigation

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Anonymous asset types

Dummy accounts （匿名账号）Jewelry Antique （古玩）

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Questions

What are the elements of the crime of money laundering under Chinese Criminal Law (the 1997 Criminal Code, the Third and Sixth Amendments to Criminal Code?)

What’s the definition of money laundering? What are the characteristics of money laundering activity currently? And what’s the significance of the fight against money laundering?

Why the government fights against money laundering? Why not fight against drug trafficking, smuggling, mafia, and terrorism directly? Does it mean that fighting against money laundering also aims at fighting against underlying crimes?

China criminalized “fencing” or “receiving of stolen goods” a long time ago. Was it possible with a small change of the specific wording to criminalize money laundering in these already existing articles? If not, what would be the legal obstacles?

Why lawyers, notaries, accountants are vulnerable to money laundering? What’s the bewilderment for these professionals’ anti-money laundering obligations? In the consideration of imposing these professionals’ obligation in the fight against money laundering, what efforts should we make?

Money laundering, as an increasingly serious crime, needs strict criminal measures to fight against on the one hand, on the other hand, administrative preventive measures are no less important than criminal measures. Suppression and prevention are always two parallel approaches to deal with crimes. Please enumerate the criminal measures and preventive measure that have been put in place in China to crack down on money laundering.

What are the elements of the money laundering under the 1997 Chinese Criminal Code and the Third and the Sixth Amendments to this Code? What are the shortcomings of this kind of legislation and how to improve them?

Do you think that the phenomenon of money laundering exists in China? Why few case examples are available in judicial practice in China?

Whether tax evasion will be an underlying crime for money laundering? If possible, what’s the difference between tax evasion and smuggling, drug trafficking as predicate offences？And what’s the difference between tax evasion and money laundering ?

Please elaborate this proposition: “Money laundering is a process, often a highly complex one, rather than a simple act. One complete process of money laundering includes three stages: Placement stage, layering stage and integration stage.”

Please elaborate this proposition: “Original banking secrecy aims at protecting individuals from arbitrary or unlawful interference. Unfortunately, banking secrecy does provide a safe harbor for money laundering activities and makes criminals launder money more audaciously nowadays.”

Please elaborate this proposition: “Lawyers, notaries and accountants, as independent legal professionals, should not only be reliable “watch dogs” for clients, but also for public interests.”

Please elaborate this proposition: The development of high technology is a double-sided sword. It does raise people’s living standards on the one hand; on the other hand, it also provides great opportunities for money launderers.