ML/TF

Money laundering (ML)

It is the processing of criminal proceeds (money, securities, real estate, etc.) in order to disguise their illicit origin. Traditionally, this process involves three stages:

1. Placement: introduction of illicit funds within the financial system.
2. Layering: it is the process of disguising and separating the funds from their illicit origin through the use of complex techniques to layer the funds.
3. Integration: it is the reintroduction of the laundered funds in the economy, by giving them a licit appearance (i.e. mortgage agreements, investment in goods and services, insurance policy surrenders, etc.)

The persons that mainly commit the crime, as well as those who collaborate into committing the predicate offence or disguising the illicit source of funds are liable to prosecution. In addition, it is important to remember that the attempted commission, the conspiracy as well as the provocation of an offence, are also punishable acts.

Money laundering conducts and/or behaviours are largely prosecuted by all the International community, given their negative effects on local economies and their stability, revenue, reputation and security.

The Andorran Criminal Code defines money laundering as follows:

Relevant documentation

Operations that are likely to involve money laundering

 

Terrorist Financing (TF)

Terrorist financing implies whatever economic action, support or participation towards providing financial support to individual terrorists and/or terrorist organizations, so that they can commit acts of terror in favour of their ideology. Even if the main goal of terrorists and/or terrorist organizations is not to generate profits, these criminals need funds in order to perform their activities, which could be obtained from both licit and illicit sources, unlike the funds used in money laundering schemes.

The Andorran Criminal Code defines terrorism financing as follows:

Relevant documentation

Terrorism financing typologies
FATF report on emerging risks on terrorism financing


Main differences between ML / TF

  ML TF
Source of funding Illicit Licit or illicit
Amounts of the transactions Generally, larger amounts that are usually fragmented in order to avoid additional controls. Generally, smaller amounts below control thresholds.
Channels Favours formal financial systems through complex schemes that usually involve front or shell companies, bearer shares and/or off-shore jurisdictions. Favours informal financial systems (hawala, cash couriers, etc.)
Intended use and motivations Lucrative Ideological
Fund traceability Circular life cycle. The funds are reinserted in the financial system, they return towards the person that generated them or are used for future money laundering operations. Linear life cycle. Funds are generated and then sent to the individual terrorist or terrorist organization.
Detection focus Suspicious transactions such as deposits that are not aligned with the customer’s wealth or its expected activity. Suspicious relationships, such as transfers of funds between seemingly unrelated parties.