Money Laundering & the Drug Trafficker: How society suffers

Fri Feb 22, 2013

A Suspicious Activity Report (SAR) lodged by an officer at a financial institution in Happy Land triggered an investigation into the supply of illegal drugs. The SAR detailed daily cash withdrawals of US$4,500 by Humpty Smith. Deposits to the account were made by various persons and the withdrawals continued over a three-week period and totalled US$67,500.{{more}} As a result of this report, an investigation was launched and law enforcement officials were able to connect Humpty Smith to a known drug dealer. Humpty Smith and several associates, including the drug dealer, were later arrested.

The above scenario is a simple example of the money laundering process by which money generated from criminal activities is converted through legitimate channels into assets that cannot be easily traced back to their illegal origins. “Dirty” money is introduced into the commercial financial system (Placement), then placed in a banking system and mixed with legitimate sums through a series of transactions meant to disguise the origin of the funds (Layering). The illegitimate funds are then returned to the legitimate economy (Integration) and the waiting pockets of the money launderer.

Money Laundering is a crime built on another crime, a never ending cycle of illegality; it is an offence by virtue of Section 41 of the Proceeds of Crime and Money Laundering (Prevention) Act, Cap 181 of the Revised Laws of 2009 (the Act). It is reported that money laundering in St Vincent and the Grenadines is primarily associated with narcotics proceeds, derived predominantly from the sale of the illegal drug to persons within the Caribbean region. The drug may be cultivated locally, transported via go-fast vessels and the money remitted to St Vincent and the Grenadines for the most part through money remittance businesses and the use of couriers at the various ports of entry.

Though drug-related offences are most common, all serious crimes are considered predicate offences for money laundering. A person is liable if he knows, suspects or has reasonable grounds to suspect that property is derived in whole or in part, directly or indirectly, from criminal conduct. Further, as stated in the case of The Director of Public Prosecutions (Appellant) v. A.A. Bholah (Respondent) [2011] UKPC 44: “… proof of a specific offence was not required in order to establish guilt…It is sufficient…that it be shown that the property possessed, concealed, disguised, or transferred etc represented the proceeds of any crime in other words any criminal activity and that it is not required of the prosecution to establish that it was the result of a particular crime or crimes.”

In small societies such as ours, a minority of persons have been heard to raise a cry when this crime is tackled by law enforcement and prosecutorial authorities as they view the drug trafficker as a generous benefactor, in some instances sharing his spoils with neighbours. He is generally considered a well-known, pleasant enough fellow, but therein lies the problem when it comes to attacking this scourge. In many cases, persons find out the hard way that ‘the small fish,’ like Humpty Smith, often pay more dearly than their benefactor, ‘the big fish.’ Through the money laundering process, the ‘big fish’ has distanced himself from the illegal act, in this instance, the production and sale of narcotics and the ‘small fish’ is the one left with the dirty hands and consequences.

Humpty Smith has been arrested, but is this the end of the matter? He is in prison and he has a son who rather than learn from his father’s mistake, also turns to a life of crime and his younger brother is addicted to illicit drugs. You may think this is an exaggeration to scare you but it is a reality we too often ignore. In a neighbouring island it was recently reported that children as young as nine years old, the average age of first time users, are using marijuana.

The United Nations Office on Drugs and Crime (UNODC) conducted a study (Estimating illicit financial flows resulting from drug trafficking and other transnational organised crimes Research Report – UNODC, October 2009) to determine the magnitude of illicit funds generated by drug trafficking and organised crimes and to investigate to what extent these funds are laundered. The report estimates that in 2009, criminal proceeds amounted to 3.6 per cent of global GDP, with 2.7 per cent (or USD 1.6 trillion) being laundered. This is only an estimate since the illegal nature of the transactions makes it impossible to produce a definitive estimate of the amount of money that is globally laundered every year. It was stated that the illicit drug trade, accounting for half of all proceeds of transnational organised crime and a fifth of all crime proceeds, is the most profitable sector. This is further evidenced by the fact that on January 29, 2013, local law enforcement officers destroyed 13,301 pounds of marijuana and 67.7 pounds of cocaine, which had a street value of EC$19,951,500 and EC$1,729,350 respectively, for a total street value of EC$21,630,850.

How many of us have stopped to consider the risks of “letting things slide”? The consequences are numerous and severe; we are faced with loss of life at sea when persons transport narcotics in go-fast vessels or through violence in drug related skirmishes; young persons are lured away from school by the promise of fast and ‘easy’ money and our young and bright minds are instead found occupying the prisons; trafficking in arms; trafficking in persons, prostitution, and other crimes; medical treatment and rehabilitation costs; increased cost of applying the law to deal with offenders and implement interdiction measures, to name a few.

Violence and corruption are inherent elements of the illicit drug trade which erode societies. If we allow certain actions to go unchecked, persons feel compelled to push the boundaries and commit further criminal acts. We have all heard the saying that you give someone an inch and they take a mile; so, we as a people, should apply this principle to this issue and not give persons the leeway to cause our societies to descend into a state of lawlessness.

It is therefore imperative that financial institutions and relevant businesses continue to play their role in preventing their institutions from being used by money launderers. Further, each citizen must see money laundering and drug trafficking for what it really is: a threat to our way of life, and condemn this crime as they would any other that plagues our society. The law is broad and targets not only the money launderer himself, but also those whom he engages to assist him. Protect yourself from being used like Humpty Smith in nefarious schemes. Money laundering and drug trafficking are crimes that can cause great damage to our way of life. We must act to prevent loss of life and liberty and encourage our people to lead a quality life in a law abiding society.