Time and again, the Philippines has landed in the “grey list” of the Financial Action Task Force (FATF) in the global fight against money laundering and terrorist financing. The FATF has reminded the country to strengthen further its regulatory framework, to expand the covered and reporting institutions, and to have stricter jurisdiction over casinos and money value transfer services. In this campaign, money laundering is usually grouped with terrorist financing although, in truth, there is a wide disparity between the two. To be more effective in this campaign, it would do well to distinguish the psychology of the money launderer from that of a terrorist and I can identify at least five differences between the two.

          First, the motive of the money launderer is financial gain. There is intent to extract funds through illegal means and thereafter enjoy the wealth flowing out therefrom. In terrorist financing, the motive is to inflict terror, damage and disorder in opposition to the government, to its leaders or to the system. One is therefore personal in nature while the other is ideological.

          Second, in money laundering, a crime has already been committed, called the “predicate offense”, and the fruits thereof which should be confiscated and forfeited are being hidden from the authorities. The act of participating in the handling of such fruits, which is considered as “dirty” money, constitutes the offense of money laundering. In terrorist financing, there is no crime yet. Terrorist funding in intended to commit, in the future, the crime of terrorism. The sources could be “clean” money and could come from persons with clean records, with legitimate businesses, and with no derogatory background. Thus, establishing the money trail and the purpose thereof would be more challenging in anti-terrorist financing.

          Third, money laundering usually involves enormous amounts. It is planned and premeditated with the objective of striking it “big”. It is normal for these funds to be in the millions but with contrivances designed to skirt reporting requirements. In terrorist financing, the amounts are smaller and could come in trickles just barely sufficient to cover low-cost safe houses, the components of assembling home-made explosives and modest means of transportation. It is easier for the funds not to breach the reporting thresholds.

          Fourth, the money launderer likes to flaunt his lifestyle, which is extravagant and luxurious. He could move in the higher echelons of society with his expensive mansions, cars, parties, vacation cruises, and other valuable possessions. He wants to be well-connected so that he can get patronage in case he has problems. On the other hand, the one involved in terrorism is of low profile who avoids attention to himself. As much as possible he wants to be incognito. He can be an ordinary resident in a low-end community with an ordinary undertaking as a laborer, mechanic or small storeowner. He is not interested in an affluent lifestyle because that is not his objective in the first place.

          Fifth, there are deterrents against money laundering such as investigations and arrests, trial and conviction, fines and imprisonment, the freezing and confiscation assets, and reputational damage. These deterrents are generally applicable also to terrorists and their financiers. However, their impact on the terrorists might not be the same as that on the money launderers. Indeed, the world has seen terrorists ready to give up their lives for the causes they believe in.    

*        *    *

          The above comments are the personal views of the writer. His email address is dezunigajuan@gmail.com


Source: Manila Bulletin (https://mb.com.ph/2021/11/09/fighting-money-laundering-and-terrorist-financing/?utm_source=rss&utm_medium=rss&utm_campaign=fighting-money-laundering-and-terrorist-financing)