Is tax evasion a predicate Offence?
In view of the above, although the AML Law does not explicitly refer to tax crimes as predicate offences, it is certainly arguable that tax evasion in the sense of defrauding the Cyprus Tax Department would constitute a predicate offence for AML purposes, given the "all criminal offences" approach adopted in article 5(
There are three principal offences – concealing, arranging and acquisition / use / possession. Concealing is where someone knows or suspects a case of money laundering, but conceals or disguises its existence. Arranging is where someone involves himself or herself in an arrangement to assist in money laundering.
- Money laundering is the generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source. The processes by which criminally derived property may be laundered are extensive.
- The FSA now has strong powers to prosecute criminally breaches of the money laundering regulations, though the general criminal prosecuting authorities (CPS, SFO, Customs and Excise etc) are responsible for offences under Sections 330-333.
- Firms must comply with the Bank Secrecy Act and its implementing regulations ("Anti-Money Laundering rules"). The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
A predicate offence is a crime that is a component of a more serious criminal offence. For example, producing unlawful funds is the main offence and money laundering is the predicate offence. Generally, the term "predicate offence" is used in reference to underlying money laundering and/or terrorist finance activity.
- Racketeering is when organized groups run illegal businesses, known as “rackets,” or when an organized crime ring uses legitimate organizations to embezzle funds. Such activities can have devastating consequences for both public and private institutions.
- RICO law refers to the prosecution and defense of individuals who engage in organized crime. In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) Act in an effort to combat Mafia groups.
- A protection racket is a scheme whereby a group provides protection to businesses or other groups through violence outside the sanction of the law. Through the credible threat of violence, the racketeers deter people from swindling, robbing, injuring, sabotaging or otherwise harming their clients.
Examples. An example of money laundering involves what is called smurfing or structuring. Smurfing involves making small deposits of money over time into accounts. When this occurs, suspicion is usually not aroused, because the deposits are not large.
- The government does not have to prove that the person actually handled the money or did anything specific to assist the money laundering offense. Money laundering is a serious crime under federal law. A violation of 18 U.S.C. §1956 can result in a sentence of up to 20 years in prison.
- Money laundering is the process of disguising the proceeds of crime and integrating it into the legitimate financial system. Before proceeds of crime are laundered, it is problematic for criminals to use the illicit money because they cannot explain where it came from and it is easier to trace it back to the crime.
- Other examples of racketeering activity include extortion, money laundering, loan sharking, obstruction of justice and bribery. The Racketeer Influenced and Corrupt Organizations (RICO) Act became U.S. law in 1970, permitting law enforcement to charge individuals or groups with racketeering.
Updated: 26th October 2019