MONEY laundering is the term applied to the act of concealing the origins of such money and releasing it undetected into legitimate business activities, the purpose being to prevent it from being tracked and confiscated by the government.
This kind of conduct is most commonly associated with criminal activities such as drug trafficking, corruption, kidnapping, extortion, tax evasion, trafficking people and a range of other criminal activities. Money laundering perpetrates crime since it enables criminal activity that generates it to continue.
The laundered funds provide financial support for drug dealers, terrorists, arms dealers and other criminals to operate and expand their criminal empires.
This threatens economic, social and political stability. It is stated by the prosecution that failure to combat money laundering could lead to the accumulation of economic and financial power by unscrupulous people or criminal organisations and therefore undermine governance, democratic systems and public confidence in the financial and legal system.
Offences relating money laundering are filed under Money Laundering Act, which was enacted in Tanzania in 2006, as Act Number 12.
The Anti-Money Laundering Act prohibits legal and natural persons from engaging in transactions which involve the proceeds of crime, or from assisting others to do so. It also requires reporting persons to identify their customers before entering into a business relationship or carrying out any transaction or series of transactions such as obtaining customer personal data and validating it against independent sources.
Other transaction include obtaining customer business profile and validating it against independent sources, recording both, personal and business data and updating it from time to time and recording regular business transactions.
The purpose for such enactment was for Tanzania as a country to have the legal frame work coming up with provisions for prevention and prohibition of money laundering and also to have provisions for disclosure of information relating to money laundering and suspicious transactions.
Other purposes include to establish the financial intelligence unit that is central for receiving reports on suspicious transactions but also to establish the national multidisciplinary committee as a sort of supervisory and advisory body for the money laundering scheme.
However, the Act took almost a year for the same to come into force. Furthermore, regulations for the operation of the Act were put in place in 2007. By that time, it is noted that there was no immediate commencement of prosecuting or charging persons with money laundering because the investigative machineries, like the Prevention and Combating of Corruption Bureau and the police, had not been trained on such new law practice.
It was until 2009 when the prosecution stated instituting money laundering cases and that was after provision of training locally and internationally to a batch of not less than five senior attorneys in Australia, London and in other specialized causes in South Africa.
There was also some locally conducted training but involving foreign training firms like Down Ton Hill, a training firm based in London, which had conducted two basic trainings in Dar es Salaam.
Fresh reports from the DPP’s Office indicate that as of December 2016, when the prosecution of money laundering cases started in 2010, when the first trial took off, about 45 money laundering cases have been filed in different courts in the country.
The report further shows that the amount of money involved in these cases is more 80bn/-. It is indicated that 13 cases have already been concluded, with the prosecution securing conviction in seven cases, while accused persons in six trials were acquitted.
Despite such positive developments, the DPP office accounts for some challenges it is facing in prosecuting the cases in question. They include complicity of the cases themselves as they involve individuals, mostly bankers, government officials and businessmen.
The challenges could be lack of sufficient training and the interpretation of the law on part of key players in the administration of justice. Lawyers recommend that more training is needed as it appears the nature of the offences are still new and is the new area for most of legal practitioners.
Prosecutors are saying that they have enough training on the field, but the ball is on the other key players, notably judicial officers. It does not help if one party gets trained but the other part, especially on the decision makers does nothing.
Another challenge, according to the DPP office, relate to lack of a comprehensive witness protection scheme, considering the fact that such trials dealing with people who have money and some are prepared to part with portion of their worth in order to do whatever they can do.
The other thing which is factual is that the cases involve long proceedings with very big number of witnesses and many exhibits. In some cases you have more than 25 witnesses and more than 30 exhibits. So these are cases that could not be disposed within a short time like simple stealing, armed robbery cases and the reason is simple, due to the nature.
Financial transactions would always need you to bring witnesses working in the financial institutions, people who are the victims of the crime. Money laundering is the process of transforming the proceeds of crime into ostensibly legitimate money or other assets.
It is also said to be a process of making illegally- gained proceeds that is dirty money, appear legal that is clean. Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system.
Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the dirty money appears clean.
For the offence of money laundering to be committed, there must be a predicate offences, which in some jurisdictions are already criminalized or crimes under other Penal Laws, but are predicated to suit money laundering purpose. For example in Tanzania, there are offences such as forgery and stealing.
If you just forge a document without going further and swindling the money and then wait until you convert into an investment or other proceeds that will remain an ordinary forgery punishable under Section 337 of the Penal Code. But same forgery is a predicate offence to money laundering.
It happens that one may forge a document and finally steal money from a bank. The stolen money is deposited into an account and owner of that account transfers the money to his wife’s account.
If the wife uses that money to, say build a hotel, then the hotel for that purpose will be the proceeds of crime and the money will have been laundered in that way. So those are the concepts that needed to be well understood by the practitioners.