What is money laundering?

Analysis of the crime of money laundering in Spain by Dr. Jesús Becerra

The crime known as money laundering consists of a set of actions that are carried out so that the money or goods from criminal activities are integrated into the economy with the appearance of having been obtained legally.

The expression, practically equivalent in several languages ​​(money laundering, Geldwäsche, blanchiment de l’argent) comes from criminal jargon and has its origin in the use of chains of dry cleaners by mafia groups (mainly in the United States of America) to place funds of illicit origin there and hide their origin. Its use became widespread in the judicial field during the eighties of the s. XX in procedures related to drug trafficking.

Stages of money laundering

The most generalized classification is the one designed by the Financial Action Group (adopted by the TS, see STS 156/2011, of March 21), which distinguishes three phases or stages:

• Placement or insertion of money in the financial system for transfer or to acquire monetary instruments. It may also consist of the physical transportation of large amounts of money across borders in order not to leave documentary evidence in the country where the original transaction took place.
• Shadowing (layering). In order to hide the actions of the first stage, numerous financial transactions are usually carried out.
• Integration or reinvestment of the money obtained to introduce it into the legal economy so that its origin acquires an appearance of legitimacy (for example, through the acquisition of real estate through intermediary companies).

What laws regulate the crime of money laundering?

 In Spain, this crime is regulated in the Penal Code (art. 301 et seq. of the Penal Code), which establishes: “Anyone who acquires, possesses, uses, converts, or transfers assets, knowing that they originate from an activity criminal, committed by him or by any third person, or performs any other act to hide or conceal its illicit origin, or to help the person who has participated in the offense or offenses to evade the legal consequences of their actions, will be punished with the sentence of imprisonment from six months to six years and a fine of up to three times the value of the property.”

What are the penalties imposed by the Penal Code?

 The penalties for this crime in its basic modality, as established in article 301.1.1º of the Penal Code, include a prison sentence of 6 months to 6 years and a fine equivalent to three times the value of the seized property.

The penalties can be more severe, depending on the origin of the material object, that is, if the goods come from crimes related to the trafficking of drugs, narcotics or psychotropic substances, as well as if they come from crimes against land use planning and urban planning, bribery , influence peddling, embezzlement, fraud and illegal extortion, negotiations and activities prohibited to officials. The penalty for participating in an organized crime group can also be of an aggravated type.

Legal person’s  penalties

In the case of a legal person, the penalty for money laundering could be a prison sentence of 2 to 5 years, for a crime committed by the natural person with a prison sentence of more than 5 years and a fine of 6 months to 2 years. for the rest of the cases. 

Due to the personal condition of the active subject, special disqualification for employment or public office, profession or trade, industry and commerce from 3 to 10 years can be added to the penalties, if the crime is committed by businessmen, financial sector intermediaries, facultative, public official, social worker, teacher or educator, in the exercise of their position, profession or trade. Likewise, it can be completely disqualified from 10 to 20 years, if the criminal acts are carried out by an authority or agent thereof.

The so-called reckless laundering

The Spanish Criminal Code has established (as of 1992) the modality of money laundering for gross negligence, punishable by imprisonment from 6 months to 2 years and a fine of three times as much, as established in art. 301.3 PC. It basically consists of carrying out the behaviors of money laundering (acquisition, use, conversion, concealment, etc.) without knowing the criminal origin of the assets, but having the full aptitude to know their illicit origin. In this regard, the doctrine and jurisprudence understand that gross negligence conduct (which the courts usually define as reckless) for the purposes of this modality, consists of gross negligence of the illicit origin of the capital, due to ignoring basic rules of economic and financial traffic or due to the poor use of administrative measures aimed at preventing money laundering. 

The case tried

Thus, for example, the case tried in STS 120/2013, of February 20: the defendants, despite knowing that their son had been convicted of committing crimes related to drug trafficking, allowed him and his partner to improvements in real estate they owned, which they later proceeded to sell to their daughter-in-law for a much higher price than the land on which they were built “…without taking the slightest precautions about the origin of the money invested by the couple in the realization of constructions.”

You might also be interested: ​​What is the relationship between money laundering and tax havens?