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Criminal Law

In the AML (Anti-Money-Laundering) and CFT (Counter-Financing of Terrorism) context, criminal law refers to the body of national and international statutes, regulations, and legal mechanisms that define money laundering, terrorist financing, and related predicate offences as crimes.

It also governs the investigation, prosecution, and sanctioning of such offences, including asset seizure, confiscation orders, and criminal penalties.

Overview

Criminal law provides the foundational legal basis for AML/CFT enforcement.

Without criminalisation of financial crime, including laundering the proceeds of crime and financing terrorism, regulatory regimes would lack teeth.

The law defines:

  • The predicate offences (or “primary offences”) that generate illicit proceeds that may be laundered. 

  • The offence of money laundering, that is, acquiring, possessing, using or concealing proceeds of crime or converting or transferring such proceeds.

  • The offence of terrorist financing – providing, collecting, or using funds or other assets knowing they are to be used for terrorist acts.

  • The mechanisms of investigation, restraint, confiscation, prosecution, and penal sanctions for offenders.

Criminal law in the AML/CFT arena thus supports three key aims:

  • Deny criminals the benefit of their offences by targeting proceeds and instrumentalities of crime. (Bank for International Settlements)

  • Protect the integrity of the financial system by deterring abuse of financial services for illicit purposes. (IMF)

  • Facilitate international cooperation in investigations and prosecutions across jurisdictions.

Key Legal Concepts

  • Predicate offence (primary offence): A crime that generates proceeds which may be laundered. Many jurisdictions define a wide range of predicate offences (e.g., drug trafficking, fraud, corruption, human trafficking, counterfeiting). (cssf.lu)

  • Money laundering offence: In general, the act of concealing or disguising the origins of illicit proceeds, transferring them, or acquiring them, knowing they derive from criminal conduct. (Bank for International Settlements)

  • Terrorist financing offence: The provision or collection of funds knowing they will be used in full or in part to carry out a terrorist act, whether or not the funds themselves come from legal or illegal sources. (cssf.lu)

  • Asset confiscation and seizure: Legal powers to identify, freeze, seize, and confiscate assets related to criminal offences (including money laundering and terrorist financing). Criminal law often provides the basis for such powers. (mourant.com)

  • International cooperation: Mutual legal assistance, extradition, sharing of intelligence and enforcement across borders; criminal law regimes increasingly embed these mechanisms to address cross-border crime.

Relevance to AML/CFT Compliance

For regulated entities (banks, payment services, casinos, etc.) and for compliance professionals, understanding the criminal law dimension is essential:

  • Compliance programs must recognise that money laundering and terrorist financing are not just regulatory violations but criminal offences.

  • The classification of customer behaviour, transaction patterns or entities as linked to criminal offences (predicate crimes) informs risk assessments, monitoring and suspicious transaction reporting.

  • Institutions must respond to law-enforcement requests, support investigations, preserve records, and sometimes cooperate in asset-seizure procedures.

  • Awareness that failure to report, or complicity in laundering, may itself expose the institution or its officers to criminal liability.

  • The criminal law environment shapes sanctions, penalty regimes and therefore the incentives for compliance.

Challenges & Practical Considerations

  • Variability of predicate offences: What counts as a predicate crime varies by jurisdiction, complicating cross-border risk assessments. (Bank for International Settlements)

  • Evidentiary complexity: Proving laundering or terrorist-financing often requires tracing complex transactions, distinguishing legal vs illegal funds, and linking assets to offences.

  • Resource constraints: Investigative, prosecutorial and judicial resources vary widely; some jurisdictions struggle with backlog or weak enforcement.

  • Multijurisdictional issues: Assets, defendants, and witnesses may span multiple countries; coordination and compatibility of laws is a challenge.

  • Keeping pace with typologies: Criminal-law frameworks are often slower to adapt than evolving criminal methods (digital assets, cryptocurrencies, remote banking).

Best Practices for Compliance & Risk-Management

  • Treat the criminal-law framework as a core input into risk assessment: Know which offences are predicate crimes in jurisdictions where the institution operates.

  • Ensure legal-department and compliance-department dialogue: Understand investigation, freezing, and confiscation mechanisms in jurisdictions where the institution has exposure.

  • Design training for staff about the criminal consequences of non-compliance, tipping-off, or providing services to entities linked to laundering or terrorist financing.

  • Maintain robust record-keeping and audit trails: these support investigations, regulatory enquiries and potential criminal prosecutions.

  • Monitor legislative and regulatory developments in criminal law: changes in statutes, sanctions lists, cipher-asset legislation, etc., may impact compliance obligations.

Conclusion

Criminal law in the AML/CFT context is the structural backbone that defines offences, penalties and enforcement mechanisms for money laundering, terrorist financing and associated crimes.

For professionals in financial compliance and risk management, the criminal-law dimension is not peripheral but central; it shapes the nature of obligations, the gravity of risks, and the design of robust controls.

Effective compliance programmes, therefore, integrate an understanding of criminal-law regimes alongside regulatory obligations and operational practices.

Related Terms

  • Predicate Offence
  • Money Laundering Offence
  • Terrorist Financing Offence
  • Asset Confiscation
  • Mutual Legal Assistance
  • Suspicious Transaction Report (STR)
  • Criminal Liability

References

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