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Comparison of Money Laundering in Different Countries

Info: 8783 words (35 pages) Dissertation
Published: 11th Jan 2022

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Tagged: FinanceBanking

United States of America

ML in United States is and has been a pressing issue. Money is primarily laundered via financial institutions whether that be through facilitation by such institutions or either by exploitation of the financial system. Among other techniques, launderers have in the USA laundered money through trade. In the 1980s there was a famous fraudulent scheme of “Pizza Connection” in the United States, where cash only pizza restaurants were set up by the perpetrators.

Fake companies were used as a scheme of laundering the illegal funds through pizza business. Illicit money in millions of dollars was mixed with the proceeds of pizza money; blending it across with the legitimate money to get through unnoticed. This created a complex puzzle to find the source of the money by identifying illegal money from the legal money. The complicated nature of the situation elucidates as to how difficult it can be to track down the illegitimate funds.

As Detective Benton mentions: “What you are trying to do is look at a pot of money and go, 'What is legitimate and what isn't?' and that can be very, very, difficult.”[1]

Not so long ago, gangs who were involved in drug dealings were enabled by the HSBC to launder money via their institution, because of their inefficiency to carry out proper detection and monitorization. Billions of pounds were taken across the border through their institution. One can argue that it is primarily and crucially the responsibility of the financial institutions to stop ML, as it is a breeding ground for launderers. More so, it is due to the deficiencies of these financial institutions that launderers target them and successfully launder chunks of dirty money.

Lord Green, the former chairman of the HSBC admitted to the failures of implementation.[2] It is fundamental that there is a strict implementation as it is crucial to keep things in place and eradicate criminal activities such as ML. It is also vital that compliance and risk management don’t take the back seat and are always thoroughly considered. However, a fine of 1.9 billion dollars was imposed on the HSBC by the US authorities for their incompetency and inefficiency.

Suggestively, instead of criminally prosecuting HSBC, preferably a fine was imposed. This is because if HSBC was criminally prosecuted, it would have had serious implications and possibly resulted in revocation of their license for banking. The complexity is that it is not easy to penalize institutions of such nature given that there is a considerable reliance on them by the economy, especially when employees and employments are at stake. It can therefore be argued that as far as criminal law is concerned, there is a level of immunity enjoyed by these financial institutions. However, an important point to note here is that just as important as the implementation of international AML laws are by all the states; for a good measure, it is also vital to have a strict enforcement at the level of individual firms.

Another example which signifies the importance of due implementation and enforcement is the laundering of billions of pounds through the Standard Charted Bank in 2012.[3] The money was laundered majorly on behalf of Sudanese and Iranian clients; necessary information was removed by the bank which would disclose the details of the payments being made.[4] For about ten years, Standard Charted violated the US sanctions; concealing nearly 60 thousand transactions with Iran and attempted to hide their infringements from the regulators.[5] Not only was the misconduct neglected to be reported but also the records of the business were majorly fabricated.

The repercussions of this laundering activity were awfully damaging; the financial system became susceptible and prone to criminals and terrorists in the USA. It is inexorable that such activities undermine the financial systems but they also pose a serious threat to the lives of people both nationally and internationally. They additionally distort and affect political stabilities and affiliations, which consequently can harm the relationships between states. Countries should implement the recommendations of the FATF. For instance, FATF recommends that lawyers acting as gatekeepers should be part of the AML process, however, the US has not implemented the recommendation. It can be argued that the effort or implementation is rather deficient or inadequate.


Delaware, a US state is a haven for global crime; a hub for illegal activities such as drug traffickers, terrorists, shell companies and those seeking to clean their reputations. Delaware holds fifty percent of the US public companies, and in 2012 the New York Times stipulated Delaware as the homeland for 133,297 companies. There are lesser people than the number of registered companies with about 285,000 companies under a single building. 

Arguably, Delaware’s popularity rests upon the fact that it is easier to register a secret company than to obtain a library card. Rules are such that the identification of the person controlling the company cannot be determined and the beneficial owner cannot be traced, thus, the requisite of minimal information and easy formation of corporations makes it a hub for people looking to launder their illicit funds. Arguably, a place with such corporate privacy allows corrupt individuals to hide their trails when transferring money from one jurisdiction to another.

Low tax rates, favorable business laws and the unique court system magnets numerous high-end businesses to Delaware, being the home for approximately sixty five percent of fortune 500 companies. The tax laws of Delaware are a goldmine for the state. In 2011, it collected an estimate tax of 860 million dollars, accounting for one fourth of the state’s entire budget. Though many businesses have authentic reasons for registering their company in Delaware, it is arguable that not everyone holds the same intentions.

The legislation enacted in 2014 set requirements for disclosure of corporate proprietorship but however are very minimum and the information is not available to the public. A Global Financial Integrity legal counsel, Heather Howe stated that the degree “does not… even approach the issue of anonymous Delaware corporations.”

Along with Delaware, Wyoming and Nevada are also known to have lenient laws relating to corporate registrations, and criminals can target the public without being caught. The Global Witness highlighted that a congressman utilized the existence of secret companies from Louisiana and Delaware to steal $500,000 in enticements. Secret companies have been described by the Global Witness as a “getaway car for criminals and the corrupt across the globe.”

In comparison to Jersey and the Isle of Man, Delaware has fifty percent of the world’s key entities registered. Arguably, not only does Delaware offer anonymity, lax regulations at a level that are unmatched by the other off-shore jurisdictions, it allows for corrupt individuals to open bank accounts across the world with a mere usage of an American address. Therefore, it can be argued that, the task of law enablers is found to be more difficult when looking to catch those responsible for such crimes.

Although it was urged that the Delaware loophole be closed, state officials claimed that the business was good for the economy of America. Arguably, the heart of the problem is America itself. If the bureaucracy is such that allows for the governance to be corrupt, it creates gaps for illegal wrongs to be committed. Public registries should hold true identities of company ownership, not only so other businesses can identify who they are trading with but also to ease the task of law enablers who can target the crimes at the grassroot level and stop ML.


Africa is an example of how important it is to have adequate and strong international instruments and enforcement mechanisms to handle ML. In 2002, the Economic and Financial Crimes Commission (EFCC), was set up by the government of Nigeria to fight corruption and other illegal practices concerning financial crime such as laundering of money.[6] It is quite sad that Africa is repressed and subjugated at the hands of widespread corruption, where dominant individuals misuse their power and authority.

This as a result, ends in causing damage to the political integrity and reputation of the whole nation. For instance, billions of dollars were laundered via European Banks by Sani Abacha, who was the former President of Nigeria.[7] Chunks of funds were also laundered through financial institutions by purchase of bonds into the United States and overseas, hidden in different bank accounts.[8] An approximate of 458 Million Dollars was later frozen by the United States.[9]

This proves and exemplifies the significance of the fact that people who launder money might not necessarily look like usual criminals. The perpetrators thus are generally those people with high social statuses and proficient backgrounds. Similarly, James Onanefe Ibori who was a Governor in Nigeria, is too an example of how the banking sector can be exploited by people with fraudulent objectives to commit offences such as ML.

Since Ibori was the Governor of the Delta State, he laundered funds from the budget to London by concealing it through several offshore companies.[10] He also hid illegal money in companies of Nigeria’s accounts owned by colleagues and connections in the name of supplies for oil and laundered money through Nigerian Banks.[11] Interestingly so, he purportedly faked his date of birth on his passport to hide former convictions which wouldn’t allow him to take part in the elections.[12] His activities were facilitated by different bankers, officials and fraudulent lawyers.[13] The money was invested by buying expensive cars, lavish houses and also a private jet worth 20 Million Dollars.[14]

This exhibits the daring depiction of a swindling politician, who also tried to induce and bribe the EFCC’s member with a great deal of money. Despite everything, the charges against Ibori which numbered to about 170 made by the EFCC were dubiously dropped by the former President Umaru Musa Yar’Adua. Though it is a requisite to ‘Know Your Client’ under the Prevention of Money Laundering Act 2002; it seems that HSBC allowed Ibori to hide his illegal money into their different branches. Arguably, it is suggested that their failure was due to the HSBC’s inadequacy to detect PEPs. However, it was in 2010 that Ibori was pronounced imprisonment of thirteen years. Nevertheless, this signifies the importance of international ML enforcements and how vital it is to have the right instruments of implementation in place.

A very important aspect to note here is the cooperation of international institutions and all the nations, to fight ML together by implementing and enforcing the right standardized instruments. As detective Benton commented in an interview to CNN, “[….] tracing the sources of money can still be difficult, particularly without international cooperation”.[15] It is very vital that the accounts of the clients are constantly observed and monitored by banks. Besides, what’s more important is that a proper background check of the clientele is performed by the banks; prior to providing their respective services. For instance, a fine of 525,000 pounds was imposed on the Guaranty Trust Bank Limited (UK) by the FCA for not having satisfactory measures to intercept ML.[16]

One of the reasons for the fine was their failure to conduct background checks to identify clients who are categorized as PEPs.[17] The Final Notice to the Guaranty Trust Bank Limited by the FCA (page 9) also mentions that the customers could easily by-pass the requirement of going through the assessments of risk when required the purpose for opening an account.[18] The bank would facilitate the clients by advising them to put down expenses of day to day, as a valid reason to open an account, which was used by many customers, notwithstanding the fact that the same was not the purpose to initiate an account for all of them.

One might wonder as to why banks would engage and indulge in such fraudulent activities, or if not, fail to intercept crimes such as ML. There can be many reasons for such conduct. The most common ground can be a bank’s unwillingness to lose or drop clients, the inducement to develop quick and high financial gains, and most importantly negligence. Rotten corporate cultures and poor internal managements can result in a disaster for banks. Where there is a need for effective and efficient systems and managements, there is together a strong need for effective enforcements; not only nationally but most acutely on an international level.

Strict measures and its effects

Where it is necessary to have strict measures and procedures to prevent ML, strict compliance by an institution may result in a setback where legitimate clients may find it being excessively interfering or a hinderance. An example is when Selftrade’s services were no longer availed because of its AML requirements, where their questions were considered too invasive, and appalling by the customers.[19] Customers were demanded to disclose information about their assets, the money they inherited and the salary they earned.[20] This created an uproar among the customers; a feeling of discomfort. Consequently, Selftrade later discontinued the banking services that it provided.

Arguably, this indicates that strict compliance may have unfavorable ramifications for financial institutions where the customers may consider their procedures to be too intrusive. This example illustrates the problem that may arise with the implementation of strict measures. It arguably, thus can prove to be a little problematic to satisfy the clients and meet the AML regulatory standards at the same time. Selftrade’s case demonstrates why strict regulatory measures may instigate reluctance among the financial institutions to adopt sufficient controls in relation to ML. An institutions strict intolerance towards non-compliance and complex procedures arguably may have adverse effects on its profits; where customers may feel discouraged to avail its services.

Nonetheless, in order to sustain financial institutions’ integrity and to prevent abuse, it is vital that regulations are strictly complied with. “Unchecked, money laundering can erode the integrity of a nation's financial institutions [....]”.[21]

Experts argue that customers will rather have to get used to, and become acquainted with the questions put forward by financial institutions in order to adhere to the necessary regulation requirements to prevent crime.[22] There is a responsibility placed upon financial institutions to not only preserve their integrity but also serve to protect the economy and the community at large against illegal practices such as ML. It is necessary that there is a balance in confirming that controls are intact by meeting the necessary AML requirements, and simultaneously making sure that the clients are also satisfied with the services. Banks should facilitate their customers in complying with the procedures by providing as much assistance viable in making it easy for the customers to provide the necessary information.

Banks could also raise awareness by educating their customers in the most effective and friendly manner possible to explain why such information or procedures are compulsory. Even though customers may feel that lengthy procedures are causing inconvenience to them but to perform necessary background checks it is essential that they comply, as this would protect the integrity of the banks and in turn benefit the customer. Where banks do not comply with the AML regulations, they could face much worse consequences in terms of hefty fines and most importantly damage to their reputation.

The cases discussed and numerous other cases indicate the importance of why countries must coordinate to control ML. Due to the cross-border nature of ML, states must cooperate and overcome the problems in relation to consistency to ensure implementation by creating a leveled field. Criminal activities and corruption coupled with weak or insufficient AML controls sends off an open invitation to money launderers. Each state must strive to recognize their problems and duly deal with them individually to eradicate ML. This would not only help to stop the crime within the nation itself but also aid to stop the crime internationally.

The threat from high-risk jurisdictions - the role of FATF

Where it is necessary that financial institutions comply with the regulations; ensuring sufficient controls, and for countries to enforce and implement international AML laws, it is equally important to be careful and alert of jurisdictions who have weak AML enforcements. In order to protect the international financial system, these risky jurisdictions are timely identified by the FATF; for states to undertake protective measures when transacting with customers or institutions from such jurisdictions.[23] For instance, Democratic People’s Republic of Korea and Iran are listed as risky jurisdictions in the public statement published by FATF recently in June 2018.[24]

Both the states have failed to attend to and tackle the major deficiencies in relation to ML and thus are submitted to be a threat to the international financial system’s integrity. It is advised to implement measures of higher due diligence by acquiring additional information from the customers, undertake background checks in relation to the source of wealth and funds.[25] In order to take extra precautionary steps, further counter measures are suggested to be adopted, in addition to the emphasized due diligence.[26]

It is advised that all states and their financial institutions be extra vigilant when conducting business, building relationships in relation to business and making transactions with these states. This includes financial institutions, their companies, and, any other representative institutions or firms. Countries should also in accordance with the United Nations Security Council Resolutions adopt and implement applicable targeted financial sanctions to safeguard their financial institutions from launderers of money.

The FATF has advised further suggestions in relation to Iran because of its disappointing failure to implement the action plan that was put in place for its deficiencies in relation to ML. Inconsistency, lack of implementation and non-compliance can cause serious problems and are a hinderance in fighting the international battle against ML. Arguably, it therefore is extremely important that countries take precautionary measures in safeguarding their jurisdiction from ML as opposed to placing reliance or hoping for such countries to ratify and comply with the international AML laws.

States which are unshielded and vulnerable to ML activities due to their weak AML regulations, pose a threat to financial sectors and it is imperative that extensive preventive measures are taken for protection against such risky states. The systematic exertion of FATF in identifying risky jurisdictions is worth noting here. This facilitates countries in recognizing risk-oriented jurisdictions, so they can be more careful when dealing with customers from such high-risk states via thorough background checks and monitorization. However, on the other hand the identification and recognition of such risk-oriented jurisdictions by the FATF can have significant deleterious effects on the economies of these countries and can be highly detrimental to their image and reputation through-out the world.

This is due to the fact that FATF urges countries to be very cautious and vigilant when holding or initiating business relationships with such duly identified risky jurisdictions. This also includes a very careful consideration before granting permission to persons from such states for instituting subdivisions of their businesses or companies in countries which are complaisant. This arguably may serve as a motivation for states to improve their AML regulations and implementation of the set-out standards, so they can be taken off from the high-risk states list.

Improving States

The FATF in its publication; ‘improving global anti-money laundering and counter-terrorist financing compliance June 2018’ shows a list of jurisdictions that are in the process of improvement by implementing a developed action plan in cooperation with the FATF to fight ML.[27] These countries have strategic deficiencies which they are ready to address by displaying a strong commitment to work towards eradicating such identified problems.[28] These countries listed are namely; Serbia, Trinidad and Tobago, Pakistan, Tunisia, Sri Lanka, Ethiopia, Yemen and Syria.[29]

The issues in each of these mentioned jurisdiction are likely to be different depending on their situation and circumstances.  However, due to the fact that these countries are in the process of working towards improvement, the FATF does not warn or urge other states in dealing with these states, in the same fashion as it warns or urges against the high-risk listed jurisdictions. Arguably, this therefore, lowers the degree of damage likely to be precipitated to their image and reputation worldwide, due to their fairly judicious measures and action in the direction of compliance to eradicate ML. Moreover, In the publication by FATF, Iraq and Vanuatu are not subject to ‘on-going global AML and counter terrorist compliance process’ anymore.[30]

These countries are now not under monitorization given that they have worked towards strengthening their regulatory deficiencies. For further improvement Iraq is to work with MENAFATF and Vanuatu is likewise to work with the APG. Given that these countries have duly complied and made an improvement, this may help in reinstating their reputation in the world, which may also inspire high-risk states to comply with the AML international standards. This arguably can urge the high-risk jurisdictions to work towards their problems, due to the global reputational damage that non-compliance or lack of implementation can cause. However, one can argue that it is not guaranteed that states would be sufficiently successful in eradicating the strategic deficiencies and complying with the set standards.

The ground reality is sometimes different than what is exhibited. The issues are not always simple and it depends on what is done rather than what is said to be done. Arguably, enhancing the identification, recognition and monitorization in relation to states may be a step in the right direction and may impose a certain pressure upon states. However, where this may yield some positive results in fighting ML, this arguably is not an all in all solution. There is a need for stronger international laws and firm enforcement mechanisms which can hold states responsible for weak or careless regulatory measures in relation to a crime such as ML.

Surprisingly, financial institutions which are considered highly trustworthy have been subject to ML activities. As discussed, this does not only impair the integrity of the financial institutions but also adversely affect the worldwide reputation of the country. It is crucial that controls in relation to AML are under constant monitorization by the states; to eradicate any issues which may be a gateway for money launderers, and safeguard their reputation. It is equally important that states adopt a defensive mechanism by being extremely vigilant and cautious against jurisdictions who pose a threatening risk of ML. This includes conducting proper background checks of every customer/business and implementation of suitable assessment procedures concerning PEPs.

Where strong AML regulations and controls are necessary for a state to protect its integrity, it is also imperative for financial institutions to detect and monitor suspicious activities so they may also safeguard their integrity and reputation. Arguably, the harm to a financial institution’s reputation is more damaging as opposed to the imposition of heavy fines. This can serve as a good mechanism in disciplining financial institutions to be upright and alert in detecting and preventing ML, and also refrain from involvement, aiding and enabling such activities.

International Anti-money laundering laws – Testing the waters

It is clear that ML is a transnational crime, and thus it requires an international effort. It is therefore important to dig deep and understand why certain countries are not on the same panel as other countries in the fight against ML. The question here concerns the practicality of adopting international AML laws and why there is a certain resistance by states in accepting them. Where it is felt that international AML laws are not beneficial for various reasons, it is important to recognize and consider the ramifications if there is a non-compliance with international AML laws by states. This part analyses the argued problems and benefits of international AML laws and its effects.

If international AML laws are applied, it is argued that enforcement agencies can face several complications and drawbacks. There seems to be a sense of reluctance due to the fact that international law may be contrary or in clash with the national laws and thus create a complication as to which law would predominate. With respect to this, America has however already stated in Article 6 of its constitution that the federal law will have supremacy over international law. It is also supposedly argued that it would create problems relating to the financial institutions’ regulations. It is submitted that uniformity is difficult to attain in financial institutions’ regulations, given that every country has their individual financial regulator and there may be a difference in the method of how compliance is ensured by them. However, if international ML laws are adopted and enforced in a uniformed manner, it is argued to overlook or disregard the necessary differences in the corresponding sanctions and regulatory rules of the states.

More so, there is also a risk where countries may not conform to the international laws, which may result in an international resentment and conflict, and in worse cases, war.

Where there are strong international laws, it will have long investigative processes in relation to, for instance the ‘know your client’ requisite. This however may not sit well with clients and investors who are legitimate; arguably thus affecting motivation of the clients and profits for the institutions. It is argued that regularity may not be achieved under the international legal system; given that in response to any of the violations of the international law principles, there may be a decentralized reaction. International laws are also argued to instigate sovereignty issues, and issues in relation to interpretation of the laws, thus creating a complex setting.

Counter arguments and why there is a need to stop money laundering

However, against the aforementioned discussed arguments, it is important to realize the repercussions of not dealing with ML on an international level and what it can lead to. The magnitude of threat from a crime such as ML, if not dealt with, can have critical ramifications and much higher problems than the complications which are argued to surface, if international AML laws are espoused to tackle the problem.

Money laundering can lead to an endless circle of criminal activities where funds can be laundered to source further or additional criminal pursuits and consequently the illegal proceeds generated from such pursuits laundered again. For instance, ML is a typical source of funding for expansive deals of smuggling and other heinous activities such as terrorism. It is clear that money launderers are criminals and it is highly likely that they would also fund further crimes alongside spending on extravagant life style and assets.

Arguably, the concept and view regarding money launderers may be that they only spend on luxurious assets for themselves and thus a reason why the International Court of Justice may not hear such cases. Criminals who commit ML should not be allowed to reap benefits of their wrongs and utilize the illicit money by laundering it. Individuals like James Ibori who have stolen or steal funds of the public undermine the integrity of the whole system, where the rich becomes richer and the poor gets poorer. The money of the public can never be in safe hands where it is stolen and laundered with ease. This not only negatively impacts the economy but also the public and their living standards.

To address this, there is a need for an international effort by adopting strong law and enforcements to close all the doors for money launderers who commit heinous crimes and live off luxurious lives by exploiting the people and the system. Perturbingly, there has been a rise in ML in developing countries and it is imperative that they improve their laws to prevent the crime. It is more important for such countries to shape and maintain a viable economy; and safeguard it against ML, as it is an essential requisite in succeeding to do so.

Effective controls for tackling ML are not only essential because it is an offence in itself; but because it is highly crucial that the criminals are deterred to undertake the predicate offences which are dangerous and detrimental; and a source or ground for the illegal proceeds, which then consequently need laundering. It would be harder for the criminals to place the illegal money, where the route to laundering the money is blocked. Under such circumstances, they would then have to expend their proceeds on assets such as houses and other lavish belongings which in a legally sound economy would have to be registered. This would result in higher chances of getting detected, given that such possessions are to undergo necessary background checks.

Under strict AML laws and enforcements, it would discourage criminals to commit the serious predicate offences, given that they wouldn’t be able to launder the illegal proceeds. Indubitably, deficient and inadequate AML laws and regulations does not entice investors but rather invite money launderers. Fighting ML effectively is not only important to prevent the crime of ML but it is also paramount to create a good global image of compliance and effectiveness in showing that the country is striving and has the tendency to adhere to other international agreements/duties.

With such perception and the persistent effort to tackle ML, the financial institutions of the state would experience stability; and witness enhancement in terms of its security and worldwide reputation of the country. Money launderers are generally persons or companies who are involved in businesses or sectors of finance. Where international AML laws offer strict enforcements, it can have a significant influence on how wealth and businesses in relation to finance are directed and managed. Cases pertaining to ML are most often major-league and are typically covered by the media. If ML is successfully detected and the launderers are duly punished for their crimes, this will serve as an example for others on a continuous basis but only if the laws and enforcements are up to par on an international level.

Reputation is an important asset for financial institutions and any involvement or negligence on their behalf can result quite disastrous for their business and cast doubt on their credibility. Due enforcements and AML laws on an international level can thus cause deterrence globally and urge financial institutions to be compliant, and strictly adhere to the necessary required measures to be taken to prevent ML. This includes measures such as due diligence and other compulsory precautions. One can argue that mortification of the culprits can serve as an effective tool to ensure compliance and upright conduct.

As far as the argument in relation to the sovereignty of a state is concerned; in the present time, countries arguably do not “enjoy absolute sovereignty”.[31] It is submitted that absolute sovereignty was a concept which existed in the past, however the situation now is very different to before. Zarif argues that now the society is a composition of interdependent states, who are obliged to abide by the international laws.[32] Apart from the consensual ratified obligations, they are also bound to abide “by the generally accepted principles of international law”.[33]

It is argued that international law is in fact created by sovereignty and it is recognized by the law as its elementary basis and principle. Expressly, international law which is the law of the nations, does not form or is constituted by any superior authority and foisted upon the nations. It is in fact emanated as a result of direct consent. As Zarif points out that, “[international law] is a law not of subordination but of coordination”[34]

In order to deal with ML effectively, there is a need for a common ground, and coordination on an international level; which would ensure a leveled field without inconsistencies. It is imperative that states cooperate and adhere to the same standards, ensuring that there are no loopholes or possible areas of exploitation for the launderers. It is argued that ML is likely to exist due to the corrupt cultures that prevail in some countries. Corruption emasculates the efforts and the international anti-ML regulations set towards fulfilling the desired purpose. Secret financial havens are established to hide the illicit money made through illegal activities.

Certain countries offer entrance to launderers due to their deficient regulation and sureties in terms of bank secrecies. This subsequently bars the struggles made towards and in furtherance of cooperation on an international level, and also hinders the function of regulatory policies on domestic level. It is essential to note that the authorities and persons who enforce the laws may themselves not abide by them. Examples are the ML activities undertaken by the former Governor of Delta state in Nigeria James Ibori and also Sani Abacha the former President of Nigeria. Another example, as discussed below, is the now convicted ex-prime minister of Pakistan: Nawaz Sharif.

Ex-Prime Minister Nawaz Sharif: Pakistan

In the leaked panama papers April 2016, the former Prime Minister Nawaz Sharif was revealed to have owned offshore assets and companies under the name of his three offspring, which were not disclosed in the family wealth statement.[35] Funds were channeled through these companies to attain assets in numerous countries.[36] Among other assets, four flats came into the limelight in Avenfield house in London.[37] The panama papers revealed Nawaz Sharif’s daughter Maryam Nawaz to be the owner of the properties which she denied by submitting a trust deed stating her as a trustee and not the beneficial owner.[38] The document surprisingly examined by the British forensic expert was found to be forged.[39] The font used in the document was Calibri, which did not exist at the time the document was signed in February 2006 and had only become commercially available after 2007.[40]

The illegitimate funds were acquired by avoiding taxes and attaining illicit wealth through corruption which were laundered through offshore companies.[41] However, the family failed to provide the money trail for the assets and the companies acquired by them.[42] In July 2017, the Supreme Court of Pakistan ruled that Mr. Sharif did not stand up to the requisites of honesty and righteousness under Article 62(1)(f) of the Constitution of Pakistan, [43] as he was dishonest to the courts and the parliament.[44]

The Supreme Court discovered substantial discrepancies between Nawaz Sharif’s and the family’s real wealth in comparison to their income.[45] The family could not provide the source for the assets, and also Mr. Sharif’s affiliation with Capital FZE company in Dubai and other wealth associated with him and his family.[46] He subsequently, stepped down as the Prime Minister of Pakistan;[47] after declared not fit to hold the position by disqualifying him under the corruption and the panama papers case.[48]

The case was referred to the National Accountability Bureau (NAB), which in July 2018 sentenced Nawaz Sharif to a 10 years imprisonment and 8 million pounds fine in relation to luxury apartments acquired in the 1990s through laundered money and owning assets beyond income. His daughter Maryam Nawaz is also facing a sentence of 7 years imprisonment for abetment,[49] coupled with a fine of 2 million pounds.[50] This is just the tip of the iceberg, as two more references in relation to an exhaustive list of companies and other assets owned by Mr. Sharif and his family are under examination by the NAB.[51]

This recent example illustrates the level of corruption and tax evasion that is undertaken by those in power which not only is an exploitation of the public’s funds but also a question on the integrity of the authorities who enforce the laws. Most importantly, the time-span which has taken to identify and discover the illicit funds and assets is worth noting. The assets and companies acquired by the family are traced back to decades ago (1985-1993),[52] and the people of the state exploited and blinded for years while the Nawaz family remained in power and enjoyed a luxurious lifestyle. This connotes the significance of strong regulations and detection in relation to ML; not only for Pakistan, from where the funds were channeled but also for other countries where the funds were laundered to by the family to acquire assets and made investments in numerous companies. There is thus a need for strong laws and regulations on a global level and more so international uniformity and cooperation.


The fact that international laws are adopted voluntarily and are ratified at the discretion of the states; there may be hurdles in enforcing the international AML laws. It is the choice of each state to determine the crimes which would constitute predicate offences in relation to ML and these offences however are often only serious crimes. It is thus ideal that there is a broader approach by establishing wider parameters through the inclusion of far-reaching offences which would catch and prosecute more criminals. Despite the fact that there is a need for international uniformity to tackle ML more effectively, it is obstructed by several hinderances in achieving the ideal goal. There is therefore need for a consistent effort on the part of each state to work towards uniformity, eradicate corruption and cooperate in achieving the set goal by making it a common objective to block money launderers.

However, irrespective of the lack of uniformity in laws internationally; the legislative frameworks and cooperation in implementation and controlling ML in the respective methods needed for each country is still imperative, and a way forward for each state to contribute to the international society. It is also vital that states implement the recommendations of the FATF and comply entirely by devoting practically to the set guidelines and refrain from partial implementation.

States should follow suit of the French Constitution where preference is given to the international laws which would enhance consistency and standardization of the laws internationally. This will eradicate the inconsistencies and the problems that surface due to the lack of uniformity, thus strengthening the fight against ML and the process to tackle the problem in a standardized manner. Where the ICC does not hear ML cases, a special court should be established to hear AML cases from around the globe. However, International Law Commission can also amend the Rome Statute 1998 to incorporate ML as a crime, which would allow ICC to deal with ML matters and enhance unification of the International AML laws.

ML ought to be recognized as a damaging risk and standardized as an offence by itself as a serious crime; given that it institutes a dangerous criminal activity which is different than the predicate offences or schemes. Where there is an intentional and deliberate adoption of deficient regulation, it must be exposed and publicized; as a threat to reputation would urge or force the institutions to be compliant. It is also a must that all financial institutions especially banks are extremely cautious in dealing with their customers by running thorough background checks and assess all risks. Banks must not accept money without knowing their customer and making sure that the money is clean. Where money may seem legal coming from the elite, influential and ruling class backgrounds, it is still obligatory to comply with the regulations and the set protocol, irrespective of the profile of the person in question.

Financial institutions unfortunately, either intentionally for financial gains or unintentionally due to negligence and weak regulations let the launderers slip away contentedly with their illegitimate funds which then serves their personal agendas or subsequent criminal plans. There is a critical need for an international combined effort with strong/effective enforcements to tackle money laundering, and a necessity for a level playing field. There must be similar standards across the globe and the same level of implementation. It is not a matter of what is said but rather what is put into action. The fight against money laundering can only be successful if there is joint action and implementation of standardized rules internationally.

[1] Jim Boulden, 'How corrupt Nigerian politician was brought to justice in the UK' (CNN, 9 May 2012) accessed 4 August 2018

[2] BBC, 'HSBC to pay $19bn in US money laundering penalties' (BBC News, 11 December 2012) accessed 5 August 2018

[3] BBC, 'Standard Chartered hit by $300m in Iran fines' (BBC News, 10 December 2012) accessed 5 August 2018

[4] ibid

[5] ibid

[6] Emmanuel Obuah, 'Combatting Corruption in Nigeria: The Nigerian Economic and Financial Crimes (EFCC)'[2010] 12(1) African Studies Quarterly 17, 24

[7] Simon English (banking correspondent), 'Laundering probe puts banks on spot' (Telegraph UK, 9 March 2001) accessed 3 August 2018

[8] Reuters, 'US freezes $458m hidden by former Nigerian leader Sani Abacha' (Telegraph UK, 5 March 2014) accessed 3 August 2018

[9] ibid

[10] Mark Tran and Agencies, 'James Ibori pleads guilty to fraud and money-laundering charges' (The Guardian, 27 February 2012) accessed 3 August 2018

[11] Matthew Green, 'Nigerian banks named in Ibori charges' (Financial Times via ProQuest, 14 December 2007) accessed 4 August 2018

[12] Andrew Walker, 'James Ibori: How a thief almost became Nigeria's president' (BBC News, 28 February 2012) accessed 4 August 2018

[13] Jim Boulden, 'How corrupt Nigerian politician was brought to justice in the UK' (CNN, 9 May 2012) accessed 4 August 2018

[14] Caroline Binham and Tom Burgis, 'Ibori pleads guilty to laundering public funds' (Financial Times London via ProQuest, 27 February 2012) accessed 4 August 2018

[15] Jim Boulden (n33)

[16] Caroline Binham, 'FCA fines Nigeria lender for inadequate money laundering checks' (Financial Times, 9 August 2013) accessed 5 August 2018

[17] Financial Action Task Force, 'FCA fines Guaranty Trust Bank (UK) Ltd £525,000 for failures in its anti-money laundering controls' (Financial Conduct Authority, 9 August 2013) accessed 4 August 2018

[18] Financial Action Task Force, 'FINAL NOTICE' (Financial Conduct Authority, 8 August 2013) accessed 5 August 2018

[19] Rupert Jones, 'Stockbroker Selftrade is accused of using 'semi-menacing' interrogation' (The Guardian, 3 May 2014) accessed 15 August 2018

[20] ibid

[21] Robert S. Pasley, 'Privacy Rights v Anti-Money Laundering Enforcement' [2002] 6(1) North Carolina Banking Institute 147, 156

[22] Rupert Jones (n47)

[23] Gary W. Sutton, 'The New FATF Standards.' (2012) 4(1) George Mason Journal of International Commercial Law 68, 71

[24] Financial Action Task Force, 'Public Statement' (Fatf-gafi.org, 29 June 2018) accessed 18 August 2018

[25] Financial Action Task Force, 'High-risk and other monitored jurisdictions' (Fatf-gafi.org, updated 2018) accessed 19 August 2018

[26] ibid, for further detail on due diligence and counter measures see Recommendations 10 and 19 Interpretive notes; Financial Action Task Force, 'International Standards on Combating Money Laundering and The Financing of Terrorism & Proliferation - The FATF Recommendations' (Fatf-gafi.org, February 2012, Updated October 2016) accessed 19 August 2018

[27] Financial Action Task Force, 'Improving Global AML/CFT Compliance: On-going Process - 29 June 2018'(Fatf-gafi.org, 29 June 2018) accessed 20 August 2018

[28] ibid

[29] ibid

[30] Financial Action Task Force, 'Improving Global AML/CFT Compliance: On-going Process - 29 June 2018'(Fatf-gafi.org, 29 June 2018) accessed 20 August 2018

[31] Javad Zarif, 'International Law as A Language for International Relations - The Principles of International Law: Theoretical and Practical Aspects of Their Promotion and Implementation' (www.un.org, 13 March 1995) 12 accessed 25 August 2018

[32] ibid

[33] ibid

[34] ibid

[35] M Ilyas Khan, 'Pakistan PM Nawaz Sharif resigns after Panama Papers verdict' (BBC News, 28 July 2017) accessed 27 August 2018

[36] David Ros, 'Penthouse pirates: How the mega-rich former prime minister of Pakistan and his sons have ploughed millions into London's swankiest addresses to amass a vast property empire' (Mail Online, 23 June 2018) accessed 28 August 2018

[37] Salman Masood, 'Nawaz Sharif, Ex-Pakistani Leader, Is Sentenced to Prison for Corruption' (The New York Times, 6 July 2018) accessed 28 August 2018; see also, Malik Asad, 'Avenfield verdict: Nawaz to serve 10 years in jail for owning assets beyond income, Maryam 7 for abetment' (DAWN, 6 July 2018) accessed 30 August 2018

[38] Secunder Kermani, 'Pakistani corruption case hinges on a font' (Pakistani corruption case hinges on a font,12 July 2017) accessed 30 August 2018

[39] ibid

[40] M Ilyas Khan, 'Pakistan court assesses PM Nawaz Sharif wealth claims' (BBC News, 17 July 2017) accessed 30 August 2018

[41] Tauseaf Mumtaz Khan, 'Pakistan: Sharif Family’s Ways of Money Laundering' (The London Post, 6 December 2016) accessed 30 August 2018

[42] Hasnaat Malik, 'Supreme Court questions money trail of Sharif's London flats' (The Express Tribune, 30 November 2016) accessed 29 August 2018

[43] Money Control, 'Nawaz Sharif disqualified from holding office for life after Pakistan SC verdict' (Money Control, 13 April 2018) accessed 5 September 2018; see also, Haseeb Bhatti, 'Disqualification under Article 62 (1)(f) is for life, SC rules in historic verdict' (DAWN, 13 April 2018) accessed 30 August 2018

[44] Sophia Saifi and Judith Vonberg, 'Former Pakistan PM Nawaz Sharif sentenced to ten years in prison' (CNN, 6 July 2018) accessed 30 August 2018

[45] M Ilyas Khan (n68)

[46] Tariq Butt, 'How Capital FZE popped up in Panama case?' (The News, 1 August 2017) accessed 30 August 2018

[47] M Ilyas Khan, 'Pakistan court assesses PM Nawaz Sharif wealth claims' (BBC News, 17 July 2017) accessed 30 August 2018

[48] Rizwan Shehzad, 'Mode of payment to Nawaz from Capital FZE not investigated, says JIT head' (The Express Tribune, 10 April 2018) accessed 30 August 2018

[49] Memphis Barker, 'Former Pakistani PM Nawaz Sharif sentenced to 10 years in jail' (The Guardian, 6 July 2018) accessed 30 August 2018

[50] Sophia Saifi and Judith Vonberg, 'Former Pakistan PM Nawaz Sharif sentenced to ten years in prison' (CNN, 6 July 2018) accessed 30 August 2018

[51] There were initially four references initiated against the Sharif family by NAB in relation to the assets possessed by them which were beyond the source of their income; see, Syed Irfan Raza, 'NAB set to file four references against Sharifs' (DAWN, 1 August 2017) accessed 30 August 2018

[52] M Ilyas Khan, 'Pakistan court assesses PM Nawaz Sharif wealth claims' (BBC News, 17 July 2017) accessed 30 August 2018

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