It stands to reason that money-laundering and terrorist financing crimes destabilize the security and peace of the entire world. Terrorist acts wreaking terror and destruction widely capitalize on large funding. According to International Monetary Fund statistics, money-laundering crimes account for about $950 billion up to $1.5 trillion. The impact of such crimes is exponentially on the increase promoted by the digital revolution of information technology and communications, which has turned the world into a small, globalized village, facilitating the movement of money and the freedom to transfer funds across national borders through widespread, fast-moving, and extremely complex financial systems.
To this effect, IMCTC organized, on December 22 of 2021, at the IMCTC headquarters in Riyadh, a keynote lecture, featuring PARALLEL FINANCIAL INVESTIGATION PROCEDURES IN MONEY-LAUNDERING AND TERRORIST FINANCING CRIMES by Mr. Ahmed Mohammed Al-Muqhim, Prosecutor of economic crimes and a co-founder of the Money-Laundering Unit at the Public Prosecution of the Kingdom of Saudi Arabia.
Socioeconomic Threats
Al-Muqhim emphasized that money-laundering and terrorist financing crimes are a grave threat to the socioeconomic aspects of any given country, especially countries suffering from poor countermeasures of such crimes.
Economically, such crimes tarnish the reputation of any financial systems, while depriving a given country of important financial resources that can be appropriated for employment and development, raising inflation rates, and affecting the rules of fair and honest competition.
Socially, the failure to prosecute the proceeds of crimes enables perpetrators to exploit such proceeds to fuel crimes and finance terrorism. The spread of money-laundering operations in any society increases crime rates and declines the values of education and culture.
Similarities and Differences
Al-Muqhim discussed the similarities and differences between money-laundering crimes and terrorist financing crimes, spelling out that both typologies feed on concealment and deception, and require international strategic cooperation, due to their cross-border ubiquity. Such crimes need a supervisory treatment and financial investigation procedures. On the other hand, there are many differences between the two types of crimes in several key aspects, such as:
• Source of Money: Money-laundering crimes draw on illegal sources; such money comes from criminalized sources (drug trafficking, antiquities smuggling, contrabands smuggling, human trafficking, etc.), while the terrorist financing can be funneled through legitimate and illegitimate sources.
• Volume of Money: Money-laundering crimes involve big money, not comparable to money-laundering crimes of terrorist financing.
• Goal: The goal of money-laundering crimes is to make financial profits, while the goal of terrorist financing is to gain political or ideological progress.
• Method of Money Movement: Money in money-laundering crimes move through financial institutions in a circular manner, starting and ending with a money-launderer. Funds of terrorist financing may not follow the path of financial institutions and take a linear path that begins with a financier and ends with a terrorist organization.
• Scope of Detection: In money-laundering crimes, detection focuses on identifying the relationships between the individuals involved in a given crime. In terrorist financing crimes, the focus is placed on money and associated movement.
Al-Muqhim reviewed the key methods of concealing funds in crimes, such as digital transactions, which have become a notoriously dangerous means, inter alia, used by criminals, and instrumentalizing goods that have no standard for their value nor control over their prices, such as antiquities, paintings, and establishment of fictitious companies, and the customs declaration claiming that a person has money, and is given a clearance of claimed funds to use and deposit suspicious funds, divide funds, such as opening more than one bank account, or transferring money to more than one beneficiary, using large fake contracts and supplies, and funneling funds.
Parallel Investigation Role
Al-Muqhim discussed the parallel financial investigation and the vital role in combating money-laundering and terrorist financing crimes. He spelled out it collects material financial evidence by identifying financial transactions of suspects, and financial movements to learn about the proceeds of the original crime and the crime of money-laundering, means, and seize, or flagging up and tracking such money, and providing the evidence necessary for investigation, indictment, detention and confiscation. In one of its recommendations, the FATF states that governments should conduct a parallel proactive investigation with regard to all cases of money-laundering and terrorist financing, and the associated predicate crimes. Simply put, the court, as it initiates an investigation into one of the predicate crimes believed to be related to financial proceeds, opens a financial investigation parallel to the criminal investigation, during which it searches for and tracks the financial proceeds of such a crime and provides evidence to link these financial proceeds to the original crime.
The success of parallel financial investigations in recovering proceeds of crime is taken as an important criterion for identifying how compliant a given country is with the requirements of combating money-laundering crimes, and a key factor contributory to global assessment, thus removing it from the list of high-risk countries.
A parallel investigation is proactive; it identifies the proceeds of crime under investigation, prevents illegal profits from penetrating the economy, thereby removing the instruments of future crime, and reinforces the important principle in law and society that no one benefits from crime.
Financial investigation and parallel financial investigation are critically important given their vitals roles in identifying and documenting the movement of money. They both identify the motives and connections between the people involved, reveal all participants in a given criminal act, and the organizational structure of criminal organizations, identify the threat of each individual accused, monitor the proceeds of crime under investigation, and help uncover crimes. They also identify the locations of suspects, witnesses, victims, the means and methods used in such a crime.
Investigation Methods and Sources of Information
Al-Muqhim presented the key methods used in parallel financial investigation, and the relevant sources of information, pointing out that some methods follow secret procedures, while others follow open ones. Secret-path key procedures include:
• Field research and investigation, by movement, inspection, and in-field observation.
• Secret operations, in which a criminal police officer operates in disguise as a man who practices the same activity as a given accused and meets with the target person to learn about the dimensions of a given crime, and the parties involved. Officers of criminal justice who perform such tasks usually undergo extensive training until they perfect stealth skills.
• Controlled delivery, by letting a tracked accused person continue their activity (e.g., delivery of drugs), so that all those involved in a given criminal network can be spotted and arrested in flagrante delicto and ensure their conviction.
• Monitor communications, after obtaining the prosecution's permission, to monitor the defendants' communications and their internal and external relations.
• Writing to the competent authorities to find out what such a given accused person has.
The key investigation methods that follow open procedures include requesting a given accused to bring documents that prove the source of their money, informing the criminal investigation officer in charge of the banknote financial document, and discussing and confronting such an accused person. Key sources of information in parallel financial investigation include:
• Criminal information, which is the criminal record that identify the history of a given accused person.
• Digital devices which a given accused person has; they are one of the most important and powerful sources of information. Criminal investigation officers must take the initiative to obtain the information contained in such sources before they are deliberately damaged or sabotaged.
• Financial information in financial institutions, such as banks and money stock exchanges.
• Classified information, which is related to the security aspect of the security services.
• Regulatory information held by regulatory authorities, such as industrial and commercial bodies, customs, passports, and others. It includes information that can disclose important aspects and activities of those accused of money- laundering and terrorist financing crimes.
Discussions
Several discussions and questions were raised by the delegates of the IMCTC member countries. Brigadier-General Nawaf Al-Jutaili, Delegate of Kuwait, asked for further explanation about the indications of money-laundering and terrorist financing crimes. Al-Muqhim spelled out that the supervisory institutions have indications thereof, such as financial movement not proportional to the income. Brigadier-General Rashid Al Dhaheri, Delegate of UAE, asked about the exploitation of famous social media applications in money-laundering, and how can this be followed up and addressed? Al-Muqhim replied that those involved in money-laundering and terrorist financing crimes are always quick to devise new methods for such crimes, including targeting famous social media platforms, because there are no standards or controls for their money. As such. It is critically important to document their money and regulate advertisement content on their pages. To this effect, the Kingdom of Saudi Arabia has taken relevant steps.