"MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIA25 As we have observed the different estimations and the research work of different authors weunderstand that the sting of money laundering as one of the famous organized crime hasdeepened its root in every form of society from the developing to the developed nations. Thenext chapter of the dissertation explains the stages of money laundering from its evolution tothe current year in The UK with greater emphasis on the different AML laws the nation hasimplemented to fight against this crime.25Source: GDP, current prices, from the IMF [28], World Economic Outlook Database, April 2009. The Exchangerate from www.xe.com based on the conversion rate on the 1st of July of the estimated year. Page 15 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAMONEY LAUNDERING – THE UKIn the current division we would be in detail discussing the process of money launderingfrom the evolution to the current position of this organized crime along with the differentchallenges the nation is facing in fighting against this crime even after implementing theselaws. Further under this section of the dissertation discussion would also be made on thecurrent anti-money laundering laws prevailing in The UK. Before moving ahead with thedifferent anti-money laundering laws in the UK it is very essential to understand the roots ofthis crime in the society and how the nation has tried to eradicate this crime before thecommencement of these laws.HISTORYMoney laundering is an organized crime that has existed in The UK from the period of26 1975?s with the Mafia elements launching their money laundering branch in London. Thereason behind opting London as one of the main branches of the money laundering businessis because it gave them the position to control and influence the movement of financesglobally and it is based on this advantage that London became the main hub in the chain of27 money laundering.The existence of this crime was more fully recognised - money laundering has been aroundsince money was first used but only in more recent times has its scope and seriousness beenappreciated during the early 1980?s where the British institutions dealing with financerecognized the existence of this organized crime which involved the flocking of the foreignmoney launders into the market during this period taking the advantage of the availablerelaxed commercial environment with the provisions such as free-for-all and laissez-faire that26Bosworth-Davies and Saltmarsh, Money-Laundering – A practical guide to the New Legislation, published byChapman & Hall, 1994, p. no. 17 para 1.4.127Sharpe M.E, Money and Morals Worldwide, First Annual report, 1995, p. No. 41 to 45 Page 16 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAwere mainly created by the financial institutions in order to meet the competition that existed28 in the then financial atmosphere. Financial deregulation method adopted by the British financial institutions in the 1980'sfollowing on the so-called 'Big Bang' in 1986 has paved a gateway to the foreign launderer toestablish their institutions in the more relaxed and de-regulated financial atmosphere ofLondon. The reason for adopting this financial de-regulation by the British financialinstitutions was mainly for developing the way the business is being conducted in thedomestic equity markets of London. In this process financial institutions were establishedwith coordination of the international houses which have been rushing to purchase theprominent UK job houses and broker firms such that they could create international securityhouses that are capable of undertaking 24 hours trading in the nation.This severe competition for international business meant that London had to compete withother international trading houses in New York, Frankfurt, etc. that have been growingrapidly in the competition of establishing a marketplace globally. Thus, it is for this reasonthat it adopted a commercial environment that had been relaxed which paved way for manyinternational money launders to establish their branches in London and make it a hub in this29 criminal chain.The authors of “Money-Laundering – A practical guide to the New Legislation, Bosworth- Davies and Saltmarsh” presumed that there are three main reasons for establishing London asone of the important hub in the chain of money laundering, they are:28Same as note 2329Ibid p. no. 43 Page 17 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIA1. The availability of highest quality of financial institutions in London, offshore in theChannel islands and the Isle of man in Britain which provide shelter for the process ofmoney laundering and investment of funds on a larger scale.2. The competence talent of the professional advisors in the field of finance is abundantin Britain.3. Lack of an effective regulatory system in the financial institutions, as explained in theabove paragraph, is also considered to be one of the important elements for rapidgrowth in the crime of money laundering in the nation. This de-regulation has beenwitnessed in the Barings disaster that to showcase those transactions that has beeninvolved and has escaped the regulation net.In addition to the above stated reason one of the additional reasons for the establishingLondon as one of the important money laundering hubs and the attraction to this place overthe period from the early 1980?swas due to the derivatives which are considered to be highleveraged instruments in investment. The reader may query as to how investment can paveway to money laundering, in answer to this query it is essential to understand that thefinancial institutions and markets dealing with securities and trading require vast amount ofliquid cash for effective and able operation of the market, this requirement overlooks theloopholes such as the indiscipline nature of the individual practitioner and also theanonymous nature of the work and the way it is being propagated.As stated above for effective operation of securities and trading market the financialinstitutions require vast amount of liquid cash in a very limited period, where collection ofmoney is the principal function of these institutions that is, the highest priority of thesemarket practitioners is the unfretted flow of cash into the market for effective operation. It isthese situations that tempt the practitioner in have liquid funds available at hand irrespective Page 18 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAof the source of these funds. This immoral and high-risk business environment give the30 money launders the chance to enter and control the operation of the financial market.Further, it can also be stated that the ability to generate more money irrespective of theprocedure that involves the disguise of these fund flows attract the launderers to launder theirearnings and have complete control and access the financial institutions. Thus, the organizedcrime of money laundering has existed in The UK over a period from 1975. The factorsdiscussed above along with the three main conditions have made London and other parts suchas the Scottish financial centre of Edinburgh of The UK attractive for money laundering.However, starting with the realisation of the major link between the illicit drug industry andmoney laundering, successive UK governments have become more acutely aware of thesignificance of illegal money laundering.MONEY LAUNDERING AS A CRIMINAL OFFENCEAfter a brief discussion on the evolution of money laundering in the UK economy, weproceed further on discussing those forms of money laundering that are considered criminaloffence in this nation. The process of money laundering results in the occurrence of acriminal offence that has occurred in a way to generate a criminal property. The principlemoney laundering offences that have been specified under the POCA regulation areapplicable to only those money laundering activities that have occurred on 24 February31 2003, but the money laundering activities prior to 2003 are governed by differentsubstantive laws that are applicable to everyone. These laws are discussed in brief in the nextsection of this chapter.30Ibid p. no. 4331Commencement No. 4, Transitional Provisions & Savings Order 2003 Page 19 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAThe money laundering offences are considered as criminal offences if they fall under thegroup of:AssistanceAn offence is a criminal offence under this group if it is proved that the individual in questionhas assisted the money launderers for retaining benefits of funds. If the offence is provedunder this group, then such assistance is a punishable offence and on conviction they arepunishable for maximum 14years imprisonment or fine or both.32 Tipping OffThe act of informing the person who is subject to investigation of money laundering is alsoconsidered as an offence under this group. The person convicted under the act of tipping offis punishable by maximum 5years imprisonment or fine or both. Failure to reportAct of failure to disclose the knowledge of information that is suspicious or caused theindividual to have a proper reason for suspecting the act as laundering is considered as apunishable offence under this group. The person convicted of the offence of failure to reportis punishable by a maximum of 5years imprisonment or fine or both. Section 330 of POCAgoverns failure to disclosure under the regulated sector, and the convicted person is alsosubject to indictment along with the above punishments.Constructive trust32Section 333 (POCA) Page 20 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAUnder this group, any person who is involved in criminal proceeds of money laundering, inparticular, can relate those proceeds and be held liable as the true owner or as a constructivetrustee of the act. Even though there is no clarity of law in this field of crime, the offence isfinalized based on reference to certain case laws such as Baden Delvaux and Lecuit v. Societe33 34 35 36 Generale, Re Montagu?s Settlement Trusts, Agip (Africa) Ltd v Jackson, Finers v Miro.Essential to prove that the property is a „criminal property'This is the most important and essential element, for proving the offence of moneylaundering it is essential for prosecutor to prove that the current property is a prove propertyis the result of criminal proceeds, or that the suspected offender supposedly knows orsuspects that the property is result of money laundering crimes as per section 340(3)If the benefits or proceeds received from a property are due to the criminal conductAn offence of money laundering is concluded as a criminal offence if the act, in particular, isthe result of criminal conduct. This is known as circumstantial evidence. Under moneylaundering, there are two ways of proving a criminal offence firstly, by proving that theoffence gave rise to criminal property secondly by relying circumstantial evidence of criminal37 conduct as explained in R v AnwoirThe other offences concluded as criminal offence under the money laundering act is,Concealing the property as criminal property – which is explained as an offence under theprovision of Section 327 (PCOA), Section 332 of the act explains that an offence is convictedof criminal offence if the individual is proved to have failed to disclose the information33Baden Delvaux and Lecuit v. Societe Generale (1983) BCLC 32534Re Montagu’s Settlement Trusts (1987) Ch26435Agip (Africa) Ltd v Jackson (1992) 4 All ER 38536Finers v Miro (1991) 1 All ER 18237R v Anwoir [2008] EWCA Crim 1354 Page 21 "