Summary

The Dutch penalization of money laundering is of relatively recent date. On 14 December 2001, title XXXA was inserted into the Penal Code. In article 420bis Sr money laundering is – simply put – defined as concealing the origin of objects, or the acquisition, possession, transfer or use of objects with the knowledge that these directly or indirectly come from any crime. After a somewhat rough start, the number of money laundering cases put before the Public Prosecutor increased every year. Media reports and published caselaw show that the penalization of money laundering is used in very different situations.

Over a decade after the introduction of the penalization of money laundering, the question is where the limits of criminal liability in money laundering should be drawn and which purpose is pursued by this penalty clause. With this research, I would like to make clear which conduct is prohibited under art. 420bis Sr, who may be guilty of this offence and under which circumstances. This exploration does not only serve a strictly theoretical importance, but clearly also a legal political importance. As of 1 January 2015 the penalization of money laundering has been amended for the first time since its entry into force. More importantly, the Minister of Security and Justice in the fall of 2014 has brought a subsequent proposal to amend the money laundering legislation into consultation. Based on the results of this research, I try to make recommendations to improve the text of the offence of money laundering. It is further examined which purpose is pursued with the aforementioned penalty clause in practice, set against the original intention of the penalization of money laundering. It is examined how the current application can be related to the objective of the penalization of money laundering and whether adjustment – of either the penalty clause or the conducted investigation and prosecution policy – is needed.

In Chapter 2, the money laundering phenomenon is explained from a historical and criminological perspective, after which the socio-economic point of view why money laundering must be combated is examined. It is established that the concept of money laundering pops up at different times in recent history. The concept is used in very different contexts, but every time it depicts a transformation process. In this process first the actual, but unjustifiable, origin of a capital is hidden. Subsequently, it is replaced by a fictional, but justified, origin. In this way, predicate offences are covered and the wrongly obtained capital can be used for undisturbed consumption or investment.

There is no ready answer to the question of how money laundering processes are carried out. In fact, money laundering processes take place in secret and they are purely bounded by human creativity. Nevertheless, there are a number of elements that are essential for any money laundering operation. In order to explain these elements, the money laundering phenomenon is often depicted as a route consisting of three phases. It successively concerns the phases of deposit, disguise and destination. It may be argued that an essential element is lacking in this presentation of facts. For the phases of disguise and destination coincide without the appearance of legitimacy being attached to the criminal capital. Regardless of which money laundering variant is figured out, each time it is all about breaking the link between the criminal capital and the predicate offence, after which the true origin is replaced by an apparently legitimate origin. In other words, the phases of scrambling and justification constitute the nature of money laundering.

With the rise of organized (drugs) crime, the absolute need for money laundering emerged for the first time, but in parallel also the opportunities of money laundering increased. During and after the money laundering process negative effects may arise. These effects necessitate the combat of money laundering. It is clear that this should be organized internationally, because a national approach merely leads to displacement effects. In the fight against money laundering there is a key role for the penalization of this phenomenon. For it must be prevented that money from crime reaches the legal economy with impunity and that society is disrupted. With a view to developing penalization, the functional description of money laundering, in which money laundering is depicted as a transformation process that consists of at least three successive phases, does not offer a solution though. An effective penalization of money laundering should also apply to acts which in themselves have nothing to do with the disguise and justification of money from crime, simply because otherwise it is too late. This means that situations in which criminals mix their loot with legal revenues or in which they try to move it to a distant foreign country, should be included in the penalization of money laundering. Money laundering should therefore formally be described in such a way that committing a single act results in a completed offence.

Chapter 3 is devoted to the international development of the penalization of money laundering. On the basis of various initiatives of the United Nations, the Council of Europe and the European Union it is examined when in the legal sense there is money laundering and who may be guilty of committing this offence. In these international instruments the category of acts that form the basis of the crime of money laundering is amply elaborated. On the basis of three types of acts it is possible to intervene at any time in – and even briefly prior to – a money-laundering process. It can be noted here that the scope of the penalization of money laundering over the past few decades has become ever broader. There are three underlying causes. In the first place it is important to highlight the increase of the category of predicate offences. Where originally focus was purely on the laundering of the proceeds from drug crimes, penalization now applies to the laundering of the proceeds from any serious crime. Secondly, it is important to highlight the possibility to extend the penalization with a variant on guilt. Finally, the penalization of money laundering may also be made applicable to the perpetrator of the predicate offence.

A last observation concerns the perspective of the penalization of money laundering. This has become broader, too. Initially the said penalty clause constituted a tool in the fight against profit-oriented crime. In short, criminals can, through their booty, be associated with the crimes committed by them. This requires, however, that the link between the wrongly obtained capital and the underlying crime remains intact. On the basis of the penalization of money laundering it should be prevented that criminals disguise the true origin of their loot in order to replace it by a seemingly legal origin. Meanwhile, the objective of the penalization of money laundering is no longer limited to the fight against the underlying crimes. The aforementioned penalty clause is aimed at exactly the protection of the financial and economic integrity by preventing that crime money reaches the legal economy unnoticed.

Chapter 4 examines the way in which the Dutch legislature fulfilled international obligations such as those discussed in Chapter 3. Initially money laundering in the Netherlands was placed under the revised provisions on handling of stolen goods drafted in 1991. It is mainly the own nature of money laundering and the importance of a specific approach which are in favour of an independent penalization of money laundering. Money laundering is simply not the same as handling. Where handling revolves around taking over goods from the perpetrator of the crime, money laundering concerns the disguise of the true origin of a crime in order to replace it by an apparently legal origin. The reproach with a handler is that he favours committing the underlying crime. The money launderer will find a completely different accusation. By his acts he threatens the financial and economic integrity and social order. There is furthermore no reason to declare the current limitation – from which follows that the perpetrator of the offence cannot also be guilty of handling goods resulting from that offence – applicable mutatis mutandis. For, with a view to the nature and punishability of money laundering, it makes no difference whether acts are committed with the proceeds obtained from one’s own or someone else’s crime.

By the independent penalization of money laundering the Dutch legislator goes further than required on the basis of the international initiatives discussed. The Dutch legislator has not used the various options for a reservation – for example with regard to the category of predicate offences to which article 420bis Sr applies or in respect of acts such as acquisition, possession and use. The Dutch penalization of money laundering is therefore applicable to virtually any act with felony-derived objects. In short, this penalty clause has a much broader scope than required under international instruments and suggested by the functional description of money laundering.

In Chapter 5, the precise scope of article 420bis Sr is mapped. On the basis of an analysis of the case-law it becomes clear where the limits of criminal liability should be drawn with regard to this crime. In practice, over the last few years questions were raised about the exact scope of the penalization of money laundering. These questions can be divided into two categories. In the first category it always concerns the question whether the penalization of money laundering has not been made too broad. The scope of application of the penalty clause here is, in other words, unclear because there is tension between the text of the law on the one hand, and the legislative history, the law system and the purpose and intent of the law, on the other. With regard to questions from the second category, the exact details of some crime components are central. It then concerns the meaning of terms used which in practice prove open to multiple interpretation, in which the scope of the penalty clause should be interpreted in the light of the legislative history, the law system and the purpose and intent of the law.

The Supreme Court has at various points introduced a limitation to the scope of article 420bis Sr. A broadly designed penalization is certainly necessary in order to effectively combat money laundering – for it concerns a secret process that must be encroached upon at any time because otherwise the grip on it is lost – but unlimited law application results in undesirable outcomes. The perpetrator of a profit-oriented crime is, according to the text of law, already guilty of money laundering when he completes his crime, while handling capital existing of a minimal part of crime money falls within the scope of the penalty clause too. In these situations the crime components of article 420bis Sr are fulfilled, even though there are no punishable acts. The Supreme Court sets limits on the criminal liability by providing grounds for exclusion of qualification. This means that although the charged fact can be proven, the evidence does not produce an offence. With the adoption of grounds for exclusion of qualification an effective fight against money laundering remains possible. Only the punishment of non-penal acts is excluded.

In addition, the Supreme Court granted importance to some crime components. In its opinion, the hiding and disguising of objects derived from crime constitute continual offences and a legally acquired object should after tax concealment be classified as derived from any crime. With a broad interpretation of the said crime components, the scope of article 420bis Sr increases. It is striking that the Supreme Court in both cases does not explain its choice in content, while a broad interpretation of the components mentioned has far-reaching effects. For instance, the choice for a broad interpretation of hiding and disguising objects derived from crime has consequences with regard to legal power over and the limitation period of money laundering crimes. The broad interpretation of the component ‘derived from any crime’ means that the penalization of money laundering not only applies to the immediate capital arising as a result of completing a profit-oriented crime, but also to the saving of costs realized by committing a (tax) crime. Several guarantees from the fiscal criminal law are thus jeopardized.

The evidence is treated in Chapter 6. It becomes clear that article 420bis Sr can not only be used against the perpetrator of the predicate offence or the third party that has taken over the spoils, but also against the suspect holding an object of which it is not at all clear from which crime it comes. In short, the component ‘derived from any crime’ is fulfilled when given the facts and circumstances of the case the object cannot but be derived from any crime.

The proof of money laundering is in practice achieved in a different way than anticipated in the legal history. As a general rule, the facts and circumstances that led to suspicion of money laundering are inserted as evidence in the verdict. It then concerns the action(s) of the accused, the object he had at his disposal and the fact that he had no or only a small legal income. Then the judge strengthens the construction of proof by a further consideration in his judgement in which he indicates that the defendant has failed to make the legal origin of the object plausible. This is the case when the suspect has given inconsistent, contradictory or obviously false statements about the origin of the object, but also when he simply stays silent. Further, the judge may insert general knowledge data in the detailed evidence consideration. It is ultimately based on the used evidence and this further consideration that the judge finds it legally and convincingly proven that the object in question is derived from crime and that the suspect was aware of this.

In Chapter 7 the application of the penalization of money laundering in practice is central. In the past decade, priority has been given to the fight against organized and financial-economic crime, including money laundering. The number of money laundering cases is increasing every year along two main lines. A first main line is formed by cases in which a prosecution in respect of the predicate offence is combined with prosecution for money laundering. The completed predicate offence is the starting point and practically every act with the loot can subsequently lead to a conviction for money laundering. A second main line is formed by cases in which the penalty clause is used against suspects who dispose of inexplicable capital. The criticism that affects them is that they have objects which is no other than that these ‘cannot but be derived from any crime’.

The large number of money laundering cases marks the success of article 420bis Sr, but the current application has little to do with the original intention of the legislator. The penalization of money laundering is in practice mainly used against suspects as to whom cannot be sustained that they threaten the financial-economic integrity and social order by surreptitiously transferring crime money into the legal economy. The focus in the investigation and prosecution of money laundering simply seems focused on the cases that – due to the broad definition and the ample evidentiary possibilities – can easily be addressed and not so much on the cases that given the ratio of this penalty clause deserve attention.

In the last chapter of this research it becomes clear how article 420bis Sr can be shaped on paper and applied in practice so that it actually prevents crime money to reach the legal economy with impunity, where it may constitute a threat to the financial and economic integrity and social order. The impending amendment in the law should be seized in order to determine the exact scope of the penalization of money laundering. This means that the legislative qtext should be clarified in some parts and limited in other parts. At the same time, independent penalization of criminal possession should be introduced. With the introduction of the said penalty clause article 420bis Sr can be limited without prejudice to an effective fight against crime money. Finally, in the application of the penalization of money laundering the emphasis should no longer be on the cases that can be easily addressed. Based on analyses of completed investigations and the information provided by private parties and supervisors, money laundering and money laundering processes should be further investigated and cash-flow research ought to be conducted. In doing so, it is important that the various chain partners use the opportunities to share information and work together. In this way, the investigation and prosecution can be directed at the persons for whom the penalization of money laundering is included in the Penal Code: criminals who with their crime money try to reach the legal economy and the service providers who assist them.