Predicate Crimes

The concept of predicate crimes can be traced to American Law and were initially classified under drug related offences, however legislation has since broadened the definition to include any serious crime and ever since the 2004 Financial Action Task Force (FATF) recommendations, predicate crimes have guided Anti -Money Laundering (AML) definitions and several jurisdictions have a list of crimes they consider to constitute serious crimes, however the ununiformed variation in definitions has resulted in several bad actors taking advantage to circumvent the law and evade detection. 

Predicate crimes are of particular interest to me as I am currently undergoing my PhD research within this area and I hope to discover important findings that will make important contribution to the financial crime landscape.

What constitutes a predicate crime?

A predicate crime is a key concept of Money Laundering and ML can only happen after a predicate crime has been committed, a predicate crime is therefore a component of a larger crime. For example, Mr Joe goes out to sell “heroin” on the streets of Long Island and cash was payed, the predicate crime in this instance is the selling of Class A drugs. 

Various jurisdictions have different approaches as to how a predicate crime is interpreted, the United Kingdom for example who are no longer a part of the EU has the Proceeds of Crime Act (POCA) 2002 legislation that adopts an “all crime approach” which serves as a predicate offence to ML. In the United States, predicate crimes are known as “specified unlawful activities” and there are over 200 known SUAs which covers well known key areas. The introduction of the 6th EU Money Laundering Directive is indeed a welcome development, with the aim of providing a uniform approach to AML/CFT regulations by proving a list of 22 predicate offences that constitutes Money Laundering across the EU states, including certain tax crimes, environmental crimes, cybercrime and self – funding.

With several guidance and reports put together by organisations such as the Financial Action Task Force (FATF) and the European Union (EU), it is imperative to highlight that the onus ultimately lies on financial institutions, designated non-financial business and other regulated businesses to take a unified approach in other to mitigate their risk of money - laundering, organised crime, terrorist financing and other related predicate offences.

If your organisation, professional body or civic group would like to learn more about this subject matter or any other areas within my line of interest, you are most welcome to get in touch with me via email- contact@emgfinancialcrimeconsulting.co.uk