Money laundering is a high stakes game of hide and seek for criminals, and all too often they win. The stakes are billions of dollars of dirty cash. Some estimates put the global value of organised crime in the trillions and amounting to 7% of global GDP, and growing. Transnational organised crime is now involved in vast schemes of technology fraud, counterfeit drugs, environmental crime, as well as human trafficking and the narcotics trade, threatening social stability and integrity in countries around the world.
Players include organised crime syndicates, corrupt officials, and crafty financial masterminds who know how to play on weaknesses around the world. For law enforcement and the justice system the challenge is immense: offences are often novel and transnational, and involve tracing illicit cash through complex webs of transactions designed to erase its criminal origins. Existing approaches which require proof of the illegal origins of proceeds often fail as investigators are unable to pierce the veil of offshore accounts, shell companies, invisible beneficial owners and other sophisticated laundering techniques.
Luxemburg’s case in 1993 against Franklin Jurado, a businessman working for Colombia’s Cali Cartel, epitomised the problems. Jurado’s job was to clean millions in drug money through global banks. When Luxembourg prosecutors finally managed to convict him of money laundering, they hit a roadblock: under outdated laws, they could not confiscate $100 million in cartel profits because the money was not directly linked to his laundering charges. For many criminals prison time without loss of wealth is hardly a sanction at all. It was a textbook example of the law lagging behind criminal ingenuity.
Making international and domestic laws effective to match the scale of the threat has driven governments and international bodies to rethink how they fight money laundering. Research conducted jointly between the EU’s Global Facility and the Siracusa International Institute for Criminal Justice and Human Rights has identified how different jurisdictions around the world are meeting the challenge by reforming and introducing laws on confiscation, illicit wealth and enrichment.
“With legal knowledge about these opportunities available for reform the EU’s Global Facility advises partner jurisdictions to strengthen laws suitable to their context and legal system. These innovations can make it harder for criminals to stash their cash—and easier for authorities to seize it,” says Mamuka Jgenti, the Global Facility’s justice and civil society expert.
Innovations That Shift the Balance
Faced with the near-impossible task of proving the exact criminal origins of laundered money, many jurisdictions are turning the tables on suspects. By shifting the burden of proof they are requiring defendants to explain the origins of properties or money that prosecutors have shown to be suspicious.
One of the earliest adopters of this approach was France, where a 2013 law allowed courts to presume assets were illicit if defendants could not justify their origins. Similar innovations have developed in the Netherlands and Belgium, giving prosecutors a fighting chance in cases where criminals have gone to great lengths to obscure their financial dealings.
“By shifting the burden of proof they are requiring defendants to explain the origins of properties or money that prosecutors have shown to be suspicious.”
Some nations have tackled the problem from a different angle entirely. In Ireland , civil forfeiture laws created the Criminal Assets Bureau, which can freeze assets without requiring a criminal conviction. By using the lower standard of proof applied to civil law Ireland has successfully stripped organised crime groups of their resources. Same types of solutions are also applied in other jurisdiction , more specifically in Common Law Jurisdictions as for example in the UK. Italy, meanwhile, has deployed preventive confiscation to dismantle the Mafia’s financial networks. Under laws dating back to 1982, Italian courts can seize assets from individuals suspected of living off criminal proceeds, even if they have never been convicted. This tool has been crucial in undermining the Mafia’s economic power.
Walking the Tightrope Between Justice and Rights
These innovations might sound like a prosecutor’s dream, but they have also sparked heated debates about fairness and human rights. Critics argue that shifting the burden of proof undermines the presumption of innocence, a cornerstone of justice. Requiring individuals to explain their wealth can also clash with the right against self-incrimination.
Courts have wrestled with these issues, though they have often decided in favour of the innovators. In 1988, the European Court of Human Rights, for example, ruled in Salabiaku v. France that shifting legal presumptions are acceptable as long as they are “confined within reasonable limits” and preserve the right to a defence. The European Court has upheld other decisions where a defendant’s right to to silence, or their refusal to explain the origins of large sums of money, was not absolute, so long as there was other supporting evidence.
“These rulings underscore an important principle: innovative legal tools must balance effectiveness with safeguards, both responding to the scale of the problem in the context and developing from international and domestic legal norms,” says Ambassador Jean-Paul Laborde who supports the EU Global Facility’s work with judicial partners. “When we advise on legal reforms to jurisdictions we help develop safeguards like rebuttable presumptions, judicial oversight, and the opportunity for defendants to challenge accusations to ensure legal reforms do not overreach.”
But the challenges do not stop at human rights. International cooperation remains a thorny issue too. For example, the principle of “dual criminality” means that countries can only assist each other if the alleged crime is recognised in both jurisdictions. This creates hurdles for enforcing laws like illicit enrichment, which are not universal. Even when confiscation orders cross borders, differences in national legal systems can block enforcement.
A Global Push for Reform
Global organisations are also contributing to the fight against money laundering and the agenda for legal reform. The Financial Action Task Force (FATF) makes recommendations based on a global picture of emerging threats and trends. Together with a number of UN Conventions signed over the past 40 years to tackle drugs trafficking, organised crime and corruption there is a growing momentum to adopt new legal measures. The FATF implements its recommendations through regional FATF bodies which monitors compliance and has the power to ‘grey’ or ‘black list’ countries.
Some reforms have been driven by urgency. Italy’s preventive confiscation laws, for instance, were born out of necessity during the Mafia’s reign of terror in the 1980s. Similarly, Ireland’s civil forfeiture laws emerged in the mid-1990s in response to growing violence linked to organised criminal groups.
As these innovations spread, they have reshaped the global fight against financial crime. Nations are learning from each other, adapting strategies to suit their legal systems while respecting fundamental rights. Courts have played a pivotal role in legitimising these efforts by reviewing reforms against constitutional safeguards to ensure that justice does not come at the expense of fairness.
“But the challenges do not stop at human rights. International cooperation remains a thorny issue too […]”
The Future of Financial Crime Fighting
Many of the tools to fight money laundering are evolving. Investigative knowledge and techniques are sharpening, information sharing and preventive measures are gradually improving, and legal systems need to similarly adapt to the increasing threat. Legal innovations are making it harder for criminals to enjoy their ill-gotten gains. At the same time, courts and policymakers are working to strike a delicate balance, ensuring that these measures respect the principles of justice and human rights.
The EU Global Facility on AML/CFT and its experts offer tailor-made advice on the suitability and nature of legal reform based on the money laundering threat, existing legal system and any relevant regional FATF recommendations.
As financial crime grows more sophisticated, laws and practice must continue to adapt. The lessons from these reforms offer the opportunity to turn the tide on organised criminality and its dirty money.
This project is funded by the European Union.