When someone suggested to me some years ago that the introduction of washable bank notes in the UK could facilitate money laundering (ML), I knew then there was a need for this feature!
The scale of money laundering is difficult to assess, but it is considered to be significant. The United Nations Office on Drugs and Crime (UNODC) estimates that between 2 and 5% of global GDP is laundered each year. That’s between €715 billion and €1.87 trillion each year. (Source Europol 2023)
What is money laundering?
Money laundering is the process through which criminals seek to conceal the true source of property or income (benefits) obtained illicitly, and by disguising the origin or the actual owner of the funds, legitimise those proceeds.
ML normally comprises three common steps: (i) Placement – obtaining the money or introducing it into the financial system in some way; (ii) Layering – transferring or concealing the source of the money through complex or multiple transactions and (iii) Integration – returning the money back into the financial world so that it appears legitimate.
Anti-Money Laundering (AML) in Portugal
The Portuguese legal framework on anti-money laundering (AML) and counter-terrorism financing has evolved under various legislative changes since 1994.
Under Lei 368.º-A of the Portuguese Criminal Code, money laundering refers to anyone who converts or transfers property (obtained by him/her or a third party, directly or indirectly) or intervenes or aids within such operations, in order to conceal or disguise its unlawful origin.
Portugal’s comprehensive AML regime also criminalizes the laundering of proceeds of serious offenses, including terrorism, arms trafficking, kidnapping, and corruption. Financial and non-financial institutions have a mandatory reporting requirement of all suspicious transactions to the Public Prosecutor regardless of threshold amount.
All financial institutions, including insurance companies, must identify their customers, maintain records for a minimum of ten years, and demand written proof from customers regarding the origin and beneficiary of transactions that exceed €12,500. Non-financial institutions, such as casinos, property dealers, lotteries, and dealers in high-value assets, must also identify customers engaging in large transactions, maintain records, and report suspicious activities to the Office of the Public Prosecutor.
Portugal’s Financial Intelligence Unit (FIU) was established in 2002 and operates independently as a department of the Judicial Police. At national level, it is responsible for gathering, centralizing, processing, and publishing information pertaining to investigations of ML and tax crimes. It also facilitates cooperation and coordination with other judicial and supervising authorities, both nationally and internally.
On March 18, 2021, the Portuguese government approved the Anti-Corruption National Strategy, which includes measures designed to tackle money laundering by adopting a risk-based and preventive approach.
Banco de Portugal acts as the central bank and the financial regulator of Portugal. It is the authority responsible for taking AML/CTF measures in Portugal. The bank regulates and publishes measures to be taken by financial institutions, which also include regulations to prevent money laundering and the financing of terrorism. These regulations are designed to be compatible with EU laws and regulations.
However, despite these measures, criminal networks which include Portugal, do occur, as in this example. In early April 2024, 20 members of an intercontinental criminal network engaged in drug trafficking and money laundering were arrested following a large-scale operation in Spain and Portugal. The suspects laundered more than €10 million using stolen identities of Colombian, Portuguese, Spanish and Venezuelan nationals.
For local businesses, here are potential ML warning signs that you should act on
Has someone been vague or reluctant to talk about the exact sums of money involved in a deal, or who the investors are? Have some unusual instructions or conditions been introduced into a deal? Has somebody contacted you out of the blue to express an interest in investing money into your company? Have there been sudden changes to your working relationship with partners or other businesses? Has money been moved without a proper explanation of where it’s gone and why, or has there been a request to use a different account? Have assets appeared suddenly or has somebody floated the idea of making a loss? Also, if someone has asked to make payments in cash, you should immediately be on your guard.
Latest developments by European Parliament
Given MLs international dimensions, on April 24, 2024 the European Parliament adopted a package of laws strengthening the EU’s toolkit to fight money-laundering and terrorist financing. These ensure that people with a legitimate interest, including journalists, media professionals, civil society organisations, competent authorities, and supervisory bodies, will have immediate, unfiltered, direct and free access to beneficial ownership information held in national registries and interconnected at EU level. In addition to current information, the registries will also include data going back at least five years.
The laws also give Financial Intelligence Units (FIUs) more powers to analyse and detect money laundering and terrorist financing cases as well as to suspend suspicious transactions.
Also included are enhanced due diligence measures and checks on customers’ identity, after which so-called obliged entities (e.g. banks, assets and crypto assets managers or real and virtual estate agents) have to report suspicious activities to FIUs and other competent authorities. From 2029, top-tier professional football clubs involved in high-value financial transactions with investors or sponsors, including advertisers and the transfer of players will also have to verify their customers’ identities, monitor transactions, and report any suspicious transaction to FIUs.
The legislation also contains enhanced vigilance provisions regarding ultra-rich individuals (total wealth worth at least €50 000 000, excluding their main residence), an EU-wide limit of €10 000 on cash payments, except between private individuals in a non-professional context, and measures to ensure compliance with targeted financial sanctions and avoid sanctions being circumvented.
To supervise the new rules on combating money laundering, a new authority – the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) – will be established in Frankfurt. AMLA will be charged with directly supervising the riskiest financial entities, intervening in case of supervisory failures, acting as a central hub for supervisors and mediating disputes between them.
The laws still need to be formally adopted by the Council, too, before publication in the EU’s Official Journal.
By David Thomas
|| features@algarveresident.com
David Thomas is a former Assistant Commissioner of the Hong Kong Police, consultant to INTERPOL and the United Nations Office on Drugs and Crime.
In 2011, he founded Safe Communities Algarve to help the authorities and the community prevent crime. It is now registered as Associação SCP Safe Communities Portugal, the first national association of its type in Portugal.
913 045 093
info@safecommunitiesalgarve.com
www.safecommunitiesportugal.com
