UN Comission on
Money Laundering: Legislation and Related Initiatives
By
Christy Arrington
According to a 2001 Model UN paper on "Trafficking in Drugs" by Nicole Wheeler, trafficking in illicit drugs exceeded $400 billion a year and accounted for about 8 percent of international trade (Wheeler, p. 1). These activities often occur in developing countries where "inadequate education and poor employment opportunities make the profits in the drug business, although short term and high risk, irresistible to a number of people" (Wheeler, p. 1). The scope of this activity requires "legitimate" business fronts to facilitate the laundering of money (Wheeler, p. 1). Unfortunately the international community has made little progress in the fight against drug trafficking and its related activity of money laundering in the four years since this paper was written.
Money laundering can undermine the integrity of banking and financial services; it supports organized crime, corruption, drug trafficking and terrorism; and it can inhibit the growth of developing countries. The process of money laundering involves the attempt to disguise the original source of the money and make it appear that it has been accrued through legitimate business activity. According to the UN Office on Drugs and Crimes, there are two reasons for laundering money: "the money trail is evidence of their crime and the money itself is vulnerable to seizure and has to be protected" (UNODC website re: money laundering, p. 2).
One way to explain how money laundering works is the graphic shown below (UNODC website re: money laundering; laundry cycle). A collection of dirty money is gained from selling illegal drugs. Then the money is moved to banks with offshore accounts, which hide them from any suspicion. The money, which can be millions of dollars at a time, can then be quickly accessed to use in other economic activities.
It is generally recognized that in order to control money laundering, countries must also eliminate the use of drugs. A number of agreements or programmes have been developed to this end: inter alia, the 1961 Single Convention on Narcotic Drugs; the 1971 Convention on Psychotropic Substances, which came into force in 1976; the International Drug Control Strategy, a five-year programme proposed in 1981; and the 1984 Quito Declaration against Traffic in Narcotic Drugs (Wheeler, p. 2). In addition several bodies operate within the UN system to address drug trafficking and money laundering.
The primary body within the UN system responsible for dealing with the variety of issues related to drug use and trafficking is the Commission on Narcotic Drugs. It was established by the Economic and Social Council (ECOSOC) in its resolution 9 (I) of 16 February 1946 and is mentioned in numerous important treaties. "Article 8 of the Single Convention on Narcotic Drugs gives the Commission the power to decide which schedule a drug shall be placed into. The four schedules provide for varying levels of control over illicit drugs" (ECOSOC Res 9 (I)).
The Sub-commission on Illicit Drug Trafficking and Related Matters of the Near and Middle East was established by resolution 6 (XXV) of the Commission on Narcotic Drugs and by ECOSOC Resolution 1776 (LIV), and is a subsidiary body. The functions of the Sub-commission are to coordinate regional activities directed against illicit drug traffic and to formulate recommendations to the Commission. This Subcommission meets annually for four days and reports directly to the Commission on Narcotic Drugs.
The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, more often called the 1988 UN Drug Convention, sets forth a number of obligations that parties agree to undertake. Generally speaking, it requires the parties to take legal measures to outlaw and punish all forms of illicit drug production, trafficking, and drug money laundering, to control chemicals that can be used to process illicit drugs, and to cooperate in international efforts to these ends. The statute lists action by foreign countries on numerous issues, including transport and financing, and money laundering (1988 UN Convention).
The 1998 General Assembly Special Session on the World Drug Problem, saw members agree for the first time to "reduce the supply of illicit drugs by the year 2008" (Wheeler, pp. 2-3). Subsequently, the United Nations Drug Control Programme (UNDCP) launched the Global Illicit Corps Monitoring Programme (ICMP) (Wheeler, p. 3). "The goal for the ICMP is to assist countries in creating a monitoring system that can plot the progress towards their eradication goals" (Wheeler, p. 3).
Another intergovernmental approach has been the creation of the Financial Action Task Force, which defines itself as "an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing" (FATF website). Members of the FATF include 33 countries and jurisdictions – including the major financial center countries of Europe, North and South America, and Asia – as well as the European Commission and the Gulf Co-operation Council. This task force has put forth its own recommendations and theories regarding money laundering, similar to the UN and their Millennium Development Goals (MDGs) that countries are working together to accomplish in the near future. The FATF is a policy-making body and has no investigative authority. The FATF also deals with money laundering regarding terrorism and has agreed with the World Bank and the IMF to help countries battle terrorism (FATF website).
However, the primary body within the UN Office on Drugs and Crime responsible for dealing specifically with money laundering is The Global Programme against Money Laundering (GPML) (UNODC website re: money laundering, p. 1). The GPML helps states devise legislation against money laundering, encourages "anti-money laundering policy development, monitors and analyses problems, raises public awareness and "acts as a coordinator of joint anti-money laundering initiatives by the United Nations with other international organizations" (UNODC website re: money laundering, p. 1). Among the strategies it pursues are technical assistance, provision of training materials, and research, analysis and data gathering (UNODC website re: money laundering, p. 1).
Despite efforts to end money laundering related to drug trafficking, it still remains a significant problem in the international community. The UN must work with its subsidiary bodies in order to not only end the illegal importing and sales of drugs, but the profits and money laundering that go along with it.
Questions:
1. How can the UNCND work with countries to reduce or eliminate money laundering?
2. How can international efforts to combat drug trafficking be strengthened and better coordinated?
3. How will the slowing of money laundering affect international drug use and trafficking?
4. How can individual countries and governments fight money laundering?
Sources:
http://www.unodc.org/unodc/en/money_laundering.html
http://www.un.org
http://www.unodc.org/unodc/en/cnd_bodies.html
http://www.imolin.org
2001 MUN paper by Nicole Wheeler, 4th Committee