Top 5 High-Profile Cases Of Predicate Offenses

The United Nations Office on Drugs and Crime (UNODC) estimates that 2-5% of global GDP is money laundered every year. Why is it so?

The incredible growth of the global economy, coupled with technological advancement, has developed a complicated financial structure.

Scammers exploit this flexibility of environment and use predicate offense techniques to fund illegal activities. Let’s move further to understand the predicate offense’s meaning.

“Dirty money has no place in our economy, whether it comes from drug deals, the illegal guns trade or trafficking in human beings. We must make sure that organized crime cannot launder its funds through the banking system or the gambling sector. Our banks should never function as laundromats for mafia money or enable the funding of terrorists.”

Cecilia Malmström, EU Home Affairs Commissioner.

What is Predicate Offense?

The word predicate means “something said about a subject” and it’s derived from the Latin word “praedicare” which means “ to proclaim or to be known”. In U.S. language, it means a base or foundation on which something depends.

A “Predicate Offense” is the foundation for a complicated criminal activity, and it’s usually the preliminary illegal act that generates funds for subsequent crimes.

Corruption, human trafficking, drug trafficking, and fraud are some of the prominent examples of predicate offenses.

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How does Predicate Offense Differ from Other Types of Crimes?

Predicate offense is specifically linked with a subsequent criminal act, and it is dissimilar from stand-alone crimes.

For example, fraud is a stand-alone crime, but if funds from that specific deception are used in terrorism financing, the fraud becomes a predicate offense to terrorism financing.

Similarly, in money laundering, the crime (corruption, human trafficking, etc.) is the predicate offense. Usually, it generates revenue from illegal means that need to be layered as hard-earned money. So, the subsequent act to camouflage the illicit origin of funds is the money laundering process.

Predicate Offense & Money Laundering

Predicate offenses in money laundering generate revenue from illegal means to fund other illicit activities. There would be no money to launder without a predicate offense, so they are totally linked.

Since 2004, the Financial Action Task Force (FATF) has declared 40 recommendations to extend the list of predicate offenses.

Financial intelligence units in the European Union (EU) and the US have established regulations to expand these offenses.

However, the Bank Secrecy Act established these offenses in the US in 1970, which was further modified in the USA PATRIOT Act 2001.

Over time, the EU money laundering directive has implemented a set of regulations to combat predicate offense cases. 6th European Union AMLD sets 22 predicate offenses of money laundering in related member states.

High-Profile Cases Involving Predicate Offense

Sani Abacha

From 1993 to 1998, Sani Abacha,  a military dictator, ruled Nigeria. He and his close family members successfully laundered $8 billion into foreign bank accounts, which is approximately 10% of Nigeria’s national income. After his death, the Nigerian government got back $2 billion.

Benex

To launder money, the Russian Mafia accessed Benex global accounts from the New York Banks. The $8 billion funds were known as “capital flight money” which means they were transferred from Russia to the United States. In 2002, this operation was closed after a police raid.

The Bank of Credit and Commerce International (BCCI)

BCCI was one of the largest famous banks in the world that was involved in money laundering during the 1980s. Drug money was transferred through the bank, which was further layered with clean funds and invested in the economy.

Predicate Offense Categories

Part A includes a broad category of predicate offenses, including drug trafficking, counterfeiting, terrorism, and smuggling.

Part B includes tax-related offenses in which the involved amount bypasses a threshold.

Franklin Jurado

Franklin Jurado laundered $36 million of Colombian drug money that was the property of José Santacruz-Londoño, who was a member of the Cali Cartel. However, in 1996, a Monaco bank made a connection between his different bank accounts and reported about his activities. Due to this, he spent almost 8 years in jail.

Nauru

Nauru is a small island that was involved in major predicate offense activities. In the 1990s, Russian civilians laundered almost $70 billion through banks because their system didn’t require any customer ID or legal paper to transfer huge amounts of money.