Measures Against Money Laundering

Various methods are employed by criminals to exploit money laundering opportunities within the judicial system. One such method involves debt recovery, where a criminal engages a law firm in a reputable jurisdiction to assist in recovering a debt. After issuing demand letters, the debtor offers to settle the debt in full. The funds are sent to the law firm and subsequently forwarded to the criminal, minus a fee for services. This process legitimizes the ill-gotten funds for further use.

Judgment debts are also a favoured avenue for criminals seeking to launder their proceeds of crime. Corrupt individuals orchestrate fake disputes and instruct their lawyers to pursue a claim in court. Alternatively, they may create a claim between themselves and a company of which they are the ultimate beneficial owner. In both scenarios, a "claim" is settled or a judgment obtained, providing the corrupt individuals with a court order to justify payments being made or received. This allows for the disbursement of dirty money as damages, effectively cleansing their ill-gotten gains.

Another means by which criminals may launder their proceeds of crime is through government judgment debt. By funding a political party with illicit funds to win elections, criminals create a deliberate sour contractual agreement. Subsequently, the government pays back the money through a judgment debt, often with a weak defense or a settlement. The judge makes a ruling, and the government pays the criminal with clean money, legitimizing its use.

Furthermore, litigation funding poses a vulnerability to the judicial system, allowing criminals to use their dirty money to fund civil cases and share in the judgment claims. While this method may not be prevalent in all regions, it serves as an avenue for criminals to utilize their ill-gotten funds.

To combat money laundering effectively, a collective effort is required. Implementing measures such as Know Your Customer (KYC) procedures, enhanced due diligence, and engagement with experts for staff training can significantly bolster the resilience of the judicial system. Additionally, the recent enactment of the Anti-Money Laundering Act, 2020, which now includes law firms as accountable institutions, is a step in the right direction. However, clear guidelines from the Financial Intelligence Centre (FIC) on reporting requirements and AML compliance programs are crucial for the law to fulfil its intended purpose in the fight against money laundering within the judicial and legal system.