Policing Money Laundering: A Case Study of Afghanistan

Defining and Meaning of Money LaunderingMoney laundering is a financial crime and is an old phenomenon (Buchanan, 2004). However, as a specific crime, it did not enter into legal context until 1986 (Daley, 2000). The term 'money laundering' was first coined by the American law enforcement officials. The background of the concept of money laundering can be traced back to the scam by Al Capone in Chicago during 1920s where he setup a Chinese laundry to disguise the true identity of the profits earned through criminal activities (Lea, 2005). The term 'money laundering' was used to refer to the financial activities by mafia groups and blending criminal proceeds with legal business profits. Money laundering entered into popular usage during the Watergate scandal during mid- 1970s in the United States of America (Bauer and Ullmann, 2000).Money laundering has been defined in a variety of ways by academicians and various organizations, both at national and international levels. According to Buchanan (2004:115), money laundering is 'a financial crime that often involves a series of transactions and numerous financial institutions across many [international] financial jurisdictions'. For Sherman (1993:13), money laundering is 'the process of converting or cleansing property knowing that such property is derived from serious crime, for the purpose of disguising its origin'. According to Savona (1997:3), money laundering is 'an activity aimed at concealing the unlawful source of sums of money'. Finally, Daley (2000:175) defined money laundering as 'the process by which one conceals the existence, illegal source, or illegal application of income, and disguises that income to make it appear legitimate'.The globalization of world economy has had great impacts on organized crime in general and on money laundering in particular. Different factors have played and are playing important role in the expansion of money laundering at national and international levels. The developments in information technology coupled with the globalization of financial markets, privatization, and expansions in foreign banks establishments have altered the nature, extent and techniques of money laundering. For example, the International Monetary Fund in its report in 1998 stated that the unlawful money generated from organized crime was between 2 to 5 percent of the world's GDP - between $ 800 billion to $ 2 trillion (Fabre, 2009). The nature and character of money laundering have changed considerably since the 9/11 terrorist attack on twin towers in the US. Money laundering is no more perceived as the laundering of criminal proceeds by organized criminals gangs, but a mean by which terrorist organizations generate, hide, transfer, and finance their terrorist activities around the world (Johnson, 2002).The problem of money laundering has also been addressed by various international organizations. They have defined the phenomenon of money laundering in their own way. At international level, the problem of money laundering was first taken up by the United Nations on 19th December 1988 in a Convention against Illicit Traffic in Narcotic Drugs and Psycho tropic Substances - commonly known as the Vienna Convention - and defined money laundering as has been stated below;* The conversion or transfer of property, knowing that such property [is derived from a drug offence] for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions;* The concealment or disguise of the true nature, source, location, disposition, movements, rights with respect to, or ownership of property, knowing that such property is derived from an offence or offences established in accordance with subparagraph (a) of this paragraph or from an act of participation in such offence or offences (United Nations, 1988, Article 3. …