The Predicate Offences of Money Laundering: A Study of the Definition of “Predicate Offences” under Thai Anti-Money Laundering Act and the United Nations Convention Against Transnational Organized Crime*
By Nattawat Baibua**
In part because of globalization, organized crime and money laundering have become increasingly transnational. Recognizing the threat, this poses the United Nations enacted the United Nations Convention against Transnational Organized Crime (the "Palermo Convention") in 2000. The Palermo Convention imposes on states several obligations relative to money laundering.1
Like other states, Thailand faces a transnational organized crime problem, which adversely affects its economic, social, and political system.2 Thailand is also a haven for money laundering of a transnational organized crime in Asia.3 The combination of these factors has made Thailand become a party to the Palermo Convention.
The Palermo Convention requires state parties to define predicate offences, "any offence as a result of which proceeds have been generated that may become the subject of an offence as defined in article 6 of [the Palermo Convention]",4 broadly in their anti-money laundering laws.5 They must include all serious crimes6, offences regarding participation in organized crime, offences regarding corruption and offences regarding obstruction of justice as predicate offences.7 However, if the states’ anti-money laundering laws set out a list of specific predicate offences, they can opt to include offences associated with organized criminal groups in that list rather than include the said four categories of offenses.8
As a state party to the Palermo Convention, Thailand has the duty to conform to the Palermo Convention's the predicate offence obligation. Thai anti-money laundering law defines predicate offences in terms of nine categories.9 It is not clear whether Thailand has not yet conformed fully to such conventional obligation. Therefore, the main purpose of this article is to ascertain this unclear issue.
Part II, the background section will (i) describe the nature and type of predicate offences; (ii) specify the Palermo Convention's obligations for combating money laundering and defining predicate offences; (iii) describe Thailand's reaction to the Palermo Convention; (iv) summarize the Thai Anti-Money Laundering Act and its legislative development; and (v) list the predicate offences covered under the Thai Anti-Money Laundering Act.
Part III, the analysis section will discuss the extent to which the Thai anti-money laundering law complies with the Convention's requirements regarding the definition of predicate offences. I demonstrate that the predicate offences under the Thai Anti-Money Laundering Act include only part of the corruption offences required by the Palermo Convention. Finally, I will conclude with recommendations to ameliorate any deficiencies, relative to Thailand's treaty obligations, in the definition of predicate offences under the Thai anti-money laundering law.
A. Predicate Offences
With respect to money laundering laws, a predicate offence is the underlying crime that generates the money to be laundered.10 Laundering the proceeds of those crimes, "[t]he process by which one conceals the existing, illegal source, or illegal application of income, and disguises the income to make it appear legitimate",11 constitutes the distinct offence of money laundering. The predicate offence is therefore one of the material elements of money laundering offence.12 For example, authorities cannot punish an individual for laundering the proceeds of arms smuggling if arm smuggling is not defined as a predicate offence.
Originally, predicate offences included only those related to narcotics because the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (the "U.N. Drug Convention")13 required state parties to enact domestic laws to combat laundering the proceeds of drug trafficking.14 Later, the international community acknowledged that other crimes, e.g., organized crimes such as arm and human trafficking, also can harm national security.15 So, it began to expand the definition of predicate offences.16
To investigate money laundering effectively, states need the private sector's cooperation, in particular the cooperation of financial institutions.17 The state therefore requires financial institutions to report any suspicious financial transactions.18 This is because money launderers must use financial institutions to clean "dirty money". This requirement, however, burdens the financial or business sector because the financial institutions will have to expand their resources and manpower to meet the requirement. In defining predicate offences, therefore, lawmakers should balance the burden to the private sector with the efficient suppression of money laundering.19 For example, if the law includes many immaterial predicate offences, it can place a great burden on the private sector without necessity. On the other hand, if the state has a small number of predicate offences, the suppression of money laundering will unlikely be efficient.