Chapter 1

Introduction

Overview

The phenomenon of money-laundering and its links to organised crime and the response of the state are explored in this monograph. The combating of money-laundering is approached as a key component in the strategy against organised crime.

Questions about a number of issues are addressed:

Although the focus of the monograph is on South Africa, some comparisons with the legislation and practices of other countries are also made. Certain international instruments against money-laundering are briefly considered.

Concepts

Money-laundering is explored in this monograph as a phenomenon relevant to the administration of criminal justice. Hence, the discussion considers money-laundering as a criminal act. Although the term ‘money-laundering’ is used throughout the monograph, it is understood to refer not only to the laundering of money, but of any type of asset.

The phrase ‘underlying criminal activity’ is often used in the monograph. Money-laundering is not an isolated criminal activity, but is always associated with some or other underlying profit-generating criminal activity. Such a criminal activity is sometimes referred to as the ‘predicate offence’. The underlying criminal activity is the source of the illegal proceeds. Crimes such as fraud, drug-trafficking and vehicle theft are examples of underlying activities from which the criminal obtains proceeds that need to be laundered.

The concept ‘organised criminal group’ is vague and not easy to define. In South Africa, organised criminal groups appear in many forms with varying levels of organisation and cohesion among their members. For this reason, it is necessary to clarify what is understood to be an organised criminal group.

For the purposes of this monograph, the term ‘organised criminal group’ is used in its widest sense without attempting to give a detailed and all-inclusive definition. An organised criminal group is understood to be a group of persons collectively involved in serious criminal activity with the view to make a profit on an ongoing basis.

Structure

The monograph deals with divergent issues such as the manifestations of money-laundering, the provisions of the relevant legislation on money-laundering and organised crime, and the implementation of the law. Each of these is dealt with in a separate chapter. This allows readers who are only interested in specific topics to refer directly to the relevant chapter.

Each chapter is preceded by an overview, which provides a basic understanding of the contents of the chapter without going into any detail. The overview presents the bigger picture against which the detailed information contained in the rest of the chapter should be seen.

Shaded text boxes throughout the monograph contain extracts from legislation and other instruments, as well as practical examples or conclusions reached from the preceding discussions.

The last chapter contains the overall conclusions on the efficacy of South Africa’s legislative response to money-laundering linked with organised crime. This chapter deals with recommendations on ways to improve the legal position and the practical application of the law.

Collection of information

The information on the legal positions in South Africa and other countries was obtained from the relevant statutes and other literature, as well as from several sources on the Internet.

Information on the implementation of the relevant legislation, for example, was obtained from discussions with several persons. Special thanks and appreciation must be expressed to:

Assistant Commissioner F C Truter, Head: Component Organised Crime of the detective service;



Director J Oosthuizen; the Director: Policy, Standards and Operational Development in the Component Organised Crime; and



Mr W Hofmeyr, Special Director of Public Prosecutions and head of the Asset Forfeiture Unit.