This week the heads of state from the G20 are meeting in Mexico, where we hope they will take action to meet their 2009 promise to end bank secrecy. One step already taken is making tax evasion a predicate offence for money laundering.
What does that mean?
Money laundering is defined as taking the proceeds of a crime and making them legitimate.
In order to find money laundering, you must be able to identify the underlying crime that gave rise to the funds. Each jurisdiction defines the crimes that “qualify” for money laundering. They generally include drug trafficking, murder, and other serious crimes.
The crimes that “qualify” for the money laundering statute are called predicate offenses; ie the crime that triggers the money laundering. Until now, most tax offenses were not considered serious enough to be listed in the predicate offenses (yes, they are specifically enumerated in the statutes). So the money you put in the bank that is the fruit of your tax evasion did not give rise to a charge of money laundering.
To say that tax evasion should be made a predicate offense is to say that it should be listed as a crime that gives rise to a charge of money laundering.
Why is this so important? Because money laundering statutes make it relatively easy to prosecute an offender (burdens of proof, evidence, etc.) and are readily recognized across jurisdictions (covered in mutual assistance treaties). So if a prosecutor can use the money laundering statute to prosecute a criminal, he will.