Money laundering offence

These days, every time we turn on the television, whether it is to watch a news programme or a political current affairs programme, the term money laundering is a common one. In fact, unfortunately, this crime has started to become all too common in Spain, although it is true that both the authorities and the courts are now tackling it.

In this article we want to explain to you, in the clearest, simplest and most complete way, what it consists of, what laws are trying to tackle it and what measures are being taken to do so.

What is the offence of money laundering?

The crime of money laundering, also known in many places and colloquially as money laundering, typifies as illegal a process by which an attempt is made to cover up the origin of funds that are produced by the action and exercise of illicit and criminal activities such as, for example, corruption, drug trafficking, arms smuggling or tax fraud. 

Specifically, it consists of avoiding legally declaring the money or depositing it in bank accounts belonging to countries that are considered tax havens in order to avoid filing the relevant income tax return required by the tax authorities of the country of origin. This is often done by using opaque companies, i.e. companies that cannot be traced by the public authorities.

What is the criminalisation of money laundering?

To be precise, money laundering as an offence is included in Article 301 of the Criminal Code in force in Spain and is considered to include any conduct that attempts to convert, transfer or acquire assets knowing that their origin comes from a serious crime, to cover up or conceal the origin of these assets, to help someone to evade the consequences of their actions or to conceal the true nature of the capital in question knowing that its origin is not lawful.

Money laundering, according to the above-mentioned article of the Criminal Code, is punishable by a prison sentence of between 6 and 6 years. However, only those persons who have committed this offence and who can be attributed with knowledge that the laundered assets come from the trafficking of drugs, psychotropic substances, narcotics and weapons can be sentenced to more than 3 years. 

For their part, the subjects may also be sentenced to special disqualification for periods of between one and three years, depending on the professional position they hold. In this sense, a good example could be that of a public official who commits this offence.

The Money Laundering Act

The purpose of having specific legislation on money laundering is to prevent and deter the use of the legal financial system for the entry of assets originating from a criminal network or simply from the commission of another crime of a different nature.

The law in force in Spain with regard to this offence is Law 10/2010 of 28 April on the prevention of money laundering and terrorist financing. However, there are precedents. Previously, there was Law 19/1993, of 28 December, on certain measures for the prevention of money laundering, whose Regulations were approved by Royal Decree 925/1995. These texts make up the legal framework designed to tackle this criminal activity.

This money laundering law in force in Spain also establishes a supervisory and control body responsible for monitoring entities and professionals likely to commit this crime. Specifically, this is the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences, better known by the acronym SEPBLAC, which stands for Servicio Ejecutivo de la Comisión de Prevención del Blanqueo de Capitales e Infracciones Monetarias.

Who is obliged to undergo a preventive audit under the Money Laundering Act?

The list of parties obliged to carry out a preventive audit in accordance with the provisions of the Money Laundering Act is very extensive. In particular, these are the most important ones:

1. Banks managing accounts and credit and financial institutions. For this reason, less than two years ago, all users were obliged to be personally identified at a branch by presenting their ID card and proof of the activity carried out.
2. Insurance companies. All those operating in the field of life insurance are obliged to do so, as well as insurance brokers who carry out their activity in relation to them and other types of investments.
3. Companies related to the field of private investment.
4. Entities managing pension funds, whether banks or not. This point also covers venture capital companies which are not entrusted to a management company.
5. Payment and electronic money institutions, as well as professionals and firms dealing with foreign exchange.
6. Postal companies offering transfer and remittance activities as part of their services.
7. Intermediaries for the granting of credit and loans. Likewise, all the parties referred to in the first additional provision of Law 3/1994, of 14 April 1994, adapting the legislation on credit institutions to the Second Banking Coordination Directive, are also obliged to carry out the relevant audits.
8. Tax advisors, auditors and external accountants.
9. Real estate developers who offer, among their services, brokerage, commission and agency activities in the sale and purchase of real estate.
10. Property registrars, whether of movable or commercial property, and notaries. Lawyers collaborating in these tasks are also obliged to do so.
11. Persons and companies that professionally advise on the incorporation of companies and legal entities of any kind.
12. Dealers in art, antiques, jewellery, precious metals and stones.
13. Casinos and betting shops.
14. Those responsible for the operation, management and marketing of games of chance and lotteries.
15. Persons who carry out activities of custody, professional transport or deposit of funds or means of payment.

It should be noted at this point that natural persons who are employees of or provide services to companies or other types of legal entities, whether sporadically or permanently, are not subject to money laundering audits. Liability is borne by the person contracting the services rendered in such cases. 

On the other hand, all those who do appear on the list and are obliged to be audited are subject to the provisions of the aforementioned law when they act through intermediaries or mediators.

In short, this is all you need to know about money laundering as a crime and the law that contemplates it, prevents it and tries to avoid its commission. As you will be able to see, in recent years, regulation has become stricter and more and more individuals and legal entities are obliged to submit to audits. We hope we have been of help and, if you have any questions, please contact us.