Glossary term
Predicate Offence
Subject: Financial Crime, Money Laundering, Typologies and Asset Recovery
Also known as: Predicate Crime, Underlying Offence
A predicate offence is the underlying crime that generates the money or property later laundered, such as fraud, corruption, drug trafficking or tax crime. Without one, there is nothing to launder.
Explanation
Money laundering law needs a link to an earlier crime: the funds must come from somewhere illegal. That earlier crime is the predicate. Countries decide which offences count. International standards ask them to cover a minimum list of serious categories, including fraud, corruption, smuggling, trafficking, environmental crime and tax offences, and many laws now cover all serious crimes. The predicate can happen in another country, provided it would be a crime in the state prosecuting the laundering. Prosecutors usually need to show the funds are criminal property, but many systems do not require conviction for the predicate offence first or proof of the exact crime. A person who commits the predicate may also be charged with laundering, depending on the legal system. Bankers meet the term when deciding what to report and when assessing risk by crime type. The list of predicate offences sets how far anti-money laundering rules reach: a crime missing from it produces money the laundering law cannot touch.
Example
A procurement officer takes bribes from a supplier and buys a house in his brother's name. The bribery is the predicate offence, and buying the house with the proceeds is the laundering. Prosecutors can charge both. If the bribe was paid in another country, the case is still possible provided bribery is a crime where they prosecute.
Not to be confused with
- Money Laundering
- Money laundering hides and uses the proceeds. The predicate offence is the crime that created them.