Judicial Precautionary Measures To Mitigate Risks to AML/CFT Criminal Activities

After September 11, 2001, the fight against illicit financing for international terrorist activities has taken on greater competence and excellent results in identifying and isolating illicit financial flows directed to terrorist groups or criminal organizations in general, significantly reducing their ability to attack.

 

This is due to this adoption of specific Resolutions of the Security Council of the United Nations and to the FATF/FATF activity: defining the lines of action and contrast to the above-mentioned criminal phenomena. In addition, it is also necessary to take into account the efforts of many "high risk" States, which since 2000 have changed their way of operating and mitigating AML/CFT/PT - (Anti Money Laundering, Counter Financing Terrorism, and Proliferation Terrorism) risks. 


The aforementioned international bodies, in order to efficiently counteract these criminal activities, have obliged the States to implement particular juridical-normative means of sanctioning both the perpetrators of the criminal event and their assets and economic resources, involving various subjects, both private and public (in particular, Ministries such as the Ministry of Defence/Internal Security, the Ministry of the Treasury and the Ministry of Justice) to prevent many criminal organizations from reconstituting themselves again and preparing new attacks. 


With regard to the procedure for the application of these measures, it is regulated by special laws, by the Criminal Code, and by the Code of Criminal Procedure; it is foreseen that the judicial authority issues the formulation and application of these sanctions following previous reports by the police, intelligence, and financial supervisory bodies. In fact, it is ultimately a judge who will establish and judge, with a motivating sentence, which measures are the most appropriate to apply in relation to the seriousness of the criminal act and to what is established by law. The measures for these particular crimes are of a precautionary and preventive nature, as there is a real threat and risk that the criminal perpetrator will carry out the harmful event immediately and repeatedly over time. 


The measures for the mitigation of these phenomena are basically of two natures: one is applied to the person by means of detention measures and forms of physical imprisonment, home or prison; moreover, the European penitentiary system has provided special measures that in cases of terrorism, the authors and their co-authors, family members also follow paths of deradicalization. The other is the freezing of the financial assets and not of the dangerous person. In particular, the latter measures are defined by the legal system as "accessory penalties" to the main penalty, e.g., if you are convicted of money laundering, the main penalty is imprisonment for four years; the accessory penalty may be the prohibition to open new bank accounts for 24 months.


 In relation to the authority that can issue these forms, only the judge can enforce these punitive measures as they aim to limit the personal freedom of the offender, affecting the fundamental rights of the person and the individual entirely. 


There are several measures to prevent or block the economic activity of a person; in general, they are called "measures of freezing of funds," but in addition to "freeze" or block in the present, there is also the concern to block and prevent the subject from committing criminal acts in the future. Some of these measures are interdiction of private economic/entrepreneurial activity, prohibition to create new bank accounts, prohibition of economic relations with State economic centers, quantitative and qualitative limitations to economic exercise (how much and what to buy), extinction or suspension of any financial liquidity. In addition to the measures mentioned above, it is necessary to consider the measures of seizure and confiscation of non-financial assets that must be considered as proceeds or means to commit criminal activities (houses, vehicles, precious objects, etc.).


EC Regulations 2580/2001 and 881/2002 provide for the freezing of "capital" assets and "financial resources" (already provided for by EC Regulation 467/2001, now repealed), but also movable and immovable assets falling under the definition of "economic resources." 


Moreover, such measures, unlike those aimed at a person, are applied by a judge in a much shorter time compared to a normal judicial process, not only because of the elements of urgency and dangerousness of the author of financing criminal activities but also because the procedure mentioned above is of an administrative nature: e.g., the police authority receives a report of the criminal offense (the report may come from different channels; from a report by an object obliged to the AML/CFT legislation or from internal investigation activities within the office). The police authority receives the report of the criminal offense (the report may come from different channels; from a report by an object obliged to the AML/CFT regulations or from internal investigation activities within the office) specific checks are carried out on what has been received/reported, and a motivated document is sent to the competent judge. Subsequently, the judge receives the report and sees the document; if there are well-founded suspicions, it issues the authorization to block economic activity and sends the notification of the judicial act to the financial police authorities, which consequently ask the financial institution to extinguish the fund or to abstain from the economic activity requested by the reported customer/subject. 


This operation is possible only when the intermediary, complying with AML/CFT regulatory obligations, is up-to-date with the Due Diligence lists, such as high-risk subjects or countries, and also acquires, records, and keeps the documents and personal and economic data of its customers, in addition to the intermediary's real knowledge of the customer's risk profile (KYC)


Written by Dimitri Barberini

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