In private law “ everything which is not forbidden is allowed”, so a person has broad range how to structure transactions and cash flow. However, “sometimes” legal transactions and cash flow can still raise questions about their transparency.
Opacity of transactions or cash flow may rise suspicion of money laundering - conformity with typology and characteristics of money laundering:
Unnecessary complexity and lack of economic justification of transactions or cash flow;
Involvement of shell companies;
Bogus and not genuine transactions and cash flow;
Other circumstances.
This article will examine the recognition of transactions and cash flows as “stand-alone” money laundering.
Subjects of the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing shall report suspicious transactions to the Financial Intelligence Unit (FIU) and shall refrain from executing transactions. Further, the FIU detecting “reasonable suspicion” of money laundering issue-binding order for the freezing of funds. The freezing of funds is prevention of any move and transaction with funds, and also transfer, amending, alteration, use, access to them or dealing with them in any way that would result in any change in their volume, amount, location, ownership, possession, character, destination or other change that would enable the use of the funds, including portfolio management.
According to the presumption of innocence, inchoate and unparticularised suspicion is not a sufficient basis for proving money laundering. It must be based on specific facts, from which prima facie the presumption of criminal origin of property can be established. In such a case, the person has the right to rebut the presumption by providing explanation and clarifications of transactions and cash flow.
It is important to distinguish the burden of proof and the burden of submitting evidence, explanations and clarifications. The burden of proof may only be extended to the person of directing criminal proceedings, but the burden of submitting evidence, explanations and clarifications shall only apply the person in question. If the person is unable to explain and clarify the transactions and cash flow, the stand-alone money laundering may be confirmed.
In the light of foregoing considerations about legal presumptions and assessment of transactions and cash flow, a person should pro-actively defend their interests and eliminate any doubt about origin of funds.
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