The offence and the property
A predicate offence is the underlying crime that generates proceeds for money laundering. Proceeds can include property obtained directly or indirectly through an offence. They are not limited to banknotes.
FATF uses these terms in its international standards. National law determines which offences and legal elements apply. An international category does not itself establish an Australian charge.
Sources: FATF: Criminal activity; Designated categories of offences; Proceeds; AUSTRAC: Money laundering.
- Predicate offence
The underlying crime generates proceeds.
- Proceeds
Money or other property comes from that offence.
- Later conduct
Dealing with the property raises a separate money laundering question.
Separate the crime, proceeds and later conduct
These terms describe related questions. The applicable law determines the elements of each offence.
Connected concepts. Lines do not show ownership or a reporting hierarchy.
Examples of offence categories
FATF lists fraud, corruption, tax crimes, drug trafficking and trafficking in human beings among its offence categories. It also includes environmental crime. Examples include unlawful trade in protected wildlife and criminal waste trafficking.
These examples describe crimes, not entire industries or populations. A lawful trade in goods is not an environmental offence merely because the goods can be misused.
Sources: FATF: Criminal activity; Designated categories of offences; Proceeds; AUSTRAC: Money laundering.
Keep proceeds separate from instruments
Proceeds concern value derived from crime. Property used to commit a crime raises a different question. Australian money laundering law can concern both criminal proceeds and property used in crime. Read the applicable offence rather than treating those categories as interchangeable.
Sources: FATF: Criminal activity; Designated categories of offences; Proceeds; AUSTRAC: Money laundering.
Example: unexplained sales income
A fictional business presents funds as sales income. Some invoices lack evidence of the stated sales. The reviewer records the missing evidence and seeks an explanation under the business’s procedures.
The reviewer does not select a predicate offence from a list to fill the gap. An AML reporting decision has its own legal test. It does not require the reviewer to convict the customer.
Sources: FATF: Criminal activity; Designated categories of offences; Proceeds; AUSTRAC: Money laundering.