28 Jun Commissioner Jourova is ignorant of the link between money laundering and women’s rights
As we had shared in a previous post, Commissioner Jourová had failed to appear in front of the TAX3 Special Committee in April 16, 2018. Therefore, the exchange of views held with the Commissioner on Justice, Consumers and Gender Equality in June 25 was the first one of Ms. Jourova in the course of the TAX3 Committee.
As we had already blogged in April, Commissioner Vera Jourová was meant to discuss the follow-up by the Commission to the recommendations from the PANA Inquiry Committee concerning the fight against money laundering; the roadmap and evolution of the Commission’s methodology for a high risk third countries list for anti-money laundering and counter terrorism finance purposes; and future actions concerning golden visas.
Being Commissioner Jourová responsible for gender equality in addition to justice, GUE/NGL MEP in the Tax3 Committee, Marisa Matias (Bloco de Esquerda), decided to give the meeting a turn by inquiring Vera Jourová on whether the Commission had put forward any proposals to address gender issues in the fight against money laundering.
The reply of the European Commissioner was a shocking one: she had not seen any correlation, any connection nor any link between money laundering and gender issues!!
In a study written by Grondona, Bidegain Ponte (in English here and in Spanish here) based on publications by the Financial Action Task Force (FATF) and United Nations Office on Drugs and Crimes (UNODC) it was noted that money laundering techniques used in human trafficking cases are similar to those found in other serious crimes. As Marisa Matias rightly pointed to Ms. Jourová, even when human trafficking cases affect both men and women, boys and girls, 70% of human trafficking cases affect either women or girls: almost 49 per cent of all detected trafficked people were women, 21 per cent girls, 18 per cent men and 12 per cent boys, which implies there is a gender pattern in human trafficking.
The first phase of money laundering consists in the »placement« of illicit funds into the financial system by breaking large sums of money into smaller amounts, smuggling currency, changing currency, transporting cash or traveller cheques or through gambling. In the case of human trafficking, forced prostitution is paid via credit cards (payments for sex are disguised as charges for drinks in a nightclub) in some places. This is the case when prostitution is carried out in commercial places, such as coffee shops, pubs, nightclubs or casinos.
The second phase of money laundering consists of »layering« through fictitious sales and purchases, shell companies, wire transfers, splitting and merging of bank accounts or by using underground banking. The following money laundering methods have been found in human trafficking cases (while some methods in human trafficking cases are the same in most countries others are country-specific, but all share some common characteristics):
- use of cash-intensive businesses,
- use of formal and informal banking systems,
- use of local or offshore companies, trusts, and shell companies,
- commingling of funds with legitimate business proceeds,
- use of aliases, straw men, false documents,
- use of night clubs, restaurants, convenience stores, taxi companies, hotels and casinos as front companies, or investments,
- use of import / export companies, transport companies,
- construction companies, tourist agencies and sports clubs for money laundering and shifting money,
- use of companies registered in different countries and bank accounts registered under such companies,
- use of the identity of the trafficked individuals to open bank accounts to gain access to credit through overdrafts,
- loans and credit/debit cards,
- forcing trafficked women to borrow money in the formal and informal banking system.
In some cases it has been found that money is shifted to limited companies which are legally constituted, simulating the payment for services that are difficult to verify (a method which is also seen in transfer pricing manipulation cases for tax evasion purposes within corporations). Such money movements make it difficult for local authorities to track the money and thereby create a distance between the crimes and illicit activities and the wealth they generate. In a money-laundering scheme, this is also known as stratification or diversification of the illicit assets.
Finally, the third phase of money laundering consists of »integration«. This can take the form of buying luxury goods or real estate. The following methods have been found in cases involving trafficking in humans:
- investing in real estate, in cars, in boats and in offshore entities
Watch the exchange between Marisa Matias and Vera Jourová underneath: