Money Laundering Allegations and Criminal Defense of Businesses

Today, a significant part of society believes that only a natural person may become the subject of an investigation and that only such a person may be charged with the commission of a specific criminal offense. However, the reality is entirely different. Following the legislative reform implemented in Georgia in 2006, legal entities also became subject to criminal liability. A legal entity may be sanctioned where a crime has been committed in the name of, through the use of, and/or for the benefit of the legal entity by a responsible person.

One of the most relevant situations in which the issue of initiating criminal prosecution against a legal entity arises is the existence of an alleged act of money laundering. A particular business entity may be intentionally used for the purpose of money laundering, or, due to the absence of protective mechanisms, a customer may exploit such circumstances and commit a criminal act by placing funds within it. In this article, we will discuss the legalization of illicit proceeds as a criminal offense and provide legal recommendations for protecting your business.

1. What Does the Legalization of Illicit Proceeds Mean?

The legalization of illicit proceeds is the process of giving a lawful appearance to unlawful and/or unjustified property for the purpose of concealing its unlawful and/or unjustified origin. This offense is typically carried out according to the following scheme:

➢ Obtaining financial resources through criminal activity – For example, a person commits fraud and, as a result of such conduct, acquires property worth GEL 200,000. In this case, fraud constitutes the underlying, or predicate, offense for money laundering.

➢ Placement – A person establishes a restaurant business that operates exclusively with cash transactions. At the end of the day, the individual adds fictitious customers and integrates “dirty” money into a legitimate business.

➢ Result – The origin of the illicit proceeds is concealed, and the funds are integrated into daily circulation as lawful income.

2. Preventive Measures for Business Protection

As noted above, a particular business may be used for money laundering purposes. In this regard, financial institutions are particularly vulnerable, including banking and deposit institutions, insurance organizations, and companies organizing gambling and games of chance. Before the issue of criminal charges against such companies arises, they are required to implement a range of preventive measures.

This obligation is established by the Law of Georgia “On Facilitating the Prevention of Money Laundering and Terrorism Financing.” The law defines a list of accountable entities that must, prior to establishing business relations with clients, conduct customer identification and verification, monitor suspicious transactions, and report any suspicion of money laundering to the Financial Monitoring Service. Qualified legal assistance is essential to enable a financial institution to establish an anti-money laundering policy and comply with legal requirements.

3. Protecting Your Business During Criminal Proceedings

If you have been charged with the legalization of illicit proceeds, this is precisely the moment when you require professional legal services to protect both your interests and those of your business.

First and foremost, it is likely that the Prosecutor’s Office will seek the seizure of your assets. Consequently, particular importance is attached to refuting the prosecution’s arguments during court proceedings and protecting your property from being “frozen.”

If you are accused of giving a lawful appearance to unjustified income, a qualified attorney should make use of existing legislative deficiencies. In the note to Article 194 of the Criminal Code, we find the following provision: “Unjustified property shall be deemed to be property for which a person does not possess documentation confirming its lawful acquisition.” If an individual keeps a substantial amount of money inherited from an ancestor at home and lacks documentary evidence confirming its origin, the law leaves open the possibility that the person may be held liable for possessing unjustified property. Furthermore, the law effectively requires that individual to prove that they are not guilty. According to Article 31, Paragraph 6 of the Constitution of Georgia, “No person shall be obliged to prove his or her innocence. The burden of proving the accusation rests with the accuser.” Under such circumstances, the accused is required to prove that the property was acquired lawfully, whereas under the Constitution it is the prosecutor who must establish that the property was obtained through criminal means. The accusation is based on the existence of unjustified property, and the burden of proof is effectively shifted entirely onto the accused.

Our firm provides comprehensive legal assistance in matters related to money laundering.

Before charges are brought, we assist in developing AML policies. After charges are filed, we immediately protect your assets from seizure and challenge the prosecution’s arguments. We monitor the legality of investigative actions and build a defense strategy around the element where the prosecution is most vulnerable — proving intent.

Should you have any questions regarding other matters, please contact us.

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