Historical context of the prevention of money laundering

The concept of money laundering began to be used in the early 1970s by the U.S. media, due to the scandal caused by Watergate.

In terms of legislation, in the 1970s, the United States started developing the first regulatory frameworks to combat this issue, such as the Currency and Foreign Transactions Reporting Act of 1970, or later, the Money Laundering Control Act of 1986.

From an international law perspective, the global origin of money laundering regulations can be traced to the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, signed in Vienna on December 20, 1988, and the Basel Committee’s Declaration of Principles in 1988 on preventing the use of the banking system for money laundering.

While the Basel Declaration establishes standards and guidelines for creating financial systems aimed at preventing money laundering, the 1988 Vienna Convention mandates the criminalization of money laundering offenses.

These international instruments were created to address the problem of money laundering from an international standpoint, under the premise that this issue could not be tackled solely from a national perspective.

Later, on July 16, 1988, the Group of 7 — G7 — issued a communiqué obligating member countries to strengthen international cooperation in four areas, including money laundering, while also announcing the creation of the Financial Action Task Force — FATF.

FATF, which has been analyzed in previous posts, is an intergovernmental body that establishes policies to combat money laundering, evaluates regional financial systems, and studies or recommends measures to prevent money laundering. FATF’s greatest contribution to money laundering prevention is the «40 Recommendations» issued in 1990, which established the framework for anti-money laundering measures.

After the tragic events of September 11, 2001, FATF adopted 9 additional recommendations to combat the financing of terrorism. These include the need to ratify and implement international instruments adopted by the UN to combat terrorist financing, the freezing of terrorist assets, and international cooperation.

It was with FATF’s 1990 Recommendations that European law, and consequently Spanish law, began to take shape. The European Union, following FATF’s Recommendations, issued Directive 91/308/EEC — known as the First Directive.