Scope:
Part of the mandate of the Working Group on Typologies (WGTYP) is to identify new threats and vulnerabilities and conduct research on money laundering and terrorist financing methods and techniques. FATF typology reports typically reveal, describe, and explain the nature of ML/TF methods and threats, thus increasing global awareness and opportunities for earlier detection. In light of its mandate, the project team focused only on the methods used to launder the proceeds of corruption. It does not attempt to describe the methods by which bribery and other corruption are effectuated, concealed, or discovered; such a discussion would be outside of the scope of this paper.
While there may be no internationally recognised legal definition of corruption, it is most commonly functionally defined as the use of public office for private gain. The United Nations, the Organisation for Economic Co-Operation and Development (OECD), and the Council of Europe4 Conventions establish the offences for a range of corrupt behaviour. The conventions define international standards on the criminalisation of corruption by prescribing specific offences rather than through a generic definition or offense of corruption. The offenses can range from petty or systemic corruption, in which public officials or employees receive money to perform (or refrain from performing) official acts, to grand corruption, in which those at the political, decision-making levels of government use their office to enrich themselves, their families, and their associates.
Because of time and resource limitations involved in this project, the project team restricted itself to an analysis of grand corruption. While there is no precise threshold — by official rank or otherwise — to distinguish grand from systemic corruption, the positions of the PEPs involved in the cases in our report ranged from senior legislators to governors to prime ministers and presidents. All of the cases examined involved behaviour that would constitute offenses falling under any of the relevant international AC conventions, as well as the generic definition described above. Where possible, the case studies identified the type of corrupt act from which the proceeds had been derived. The types of corruption involved bribe taking and kickbacks, of both foreign and domestic officials, but also embezzlement (in which money rightly belonging to the State was siphoned for personal use through a variety of means), extortion (in which the public official uses the threat of official power to receive money) and self dealing (in which the corrupt PEP has a personal financial interest in acts and decisions he makes in his official capacity).
Detailed report from FATF: click here