The Predicate Offence in Money-Laundering Cases

A charge under Article 209 of the Criminal Code of Ukraine (KK) cannot stand “on its own”: laundering is always derivative of another offence that generated the dirty money. That first offence is called the predicate offence, and it is precisely around the predicate that money-laundering cases are won and lost — whether it needs a separate conviction, how its elements are proven, and where the line runs between it and laundering proper. Let us look at these questions through the lens of forensic economic expertise, the discipline without which the economic side of the predicate usually remains unproven.

What a predicate offence is: a definition

A predicate (primary) offence is a socially dangerous, unlawful act that preceded the laundering and became the source of the property that is later “washed”. In plain terms: first someone unlawfully obtains money or other property, and only then tries to give it the appearance of legitimacy. Without the first step, the second cannot exist.

The concept of the predicate offence is fixed in Article 209 of the KK and is closely tied to Ukraine’s dedicated anti-money-laundering (AML) legislation — the Law “On Prevention and Counteraction to the Legalisation (Laundering) of Proceeds Obtained through Crime…” (No. 361-IX). After the financial-monitoring reform that took effect on 28 April 2020, the legislator moved to an “all-crimes” approach: a predicate can be a broad range of acts, not only “serious” crimes. The current wording sets no separate punishment threshold for the primary act — it is enough that the act is socially dangerous, unlawful, and that it generated property of criminal origin. An important nuance of the law’s operation in time: for acts committed before 28 April 2020, courts apply the wording in force at the time of commission (which did contain a punishment threshold and excluded certain tax offences).

From this follows a practical conclusion: laundering is always a secondary, dependent offence. Logically and evidentially it rests on the predicate act, and if the foundation is not proven, the whole edifice of the prosecution wobbles.

Is a separate conviction for the predicate required

This is the question most often asked by investigators and defence lawyers alike. The short answer: a separate conviction for the predicate offence is not a mandatory condition for a money-laundering charge.

The Supreme Court (Verkhovnyi Sud) in criminal matters consistently proceeds from the position that, to apply Article 209, it is enough to establish the elements of the predicate act within the laundering case itself — to prove that the property was obtained as a result of a socially dangerous, unlawful act. Article 209 is not a rule carrying criminal-law preclusion that would require a prior conviction for the primary offence. This is consistent with international standards — the recommendations of the FATF (Financial Action Task Force) — on which Ukraine’s AML framework was built.

What this means in practice:

• the predicate act may be proven in the same proceedings as the laundering (often on a cumulative basis, where a person is charged with both the predicate and Article 209);
• the person may not be prosecuted for the predicate at all (limitation period expired, amnesty, death of the suspect) — and the money will still be treated as criminal for the purposes of Article 209;
• the predicate may have been committed abroad — what matters is that the act is also recognised as a crime under Ukrainian law.

At the same time, “no mandatory separate conviction” does not mean “no need to prove”. The elements of the predicate must still be established — the source of the property, its unlawfulness, its link to the subsequent operations — and proven to the criminal standard, beyond reasonable doubt. It is simply done within a single evidentiary picture rather than necessarily by a separate court decision.

Which acts can be predicate

The list is practically open, but in laundering cases the following occur most often:

1. Tax evasion — when funds “saved” from the budget are introduced into legal circulation through contracts or asset purchases. Before the 2020 reform, tax offences were excluded from the list of predicates; today they can serve as the primary act.
2. Fraud — obtaining another person’s property by deception, including financial fraud.
3. Embezzlement, misappropriation, conversion — primarily in the corporate and public-budget sectors.
4. Corruption offences — undue advantage, abuse of power or office, illicit enrichment.
5. Drug crime and other illegal trade — the classic source of cash that has to be “legalised”.

For the economic expert, the nature of the predicate matters because it sets the point of departure: where exactly the criminal proceeds arose and in what amount. Tax evasion, embezzlement and fraud have a different economic anatomy, and the pattern of fund movement after each of them looks different.

Self-laundering and the predicate: a qualification problem

The subtlest point in these cases is drawing the line between the predicate act itself and the laundering, especially when both are committed by one and the same person. This is so-called self-laundering: the person who obtained the money through crime is the same one who gives it the appearance of legitimacy.

Two typical qualification traps arise here:

• Equating the disposal of proceeds with laundering. Not every expenditure of criminal money is laundering. Buying groceries or paying for services “for consumption” is a use of proceeds, not the giving of a legal appearance to them. Laundering presupposes a separate purpose and a separate act — masking the source, changing the form or owner of the asset, introducing it into legal circulation.
• Double-counting a single act. Sometimes the investigation tries to qualify under Article 209 the very operations that already form the objective side of the predicate offence. If a transfer of funds is a means of committing the predicate itself (for example, an element of an evasion scheme), it does not automatically become “laundering” as well — a self-standing laundering act is required.

Financial analysis is precisely what helps to distinguish these situations: it shows where the predicate act ends and where a separate “cleaning” operation begins.

The standard of proof for the predicate: the case-law of the ЄДРСР and the Supreme Court

An analysis of depersonalised decisions in the Unified State Register of Court Decisions (ЄДРСР) shows a steady trend: courts acquit or re-qualify cases where the predicate act is declared but not proven by concrete evidence.

Benchmarks that follow from cassation-instance practice:

• the predicate cannot be “presumed” — there must be evidence of the criminal origin of specific property, not an abstract mention of “unlawful income”;
• a traceable connection is required between the predicate act and the property being laundered: the same funds, the same chain;
• the volume of the criminally obtained property must be established quantitatively, not estimated by eye.

It is precisely on these three requirements — source, connection, size — that weak charges most often collapse. And these are exactly the questions that lie in the field of specialised economic knowledge.

A generalised example

A typical situation looks like this: for years an enterprise minimised its taxes through a chain of “shell” (technical) counterparties, and the “saved” funds were withdrawn and invested in real estate registered to related persons. The predicate here is tax evasion; the laundering is the very acquisition of property that gave the money the appearance of a legal source. For a charge under Article 209 to hold, the investigation must first calculate the amount of unpaid tax under the rules of tax law (that is, the size of the income from the predicate), and only then show that these very funds went into acquiring the assets. If the examination establishes only the fact of the purchase but does not prove the criminal source of the money, the connection between the predicate and the property remains unproven — and the laundering charge falls apart.

The role of forensic economic expertise

A forensic economic expert does not qualify an act under an article — that is the competence of the investigation and the court. The expert’s work is governed by the Law of Ukraine “On Forensic Expert Activity” and the Instruction on the appointment and conduct of forensic examinations and expert studies (Ministry of Justice Order No. 53/5), and in criminal proceedings the examination is ordered under the rules of the Criminal Procedure Code of Ukraine (KPK). But without such a study the economic side of the predicate usually cannot be proven. Within specialised knowledge, the expert:

• establishes the source of the funds — from bank statements, primary documents and accounting records, showing where the property came from;
• determines the size of the income from the predicate act — the amount of unpaid tax, the value of what was embezzled or misappropriated, the volume of assets withdrawn;
• traces the connection between the primary act and the subsequent operations — the same chain of funds, transit, splitting of sums, absence of any real supply of goods;
• outlines the limits of the study — states honestly which documents are missing and which conclusions are therefore impossible.

Question in the case	What the expert examines
Did income arise from the predicate	Source of credits, documentary basis, correspondence with real activity
What is its size	Quantitative calculation of what was unpaid / embezzled / withdrawn
Where did it move next	Chain of transfers, transit accounts, cash withdrawals
Are there signs of masking	No goods behind the operations, splitting of sums, gap between stated purpose and fact

The materials of such cases often begin with financial intelligence from the State Financial Monitoring Service (Derzhfinmonitoring) and are then verified with the participation of the Bureau of Economic Security (BEB), bodies of the State Tax Service, or other pre-trial investigation authorities — depending on the nature of the predicate. But none of these bodies replaces evidentiary work: the movement of funds is not, in itself, a proven predicate. In my expert practice it is precisely the quantitatively established size of the income from the predicate act that often becomes the piece of evidence joining the primary crime and the laundering into a single chain.

A typical error: charges without a proven predicate

The most common defect in such cases is charging Article 209 on the strength of “suspicious” fund movements when the predicate act has not been properly proven. The investigation describes transit, cash and “shell” counterparties, and immediately calls it laundering — skipping the mandatory step of showing which specific crime generated the money and in what amount.

The consequences of such an approach are predictable:

• the defence proves in court the absence of a proven source — and the Article 209 charge collapses;
• an expert opinion that labels fund movement as “laundering” without an established predicate is assessed critically, as going beyond the expert’s competence;
• the case drags on into studies that should have been carried out at the outset.

The correct logic is the reverse: first the predicate and the size of the income, then the laundering operations. The expert describes the facts — source, amount, route, signs of masking — and leaves the legal qualification to the body that ordered the study.

Practical guidance for the parties

• For the investigator / detective — do not start with the “laundering” label; first record the predicate act and its economic size, secure the full array of statements and primary documents, and formulate the questions to the expert correctly.
• For the defence lawyer — check whether the source of funds is proven, whether there is a traceable connection between the predicate and the property being laundered, and whether the expert has stayed within competence; look for signs of double-counting a single act.
• For the business owner — understand that even lawful activity with “convenient” no-goods counterparties creates a risk of being drawn into someone else’s scheme; keep the documents confirming the reality and source of transactions.
• For the private individual — do not run someone else’s money through your accounts “for a fee”: that is a ready-made role as an executor in a laundering chain.

Cases under Article 209 are won and lost on the predicate. If you need to assess whether the source and size of criminal proceeds are proven, or to review an existing expert opinion, a considered consultation and professional forensic economic expertise will help you build a position grounded in facts. Get in touch — I will consider your question within the limits of expert competence.