What is a Predicate Offense?
A predicate offense is the underlying crime that generates illegal proceeds, which criminals then try to launder.
Money laundering cannot happen without a predicate offense. Laundering is the act of disguising where criminal money came from, so there must first be a crime that produced that money. A drug sale, a fraud scheme, or a bribe creates the dirty funds, and laundering is the process that makes them look legitimate.
A predicate offense and money laundering are treated as separate crimes. A person can be prosecuted for laundering money even if someone else committed the predicate offense, and in many countries a person can be charged with both.
What are examples of predicate offenses?
The Financial Action Task Force (FATF) sets out 21 designated categories of predicate offenses that every country should cover. Common examples include the following.
- Drug trafficking
- Fraud
- Corruption and bribery
- Tax crimes
- Human trafficking and migrant smuggling
- Illicit arms trafficking
- Organized crime and racketeering
- Terrorism, including terrorist financing
- Environmental crime
- Insider trading and market manipulation
Many countries go further than the FATF list. Some treat any serious crime as a predicate offense, which means proceeds from almost any illegal activity can form the basis of a money laundering charge.
Why do predicate offenses matter for AML compliance?
Predicate offenses define what counts as money laundering in each country. The global framework grew out of UN conventions that first targeted drug trafficking proceeds and later expanded to organized crime and corruption. A wider list of predicate offenses means a wider range of criminal proceeds that financial institutions must watch for.
Compliance teams do not need to prove which predicate offense took place. Reporting obligations are triggered by knowledge or suspicion of money laundering, so a bank can file a suspicious activity report without knowing the exact underlying crime. Identifying and investigating the predicate offense is the job of law enforcement.
Predicate offenses still shape how firms detect risk. Adverse media linking a customer to corruption, a fraud pattern that creates sudden inflows, or a business with ties to drug-producing regions can all point to a predicate offense behind the funds. Transaction monitoring and customer due diligence help surface these signals early.
