A predicate offense is the underlying crime that generates the dirty money later laundered. Drug trafficking, fraud, and corruption are common examples. In short, it is the source crime that produces criminal proceeds, which laundering then tries to hide.
Key takeaways
- A predicate offense is the crime that produces the money later laundered.
- Common examples include drug trafficking, fraud, corruption, and theft.
- It is the source crime; the money it produces is the proceeds of crime.
- Money laundering is a separate offense from the predicate crime.
- The FATF lists designated categories of predicate offenses.
- Many countries treat almost any serious crime as a possible predicate.
On this page
What it isExamplesVs proceeds of crimeAll-crimes or a listWhy it mattersLink to launderingTax as a predicateHow firms think about itFAQsRead more
21
Designated categories of predicate offense listed by the FATF
Source: FATF
$800B to $2T
Proceeds of predicate crimes laundered worldwide each year
Source: UNODC
1989
Year the FATF set the global anti-money laundering standard
Source: FATF
What is a predicate offense?
A predicate offense is the crime that comes first, before the laundering. It is the illegal act that produces the money a criminal then needs to clean.
Every case of money laundering starts with one. Without an underlying crime to generate dirty money, there would be nothing to launder. The predicate offense is that starting point, the source of the tainted funds.
The crime and the cleaning are two separate things in law. Read more: the cleaning itself is money laundering.
Examples of predicate offenses
Almost any profit-making crime can be a predicate offense. Some appear far more often than others.
- Drug trafficking. One of the oldest and most common sources of dirty money.
- Fraud. From investment scams to invoice fraud.
- Corruption and bribery. Stolen public funds and improper payments.
- Theft and robbery. Proceeds taken directly from victims.
- Tax evasion. Money kept by cheating the tax authorities.
- Human trafficking. Profits from the exploitation of people.
What links them is profit. A crime that generates money creates the need to launder it, which makes it a predicate offense.
Predicate offense vs proceeds of crime
This is the pairing people most often confuse, so it is worth being clear. The two are linked but distinct.
A predicate offense is the crime. The proceeds of crime are the money or property that crime produces. One is the act, the other is the result. Drug dealing is the predicate offense; the cash from selling the drugs is the proceeds of crime.
| Predicate offense | Proceeds of crime | |
|---|---|---|
| What it is | The underlying crime | The money or property it produces |
| Example | Fraud | The stolen funds |
| Role | The source | The result to be laundered |
Keeping them apart helps. The predicate offense explains where the money came from, and the proceeds of crime are what laundering tries to disguise.
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All-crimes or a listed set
Countries take one of two broad approaches to defining predicate offenses. The choice affects how wide the net is cast.
- An all-crimes approach. Almost any serious crime can be a predicate offense, which casts a wide net.
- A listed approach. Only specific, named crimes count as predicate offenses.
The FATF sets out designated categories of offenses that should be predicates, such as trafficking, fraud, and corruption, and many countries go further with an all-crimes rule. The wider the approach, the harder it is for a criminal to argue their money is somehow clean.
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Why predicate offenses matter
Predicate offenses matter because they connect laundering to real crime. To prove laundering, you often need to show the money came from an underlying offense.
They also shape the scope of AML law. A country that treats almost any crime as a predicate captures far more laundering than one with a narrow list. And for a firm, the range of predicate offenses is a reminder that dirty money can come from many directions, not just the obvious ones.
How it connects to laundering
The predicate offense and the laundering are two links in one chain. The first produces the money, the second hides it.
A criminal commits the predicate offense, such as fraud, and ends up with dirty money. They then launder it to make it look legitimate. Because the two are separate offenses, a person can be charged with both, and often is. The laundering charge, in effect, targets what happens to the money after the first crime.
This two-offense structure is deliberate. It lets authorities pursue the money trail even when the original crime happened abroad or is hard to prove, giving them a second route to hold criminals to account.
Tax offenses as predicates
Tax crimes deserve a mention, because their status has changed. For years, some countries did not treat tax evasion as a predicate offense for laundering.
The FATF has since made clear that serious tax crimes should be predicate offenses, and many countries have brought them in. This matters because it means money kept through tax evasion can be treated as criminal proceeds, widening the reach of AML rules into an area once left out.
How firms think about predicate offenses
For a compliance team, predicate offenses are less a legal puzzle than a reminder to stay broad. A few points shape how firms approach them.
- Assume many sources. Dirty money can come from any profit-making crime.
- Follow the red flags. Unusual activity can point to an unknown predicate offense.
- Report suspicion, not proof. A firm need not identify the exact crime to report.
- Think beyond the obvious. Fraud and tax evasion sit alongside drugs and corruption.
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Frequently asked questions
What is a predicate offense?
A predicate offense is the underlying crime that produces the dirty money later laundered. Drug trafficking, fraud, and corruption are common examples. It is the source crime that generates criminal proceeds, which laundering then tries to hide. Every case of money laundering starts with a predicate offense, since without it there would be nothing to launder.
What is the difference between a predicate offense and proceeds of crime?
A predicate offense is the underlying crime, while the proceeds of crime are the money or property that crime produces. One is the act, the other is the result. For example, drug dealing is the predicate offense, and the cash from selling the drugs is the proceeds of crime that a criminal then tries to launder.
What are examples of predicate offenses?
Common predicate offenses include drug trafficking, fraud, corruption and bribery, theft and robbery, tax evasion, and human trafficking. Almost any profit-making crime can be a predicate offense, because a crime that generates money creates the need to launder it. What links these examples is that each produces criminal proceeds.
Is money laundering separate from the predicate offense?
Yes. Money laundering is a separate offense from the predicate crime that produced the money. A person can be charged with both the underlying crime and laundering its proceeds, and often is. The laundering charge targets what happens to the money after the first crime, which is why the two are treated as distinct offenses in law.
Does a launderer have to commit the predicate offense?
No. A person can be guilty of money laundering for cleaning someone else’s criminal proceeds, even if they had no part in the underlying crime. This is why handling suspect funds carries real risk, not just committing the source offense. Anyone who knowingly deals with the proceeds of crime can face a laundering charge.
What is the all-crimes approach to predicate offenses?
The all-crimes approach treats almost any serious crime as a possible predicate offense for money laundering, casting a wide net. The alternative is a listed approach, where only specific named crimes count. Many countries use an all-crimes rule, which makes it harder for a criminal to argue that their money came from a crime that somehow does not count.
Is tax evasion a predicate offense?
Increasingly, yes. For years, some countries did not treat tax evasion as a predicate offense for laundering, but the FATF has made clear that serious tax crimes should be predicates, and many countries have brought them in. This means money kept through tax evasion can be treated as criminal proceeds and fall within anti-money laundering rules.
What are the FATF designated categories of offenses?
The FATF sets out designated categories of offenses that countries should treat as predicate offenses for money laundering. There are 21 such categories, covering crimes such as trafficking, fraud, corruption, and smuggling. Many countries go further with an all-crimes approach, but the FATF categories set a common minimum for what should count as a predicate offense.
Why do predicate offenses matter for AML?
Predicate offenses matter because they connect laundering to real crime, and proving laundering often requires showing the money came from an underlying offense. They also set the scope of AML law: a country that treats almost any crime as a predicate captures far more laundering. For firms, the range is a reminder that dirty money can come from many directions.
How do predicate offenses connect to money laundering?
The predicate offense and the laundering are two links in one chain. The predicate offense, such as fraud, produces dirty money, and the laundering then hides it to make it look legitimate. Because they are separate offenses, a person can be charged with both, with the laundering charge targeting what happens to the money afterward.
Do firms need to identify the predicate offense to report suspicion?
No. A firm does not need to identify the exact predicate offense to report suspicious activity. It reports suspicion, not proof. If activity looks like it could involve criminal proceeds, the firm files a suspicious activity report and lets the authorities investigate the underlying crime. Waiting to pin down the predicate offense would defeat the purpose of reporting.
Can fraud be a predicate offense?
Yes. Fraud is one of the most common predicate offenses for money laundering. It covers a wide range of crimes, from investment scams to invoice fraud, all of which generate money that a criminal then needs to launder. Because fraud is so widespread and profitable, it is a major source of the proceeds that flow through laundering.
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Last reviewed July 12, 2026 · 10 min read · Written for compliance and risk professionals · By the WhoWiki editorial team
Key takeaway: a predicate offense is the underlying crime that produces the dirty money later laundered, so it is the source crime behind money laundering.