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By Benson Varghese

Last Updated: May 27th, 2022 at 2:51 PM
Published on: May 5th, 2022 at 5:20 AM

What is money laundering?

Money laundering is the process of concealing “dirty” money obtained through illegal activity and making it “clean.” Money obtained through criminal activity cannot be used in the legitimate financial system without raising suspicion. So, the money must be cleaned to appear legitimate and not raise suspicion when used at financial institutions, such as banks.

Federal money laundering is a white collar crime that stems from another – usually much more serious – crime, such as drug trafficking or robbery. Over the years, money laundering has become a popular storyline in movies and TV series, such as Ozark on Netflix. And while it has been romanticized, the truth is that money laundering is a serious federal crime that can carry stiff prison sentences.

How does money laundering work?

Money laundering typically occurs in three steps: placement, layering, and integration. First, the illegally gained money is placed in a legitimate enterprise (placement). Second, the source of the money is obscured through multiple transactions (layering). Third, and finally, the laundered money is integrated to the legitimate financial system through any number of recognized financial instruments, such as banknotes or loans (integration). Money laundering can be as simple as depositing funds into a checking account or can involve a complex web of shell companies and offshore accounts.

Federal money laundering charges are almost always charged as conspiracy charges.

What are federal money laundering statutes?

Money laundering is a federal crime. The federal money laundering statute is complex and broken into two sections under Title 18 of the United States Code: sections 1956 and 1957.

  • Section 1956 prohibits financial transactions that are designed to promote unlawful activity or disguise the source of the illegally gained money.
  • Section 1957 prohibits financial transactions involving illegally gained money exceeding $10,000.

Through these laws, the government may bring several different types of money laundering charges, often through sting operations. They could include transaction money laundering, international money laundering, and reverse money laundering.

What are the penalties for federal money laundering?

A person convicted of money laundering may be sentenced up to 20 years in federal prison and fined up to $500,000. Additionally, a money laundering charge allows the federal government to seize the money and other related property through a civil asset forfeiture judgment.

Learn more: Timeline of a federal criminal case.

What are the elements of a money laundering offense?

In a criminal trial, the government bears the burden of proving that the accused’s conduct satisfies every element of the crime. To convict someone of money laundering, the government must demonstrate four elements under section 1956:

(1) the defendant knew the money was dirty;

(2) the money is from a “specified unlawful activity;”

(3) there is a financial transaction; and

(4) intent, that the money is used for the purpose of promoting or concealing a crime, or the transaction is to avoid a reporting requirement.

Section 1957 adds the $10,000 minimum money requirement but does not require the same intent as section 1956. Instead, section 1957 requires only that someone knowingly engaged in a financial transaction of “criminally derived property.” That is, transferred the proceeds of a specified unlawful activity.

Knowledge is an element for all money laundering crimes, but the requirement varies depending on the specific offense and jurisdiction. In Texas, the government can simply show that the defendant was “willfully blind” to the specified unlawful activity. This means that all the government must show is that the defendant was aware that there was probably illegal conduct and purposely avoided learning of the illegal conduct.

The anti-money laundering laws refer to specified unlawful activity repeatedly. So, what does that mean? Practically speaking, specified unlawful activity means almost any crime. The federal government has outlined an extensive list of crimes amounting to “specified unlawful activity.” The list includes, among others, any act or threatened act involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, obscene matter, or controlled substances, that you could be charged for under state law and imprisoned for more than one year. Additionally, section 1956 identifies violations of more than 80 different sections of United States Code as specified unlawful activity, including offenses relating to counterfeiting, copyright infringement, and healthcare. In short, specified unlawful activity is likely anything constituting a felony.

Almost any exchange of money can amount to a financial transaction. While Congress did provide a specific definition, courts generally interpret the term broadly to provide for an expansive definition. The term has recently been broadened to cover virtual cryptocurrencies, like Bitcoin.

Lastly, the government must show that the money is used for the purpose of promoting or concealing a crime or trying to avoid a reporting requirement. This may be any reporting requirement under state or federal law, including tax evasion.

What are the defenses to money laundering charges?

Money laundering charges are complex and there may be opportunities to show that the charged conduct is actually not money laundering. Possible money laundering defenses could include:

  1. The case doesn’t involve a monetary or financial transaction.
  2. The money is not “dirty” and comes from a source other than criminal activity or in fraud case. One possibility is the “merger” issue—where the conduct charged as “specified unlawful activity” consists primarily of a financial or fraud offense and the financial and money laundering offenses are so connected that there is not a clear delineation between the underlying financial offense and the money laundering offense.
  3. The person charged doesn’t know the money is “dirty.”
  4. The transaction is not for an unlawful purpose.
  5. If the money laundering charge is based on a sting operation, it may be possible to show that there was no criminal conduct because of entrapment.

Facing money laundering charges? Contact Us

If your loved one is facing federal money laundering charges, it’s imperative that you contact an experienced defense attorney as soon as possible. The government takes money laundering very seriously. Our team of attorneys has extensive experience defending white collar crimes. Call 817-203-2220 today for a complimentary strategy session with a member of our team.

Federal Money Laundering Charges [2022]
2022-05-27T14:51:52-06:00
Varghese Summersett PLLC
Varghese Summersett PLLC