Federal Money Laundering

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The crime of “money laundering” is sometimes difficult to conceptualize, yet it is a crime that the federal government applies to a broad number of activities that involve large amounts of money.  In fact, what makes money laundering a single type of crime is not so much the activities involved, but rather the goal of any number of activities.  Specifically, the crime of money laundering is meant to prosecute any act that is meant to conceal the illegal source of money that is in someone’s possession.

W clearly define what money laundering is, what statutes are used to prosecute money laundering, what the penalties for money laundering could be, and what defenses can be raised against a money laundering charge.

If you or a loved one have been charged with federal money laundering, then you need the help of an experienced federal money laundering defense attorney.  We welcome you to contact the Law Office of Jeremy Gordon.  With a proven track record of favorable outcomes and excellent service to clients, Jeremy Gordon can get the best outcome for you and your family if you are facing federal money laundering charges.  Schedule a free phone consultation today.

 

 

Money Laundering:  The Basics

  • Understanding the crime based on its title – Money Laundering

The phrase “money laundering” is actually descriptive enough to give us an idea of what the crime encompasses.  In essence, the perpetrator is trying to “launder” or “clean” money.  What about the money needs to be cleaned?  The fact that the money is the result of, or “tainted” by illegal activity. 

Thus, a person with the tainted money needs to put it through another transaction or an entity such as a bank to separate, or put distance between, the illegal activity that generated the money and possession of the money.

  • Money Laundering – the three common steps

The description above can be broken down into three essential steps in the process of money laundering. 

  1. The perpetrator will engage in illegal activity that results in money going into the perpetrator’s hands. 
  2. The perpetrator passes the money through a transaction or number of transactions to hide the illegal source of the money.
  3. The transaction or series of transactions returns money to the perpetrator in an indirect way.  As a result, the money has been “laundered.”

For example, a person could make a lot of cash selling drugs on the street.  To hide the source of that cash, he could purchase a high-end vehicle.  Later, that person could turn around and sell the vehicle to someone else.  The money from that sale no longer has the “taint” of the initial drug sales attached to it.  In other words, the person “laundered,” or removed the “taint” on the money by buying and selling the vehicle.

Money Laundering:  The Law

  • The Bank Secrecy Act of 1970

To combat money laundering on the federal level, Congress passed the Bank Secrecy Act of 1970.  That law requires banks to report any financial transaction that exceeds $10,000.  Accordingly, if someone comes into a bank to deposit over $10,000 in cash, the bank is required to report that transaction to federal authorities.

  • The Money Laundering Control Act of 1986

A little less than two decades later, Congress passed the Money Laundering Control Act of 1986, which officially made money laundering a federal crime.   The Money Laundering Act consists of two sections – 18 U.S.C. § 1956 and § 1957. 

Section 1956 makes it a crime for individuals to engage in a financial transaction with proceeds that came from a list of specific crimes, so-called “specified unlawful activities” (SUAs).  SUAs include drug distribution, wire and mail fraud, murder, bribery, and RICO violations.  Moreover, the law requires that the individual had the intent to disguise the source, ownership, location, or control of the money. 

Section 1957, often called the “money spending statute,” makes it illegal to engage in a financial transaction in excess of $10,000, where the money was derived from an SUA.  Notably, in contrast to § 1956, there is no intent-to-conceal requirement.  Thus, if an individual spends more than $10,000 of ill-gotten gains, regardless of whether the individual wanted to disguise it, then he or she has violated § 1957. 

Money Laundering:  Penalties and Defenses

The penalties for money laundering can be severe.  A person convicted of money laundering under § 1956 could face up to 20 years in federal prison, and/or fines up to $500,000 or twice the value of the transaction.  A person convicted under § 1957 carries a maximum penalty of 10 years in federal prison and a maximum fine of $250,000 or twice the value of the transaction. 

With regard to defenses, there are two main defenses that could defeat a charge of money laundering. 

  • Source of funds.  If the source of the funds was legitimate, and not the result of illegal activity, then the federal government would be unable to prove the elements of money laundering. 
  • No intent.  If the government is unable to prove that a person had the intent to promote illegal activity or an intent to conceal criminal activity, then the government will also be unable to prove money laundering.