Money Laundering

(18 U.S.C. § 1956 (2005) and 18 U.S.C. § 1957 (2005))

If you are charged with a federal crime in which profit was involved, it is likely that you will also be charged with money laundering–the transfer of funds derived from some illegal activity.  Section 1956 includes an intent or knowledge requirement while Section 1957 requires only a $10,000 threshold amount of money transferred involving a financial institution.

18 U.S.C. § 1956 (2005)

The federal money laundering statute criminalizes three types of conduct or attempted conduct: domestic money laundering (18 U.S.C. § 1956(a)(1)), international money laundering (18 U.S.C. § 1956(a)(2)), and undercover sting money laundering (18 U.S.C. § 1956(a)(3)).  Each separate transfer from a single batch of proceeds may be charged as separate money laundering crimes (United States v. Prescott, 42 F.3d 1165 (8th Cir. 1994).

Domestic and international money laundering share three common elements that government must prove beyond reasonable doubt:

· Knowledge that the funds were obtained as a result of any felony under state, federal, or international law. It is not necessary to show that the alleged money launderer knows the source or nature of the exact illegal activity (18 U.S.C. § 1956(a)(1) and (c)(1));

·  Initiation, conclusion, or participation in a “financial transaction” ((18 U.S.C. § 1956(a)(1), (c)(3), and (c)(4)). A “financial transaction” may be a deposit, withdrawal, gift, currency exchange, purchase, wire transfer, or other monetary movement affecting interstate or foreign commerce; and

· The intent to either (1) promote the unlawful activity, (2) engage in tax fraud or evasion, (3) act knowing that doing so would conceal the proceeds of unlawful activity, or (4) act knowing that to do so would avoid state or federal reporting requirements.

Undercover money laundering involves funds that are provided by the government in the course of investigating a crime and are represented as being illegal proceeds ((18 U.S.C. § 1956(a)(3)). The government must prove beyond reasonable doubt that there was an intent to conceal a crime or avoid a reporting requirement.

The statute contains a long and non-exclusive laundry list of conduct that can trigger a money laundering charge (18 U.S.C. § 1956(a)(7)) including racketeering, smuggling, bribery, destruction of government property, computer fraud, murder, kidnapping, counterfeiting, violation of other federal statutes, and so-called terroristic acts (Id).

Finally, Section 1956(h) incorporates a conspiracy component. Therefore, it is possible for the government to bring an indictment that does not contain specific overt acts in violation of this law.

Penalties for each count of money laundering include up to 20 years in prison, and up to $500,000 or twice the amount involved in the transaction–whichever is greater–or both. In addition, the government may pursue civil penalties in the amount of up to $10,000 or the value of the transaction, whichever is greater (18 U.S.C. § 1956(b)).

18 U.S.C. § 1957 (2005)

Statutory money laundering requires the government to prove beyond reasonable doubt that (1) the individual knew that the funds were derived from unlawful activity, (2) the funds did in fact derive from unlawful activity, (3) the amount involved in the transfer exceeds $10,000, and (4) the transfer involved a bank or other financial institution (18 U.S.C. § 1957(a); see also United States v. Cavin, 39 F.3d 1299, 1307 (5th Cir. 1994)).

Penalties include up to 10 years in prison, or up to $250,000 or twice the value of the transaction–whichever is greater–or both. There are no additional civil penalties.