Practice Areas

Money Laundering

Money Laundering

What is Money Laundering?

Money laundering is the process of making illegally earned money appear to be “clean,” usually through a complex set of bank transfers and transfers involving legitimate businesses. Money laundering is a serious financial crime. The government has invested significant resources to prevent, investigate, and prosecute money laundering. For example, the U.S. Treasury Department’s Office of Terrorism and Financial Intelligence identifies and attacks money laundering operations and networks across domestic and international financing systems by using its financial expertise, cutting edge technology, operational resources, and expansive relationships with the private sector as well as interagency and international communities.

How is Money Laundering Charged?

Money laundering is charged under 18 U.S.C. §§ 1956 & 1957

Section 1956(a) defines three types of criminal conduct: domestic money laundering transactions (§ 1956(a)(1)); international money laundering transactions (§ 1956(a)(2)); and undercover “sting” money laundering transactions (§ 1956(a)(3)).

Domestic Money Laundering

To be criminally culpable under 18 U.S.C. § 1956(a)(1), a defendant must conduct or attempt to conduct a financial transaction knowing that the property involved represents the proceeds of an unlawful activity.  In conducting the financial transaction, the defendant must have acted with one of the following four specific intents:

  •  § 1956(a)(1)(A)(i): intent to promote the carrying on of a specified unlawful activity;
  •  § 1956(a)(1)(A)(ii): intent to engage in tax evasion or tax fraud;
  •  § 1956(a)(1)(B)(i): knowledge that the transaction was designed to conceal or disguise the nature, location, source, ownership, or control of proceeds of the specified unlawful activity; or
  •  § 1956(a)(1)(B)(ii): knowledge that the transaction was designed to avoid a transaction reporting requirement under state or federal law.

To prove a violation of § 1956(a)(1), the prosecutor must demonstrate, either by direct or circumstantial evidence, that the defendant knew that the property involved was the proceeds of a felony under state, federal, or foreign law.  The prosecutor need not demonstrate that the defendant knew of the specific crime from which the proceeds were derived, merely that the defendant knew that the property was illegally derived in some way.

The prosecutor must also demonstrate that the defendant initiated or concluded, or participated in initiating or concluding, a financial transaction. 

International Money Laundering

Prosecutions pursuant to § 1956(a)(2) arise when monetary instruments or funds are transported, transmitted, or transferred internationally, and the defendant acted with one of the requisite criminal intents listed above (i.e. promoting, concealing, or avoiding reporting requirements – the intent to engage in tax violations is not included in § 1956(a)(1).

If the transportation, transmission, or transfer was conducted with the intent to conceal the proceeds of specified unlawful activity or to avoid a reporting requirement, the prosecutor must demonstrate that the defendant knew the monetary instrument or funds represented the proceeds of some form of unlawful activity.  If, however, the transportation, transmission, or transfer is conducted with the intent to promote the carrying on of specified unlawful activity, the prosecutor need not show that the funds or monetary instruments were actually derived from any criminal activity.

The transportation, transmission, or transfer must cross the border – either originating or terminating in the U.S. 

Money Laundering Stings

Section 1956(a)(3) relates to undercover operations where the financial transaction involves property represented to be proceeds of a specified unlawful activity.  The proceeds in § 1956(a)(3) cases are not actually deried from a real crime, they are undercover funds supplied by the government.  The representation must be made by or authorized by a federal law enforcement officer with authority to investigate or prosecute money laundering violations.  The representation may also by made vby another at the direction or approval of a federal law enforcement officer.  The specific intent provisions in § 1956(a)(3) are slightly different from those in § 1956(a)(1).  First, the intent to violate the tax laws is not included in § 1956(a)(3).  Second, subsections 1956(a)(3)(B) and (C) require that the transaction be conducted with the intent to conceal or disguise the nature, location, source, ownership, or control of the property, or to avoid a transaction reporting requirement – this is in contract to subsections 1956(a)(1)(B)(i) and (ii), which require merely that the defendant know that the transaction is designed, in whole or part, to accomplish one of these ends.

Money Laundering Spending

Prosecutions under 18 U.S.C. § 1957 arise when the defendant knowingly conducts a monetary transaction in criminally derived property in an amount greater than $10,000, which  is in fact proceeds of a specified unlawful activity.

The most significant difference from § 1956 prosecutions is the intent requirement.  Under § 1957, the four intents are replaced by a $10,000 threshold amount for each non-aggregated transaction and the requirement that a financial institution be involved in the transaction.  Although the prosecutor need not demonstrate any intent to promote, conceal, or avoid the reporting requirements, he/she still must demonstrate that the defendant knew the property was derived from some criminal activity and that the funds were in fact derived from a specified unlawful activity.

Penalties for Money Laundering

The maximum penalty under § 1956 is 20 years in federal prison and $500,000 in fines. The maximum penalty under § 1957 is 10 years in federal prison and $250,000 in fines. Various enhancements may apply, depending on the circumstances, which could significantly increase these maximum sentences.

Irvine, California Money Laundering Attorney

The first and most important decision a defendant or anyone facing a federal money laundering investigation must make is to retain the right defense attorney. Responding to a money laundering investigation or charges requires a proactive, coordinated, and proactive approach. White collar federal defense attorney Peter Hardin has a long and outstanding track record of establishing clear communication with federal law enforcement agents and prosecutors and responding swiftly and accurately to search warrants and subpoenas. Because Peter Hardin has prosecuted and defended criminal cases, such as money laundering, for nearly 20 years, he understands not just the law, but the way federal authorities investigate cases and the prosecutorial tactics that follow. It is essential that anyone who may be under investigation for money laundering, or who has been charged with money laundering, act quickly to build a strong defense and protect their rights. Contact Peter Hardin now for a free and confidential consultation.

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