Money laundering charges: What is money laundering?
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Although many people think of money laundering simply making convoluted financial transactions to conceal the origin of funds obtained from criminal activity, the federal criminal money laundering laws cover a far broader range of conduct involving criminally derived property.
Federal criminal money laundering offenses are codified under 18 U.S.C. § 1956 and § 1957. In this post, we’ll discuss § 1956 money laundering offenses.
1956 money laundering offenses most commonly fall into one of two kinds of money laundering:
- “Promotional” money laundering – in which the alleged financial transactions involving criminally derived funds were performed for the purpose of promoting the underlying criminal activity that generated the funds; and
- “Concealment” money laundering – in which the alleged financial transactions involving criminally derived funds were performed for the purpose of concealing the source, nature, ownership, or location of the funds.
Beyond promotional and concealment money laundering, § 1956(a)(3) also penalizes structuring financial transactions to avoid reporting requirements in the context of concealing the funds, or promoting the underlying criminal activity. However, § 1956(a)(3) charges are uncommon because where there is evidence of structuring, prosecutors will commonly bring a separate structuring charge under the federal structuring statute: 31 U.S.C. § 5324.
What is the difference between promotional money laundering and concealment money laundering?
Both promotional and concealment money laundering criminalize financial transactions involving tainted (or criminally derived) property. A financial transaction in this context can be complex, such as using shell entities and fictitious businesses to transfer money, or simple, such as withdrawing cash. Tainted property can be drug proceeds, money obtained from theft or robbery, or profits earned from a fraud.
The main difference between promotional money laundering and concealment money laundering lies in the knowledge and intent elements that must be proven at trial.
In promotional money laundering cases, the government is required to prove that the defendant knew about and intended to promote the underlying unlawful activity. For example, if the laundered funds were derived from drug sales, the government must prove that the defendant knew about the drug sales and intended to promote the drug sales by engaging in the financial transactions.
In a concealment money laundering case, by contrast, the government is required to prove that the defendant knew that the money was tainted (i.e., came from a crime), but does not need to prove that the defendant knew specifically what crime. The government also must prove that the defendant’s intention in engaging in the transaction was to conceal some aspect of the property or money in question.
What are the defenses to money laundering charges?
Money laundering charges are highly technical in nature, and an effective defense to such charges requires a clear understanding of both the governing law and the prosecution’s theory of the crime.
For example, to obtain a conviction for money laundering, the government must prove that the accused person had a certain level of knowledge and intent to commit the crime. That is, simply engaging in a financial transaction or transporting funds – even if those funds happen to be the proceeds of a crime – is not enough for a conviction.
Additionally, the government has to prove that the funds came from a list of specified crimes – not all criminal activity qualifies. The prosecution also must show that the financial transaction has to effect interstate commerce; not all financial transactions meet this requirement.
What is the statute of limitations for money laundering?
The statute of limitations for money laundering is five years. This is also the case for money laundering conspiracy.
Note that investigations of money laundering often take years, so it is important to carefully review the facts of each case for a potential defense based on the statute of limitations.
Money Laundering Penalties: What kinds of sentences can be expected from a money laundering conviction?
§ 1956 carries a maximum potential penalty of 20 years. § 1957, by contrast, carries a maximum potential penalty of 10 years.
Federal criminal penalties are heavily influence by the now advisory U.S. Sentencing Guidelines. Click here to learn more about how sentencing guidelines work.
The sentencing guidelines for money laundering offenses are primarily influenced by two factors: first, the value of the laundered funds, and second, whether the defendant can be held accountable for the underlying criminal activity that generated the laundered funds.
The value of the laundered funds is an important factor that affects sentencing in money laundering cases because a defendant’s sentencing guidelines range is increased according to the loss table under U.S.S.G. § 2B1.1 that is also used in basic economic crimes such as theft. Thus, a defendant who laundered, for example, between $6,500 and $15,000 would receive only a minor enhancement of two points, but a defendant who laundered between $1.5 million and $3.5 million would receive a 16-point increase.
The other important factor affecting money laundering sentencing is whether the defendant engaged in the underlying criminal conduct. This problem most often arises when the defendant was not charged with, or is acquitted of, the underlying criminal conduct. At sentencing, the Judge applies a preponderance of the evidence standard to find facts that are relevant to sentencing—including the question of whether the defendant played a role in the underlying criminal conduct that generated the proceeds. Thus, even in cases where a defendant was acquitted of that criminal conduct, a judge can potentially find, by a preponderance of the evidence, that the defendant was actually guilty, and increase the defendant’s sentence accordingly.
Of course, this often is a counter-intuitive and unfair result for defendants who believe that they have been found not guilty of some criminal conduct, only to be later punished for that very same conduct. Given this reality, it is important to have a defense strategy that will push back against punishing a person for conduct the person did not commit, merely by showing that the person engaged in money laundering.