Money Laundering & 18 U.S.C. § 1956 Federal Criminal Law

In a nutshell money laundering is the act of taking illegally obtained funds and converting it to a legal or usable state. This usually involves converting money into different currencies, assets, or bills. Federally, most of the money laundering statutes can be found in 18 U.S.C. § 1956 which states that:

1. Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity:

(A)

(i) with the intent to promote the carrying on of specified unlawful activity; or

(ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or

(B) knowing that the transaction is designed in whole or in part-

(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both. For purposes of this paragraph, a financial transaction shall be considered to be one involving the proceeds of specified unlawful activity if it is part of a set of parallel or dependent transactions, any one of which involves the proceeds of specified unlawful activity, and all of which are part of a single plan or arrangement.

2. Whoever transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States-

(A) with the intent to promote the carrying on of specified unlawful activity; or

(B) knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represent the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part-

(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the monetary instrument or funds involved in the transportation, transmission, or transfer, whichever is greater, or imprisonment for not more than twenty years, or both. For the purpose of the offense described in subparagraph (B), the defendant’s knowledge may be established by proof that a law enforcement officer represented the matter specified in subparagraph (B) as true, and the defendant’s subsequent statements or actions indicate that the defendant believed such representations to be true.

3. Whoever, with the intent:

(A) to promote the carrying on of specified unlawful activity;

(B) to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity; or

(C) to avoid a transaction reporting requirement under State or Federal law,

conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity, shall be fined under this title or imprisoned for not more than 20 years, or both. For purposes of this paragraph and paragraph (2), the term “represented” means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section.

While this may seem confusing at first, money laundering is easier to understand when broken down into its basic elements. First, money laundering requires the defendant be “knowing.” In this instance “knowing” means that the defendant knew the funds came from an illegal activity and that the transaction was for the benefit of another illegal activity. Secondly, money laundering requires a transaction, or an attempted transaction occur. For this law, a transaction is any distribution of funds from criminal activity. The final element of money laundering relates to the four different categories or types of this offense which are Promotional, Concealment, Structuring, and Tax Evasion.

Promotional Money Laundering

Promotional money laundering occurs when someone knowingly engages in money laundering that is used for promoting (aiding, assisting, continuing, sustaining) another unlawful activity. It is not necessary that the participants know exactly what illegal activity is being used to generate the money nor must they know exactly what illegal activity it is sustaining. It is simply enough that the defendants know that the source of the money is illegal and that the promoted activity the money is being used to sustain is also unlawful. Additionally, promotional money laundering comes in three forms which are financial transactions, international transmissions, and stings.

Financial transactions are defined by two elements, that they be financial, and that they be transactions. Thus, there must be funds involved, and there must be a form of distribution of proceeds received from crime. Additionally, financial transactions are also defined by their predicate offenses, both the original crime and the promoted crime which are categorized in State, Federal, and Foreign law. This is because the funds must come from a crime within the category of predicate offenses.

International transmissions are easily defined as any action or attempted action to transmit funds from somewhere inside the U.S. to somewhere outside the U.S., or from somewhere outside the U.S. to somewhere inside the U.S. to promote criminal activity. Like financial transactions, the predicate offenses must fall into the categories of what constitutes a criminal offense.

Finally, stings are simply a variation of financial transactions in which law enforcement has manipulated someone into believing that funds are from a criminal source and are being used to promote another criminal activity when they are not. As before, this is limited by the categories of predicate offenses.

Concealment Money Laundering

Concealment money laundering is the knowing transaction or attempted transaction of illegal funds to “disguise the nature, location, the source, the ownership, or the control of the proceeds of specified unlawful activity”. The defendant need not know exactly where the funds came from or where they’re going, only that both the source and the destination are a form of illegal activity. Just like promotional money laundering, concealment money laundering is divided into financial transactions, international transmissions, and stings.

Structuring Money Laundering

Structuring money laundering goes by many names. Structuring, report evasion, and smurfing are just a few. Structuring occurs when money laundering actions are taken to avoid state or federal financial transaction reporting requirements. In the past, criminals would attempt to subvert reporting requirements by depositing their money across multiple locations to not trigger the necessary reporting. Because of this, structuring laws were put in place. As with all money laundering crimes, structuring requires that the defendant be knowing and have participated or attempted a transaction. Finally, structuring money laundering is divided into the three offenses financial transactions, international transmissions, and stings.

Tax Evasion

Tax evasion money laundering is the simplest form of money laundering. It occurs when someone knowingly, conducts or attempts to conduct, a financial transaction with the profits of criminal activity, for the purpose of evading or beating tax laws under 26 U.S.C. §7201 or §7206. Unlike the other forms of money laundering, tax evasion must be tied to a financial transaction and is not related to international transmissions or stings.

What the Prosecution Has to Prove

To be found guilty of money laundering the prosecution must prove beyond a reasonable doubt that:

1. The defendant knew the funds were profits of illegal criminal activity; and
2. The defendant participated in a financial transaction of said funds; or
3. The defendant had intent to participate in a financial transaction of said funds; and
4. The funds were used for the promotion, concealment, or structuring of another illegal criminal activity; or
5. The funds were used for the purpose of evading or defeating established tax laws

If the prosecution proves these elements beyond a reasonable doubt the defendant will be found guilty. If the prosecution does not prove these elements beyond a reasonable doubt, then the defendant will be found not guilty.

Possible Defenses for Money Laundering

When formulating a defense against this charge there are a few strategies to keep in mind:

1. Proving that the defendant did not know the funds were coming from an illegal activity. One of the elements of this crime is that the defendant knew the funds were both coming from and used for illegal activity. If one can demonstrate with supporting evidence that the defendant was ignorant of this fact, they cannot be guilty.
2. Proving that the defendant did not have an intent to participate in a money laundering financial transaction. If one can prove with supporting evidence that the defendant did not have intent to complete the action or could not have completed the action, then they cannot be guilty.
3. Demonstrating a lack of evidence that the funds came from a crime. If one can prove that the funds did not come from an illegal activity, then it is not promotional money laundering.

Sentencing for Money Laundering

In addition to sentencing guidelines, judges also look at other factors when deciding sentencing including:

1. The defendant’s personal history
2. Criminal history or lack of one
3. The details of the crime

Generally, money laundering is punishable by no more than 20 years. Additionally, all funds are subject to seizure, the judge may impose a fine no greater than $500,000 or twice the value of the funds, and the government may claim forfeiture of all property in proximity to the criminal activity.

The Kushner Law Group has had years of experience defending and protecting the rights of our clients in both New York State and the Federal courts. We have won successful results on behalf of our clients and are here to help guide you through the prosecutorial process if you have been charged with any form of money laundering. To learn more about the Kushner Law Group please go to https://kushlawgroup.com/about-2/. Call us now for a free consultation at (718) 504-1440.