Tax evasion money laundering is the simplest form of money laundering. The statutes for this offense can be found in 18 U.S. Code § 1956. Tax evasion in the form of money laundering 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.
As with all money laundering crimes, the tax evasion element requires that the defendant be knowing and have participated or attempted a transaction. In this instance knowing means that the defendant is aware that both the source of the funds and its destination are related to illegal activity. The defendant need not know the exact activity if they are aware it is illegal. However, 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.
Financial Transactions Element Explained
The statutes for tax evasion money laundering offense can be found in the financial transactions portion of 18 U.S. Code § 1956 which reads:
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)(ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986The simplest way to understand financial transactions is to break it down into its two elements, that they be financial, and that they be transactions. So, for a promotional money laundering offense to be a financial transaction it must have funds involved, and it must contain 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.
The best way to understand what a financial transaction is, is to break it down into its two elements, that it be financial, and that it be a transaction. So, for a tax evasion money laundering offense to be a financial transaction it must have funds involved, and it must contain 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 laws. This is because the funds must come from a crime within the category of predicate criminal offenses.
What the Prosecution Has to Prove
To be found guilty of a tax evasion money laundering offenses 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 purpose of which is evading or beating tax laws under 26 U.S.C. §7201 or §7206.
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 Tax Evasion as a Money Laundering Offense
When formulating a defense against Tax Evasion Money Laundering, 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 a defendant can prove with supporting evidence that he or she 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 money laundering.
Sentencing for Tax Evasion as a Money Laundering Offense
In addition to sentencing guidelines, judges also look at other factors when deciding sentencing including:
1. The defendant’s personal history and details of his/her life
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 garnered successful results on behalf of our clients and are here to help guide you through the prosecutorial process. To learn more about the Kushner Law Group, please click here. If you have been charged with any form of money laundering, call us now for a free consultation at (718) 504-1440.
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