Money Laundering Charges
Money laundering charges can be serious and complex. We can help.
What is money laundering? Money laundering refers to financial transactions that involve money obtained through criminal activity. Usually, the purpose of a money laundering transaction is to take money earned through illegal activity and make it appear legitimate. It is called “laundering” because it is a process where someone is attempting to take “dirty” money and make it “clean.”
Money laundering occurs whenever money earned through illegal activity is deposited in a bank or other financial institution. Money laundering also occurs wherever illegally obtained money is spent in a way that helps promote or conceal the illegal activity.
In this video, Page Pate explains the different types of money laundering charges under federal law. Page also shows how our firm uses creative legal defenses to effectively respond to money laundering charges in court.
I’ve represented well over 100 people who were facing money laundering charges in federal court. Now, money laundering can be a complicated type of an offense, so I thought it might be helpful to walk through the basics, “What is money laundering, and what type of defenses have we used in the past to win these cases?” Well, to begin with, what is money laundering? Well, to put it simply, it’s taking dirty money, money from criminal activity, and making it clean, making it appear to be legitimate. And so it can be something as simple as taking money that was made from a drug transaction and depositing it into a checking account. That is technically money laundering.
Now, in federal court, we see money laundering charges usually in cases involving some type of underlying financial crime. It can be a drug crime. It can also be a fraud or embezzlement crime. It can be a racketeering/RICO Act-type of crime. Basically, any crime where the person is alleged to have made money, you’re going to see the federal government add money laundering charges to that case, and there’s a good reason for that. In addition to trying to make the person face additional criminal penalties, the government wants to get that money. So they use the money laundering charges as a way to convince a judge, even before the case goes to trial, to let the government seize the money and eventually try to keep it.
Now, there are various types of money laundering charges under federal law. The most common falls under 18 U.S.C. Section 1956. That’s the one that we see most of the time. Now, this is a serious crime. It carries up to 20 years in prison for someone who is convicted. Let’s go through the elements. The first element is that this must involve a financial transaction. And that means you take the money and you go to a bank, or you take the money and you go buy a car, go buy some jewelry. Anything that you do with that money where you’re exchanging it for goods, services, or trying to put it in a bank account is a financial transaction. What is not a financial transaction is if you take that money, give it to someone to hold for you, and all they do is put it in their bedroom or under the mattress. Even though that may be dirty money, it’s not money laundering because there’s no financial transaction.
The second element is that the money must be from a particular crime. It has to be dirty money. Now, the money laundering statute gives a list of different types of crimes that must be involved for the money to be money subject to a money laundering charge, but it’s a long list. So almost any type of federal crime where the person is alleged to have made some money can be the basis for a money laundering charge, as long as the money actually comes from the crime. And of course, the person who’s being charged with money laundering has to know that. They have to know that the money that they’re taking, receiving, or using in some way comes from some type of criminal activity.
And finally, for this type of money laundering offense, the money has to be used or a particular purpose. In other words, you’re taking the money, putting it into a bank account or buying something with it for the purpose of promoting the underlying crime, trying to conceal it, or trying to avoid a reporting requirement, taking the money and dividing it up into less than $10,000, which is a structuring crime and certainly can also be money laundering. But there’s another type of money laundering offense, and that’s found in 18 U.S.C. Section 1957. Also, a very serious crime, but the maximum is 10 years instead of 20 years and the elements are a little different.
First of all, it has to involve a monetary transaction. That’s a little bit different from the other money laundering crime. For this particular crime, the money has to involve a financial institution, a bank, an investment company, securities. You have to actually take the money and give it to some type of financial institution to be guilty of this type of money laundering offense. And there’s a threshold amount. The amount of the transaction has to be more than $10,000. But like the other money laundering charge, the money, of course, has to come from criminal activity and the person has to know that the money is dirty.
Now, there are other types of money laundering charges that kind of fall under these two laws. The first is international money laundering, and that’s basically money laundering that involves the movement of the money from one country to another, some type of international transaction. It can be from the United States to, say, Europe or Asia. Or it can simply involve the United States. Even if the money is moving between two foreign countries, if the United States is somehow involved in that transaction or someone in the United States is involved, then it can qualify for this type of money laundering. What’s interesting about international money laundering is that the money doesn’t actually have to come from a crime. As long as the person is trying to further the criminal activity that they may be involved with, even if the money is otherwise clean, they can be charged and convicted of international money laundering.
Now, we also see a lot of money laundering sting operations. Especially now, I’m seeing more and more of these cases being charged in federal court. Now, obviously, this involves an undercover operation by government agents and we see it two different ways. Either the government will set up some type of business, where they try to convince people to give them dirty money and then charge them with money laundering. Or they will act like they’re criminals, like they’re drug dealers or they’ve committed fraud, and they’ll go out to professionals, people in the community, accountants, merchants, financial advisors, even lawyers, and try to convince them to take money that is dirty.
Now, of course, in a sting operation, the money is not really dirty at all. It’s usually money that’s coming from the government. They’re just pretending that it’s dirty. The key thing, though, is that the person who’s being charged has to think that this money is from a crime, has to think that the money is actually dirty. And the government has a variety of different ways to try to make those suggestions without actually saying the money comes from a crime.
Now, you can also have money laundering conspiracy charges, and that’s basically money laundering, but it involves an agreement between two or more people. What’s interesting about a conspiracy, though, is you never have to take the money to a bank or you never have to actually engage in a transaction. What’s being punished here is the agreement to commit this unlawful act. So even if someone never sees dirty money but they know that there’s an attempt to do something with that dirty money, even if they played a very small role, they can be charged in a money laundering conspiracy.
Now, of course, like any federal case, there are defenses to this type of charge and we’ve used several of these successfully in other cases. The first offense is that the case doesn’t involve a monetary or financial transaction. A great example of this is, say, someone goes to a bank, robs the bank, ends up with a sackful of cash. They take the cash to a friend and say, “Hey, I need you to hide this for me. Go put it out back somewhere.” The other person takes the money, ti’s dirty money clearly, and then they go do something with it, they hide it, they conceal it, but they don’t take it to a bank, they don’t spend it. There’s been no monetary or financial transaction, so that’s not a money laundering case.
An obvious defense is that the money isn’t dirty. You see that in two ways. Either someone’s been involved or charged with being involved in a criminal activity and they’re using money in connection with that case, but the money came from some other source. It wasn’t directly from the criminal activity that was the basis of the case. We mostly see, though, this type of defense, and we used it successfully last month in fraud cases. The government says, “Okay, this person’s engaging in an illegal, fraudulent activity. So any money that they make and spend or use, deposit, has to be money laundering. Well, if you can show that the underlying activity wasn’t fraud to begin with, then the money is not dirty and there’s no money laundering.
You can also defend these charges even when you have dirty money. The money is clearly from a criminal activity, but the person being charged doesn’t know that. A good example of that is a merchant, say, a jeweler or someone who sells cars. And somebody’s got some dirty money, they go to these folks, they buy stuff from them, but the people selling the merchandise, the jewelry, the cars, they don’t know that the money is from an unlawful source. They may have some suggestions, they may have some suspicions, but the government has to show that they knew the money came from criminal activity.
Now, in 1956, that first money laundering charge we talked about, there’s this additional element that the government has to show that not just is the money from a crime, but that the transaction that’s taking place is for a particular purpose. You’re either trying to promote the unlawful activity, conceal it, or to avoid reporting requirements. If the government can’t show that, then that’s a good defense to a 1956 money laundering charge. And finally, if there is an undercover sting operation, you always want to consider an entrapment defense. Did the government go too far? Did they try to push this person to take money that the person really wasn’t interested in taking? Or were they so unclear about the source of the money that the person has a legitimate defense that they had no idea that the money was from any type of crime?
So there are a lot of defenses to money laundering charges. These are very serious charges, very complicated charges. If you’re going through it or know someone who is, you probably have questions. If you have questions, hopefully, we can have some answers. So give us a call and we will do our best to help
Money laundering laws cover both domestic and international financial transactions. International money laundering cases are usually focused on the purpose of the financial transaction. Even a transaction with “clean” money can be the basis of an international money laundering charge if the money is being used to promote a particular crime.
There are two federal criminal laws that specifically address money laundering. The first law (18 U.S.C. §1956) makes it a crime for any person to engage in a financial transaction with money that was obtained from criminal activity with the intent to try and promote the criminal activity or conceal it. The second law (18 U.S.C. §1957) makes it a crime for a person to engage in a monetary transaction in an amount greater than $10,000, knowing that the money was obtained through criminal activity.
Rarely is someone charged with just a money laundering offense. We usually see money laundering charges brought in cases where someone is being accused of drug conspiracy, mail and wire fraud, racketeering (RICO), or some other financially motivated crime.
The government can also use undercover “sting” operations to investigate and prosecute money laundering offenses where the money is not actually “dirty money.” In these “sting” operations, an undercover agent can say that the money is “dirty” even if it is clearly not.
In addition to these crimes, federal law also makes it illegal to enter into an agreement to commit money laundering. Money laundering conspiracy charges are often brought against people who have only played a small role in the alleged criminal activity. In order to prove that someone is part of a money laundering conspiracy, the government must show that there was an agreement to launder money and that the person knew about the agreement and wanted to join in it. The government does not have to prove that the person actually handled the money or did anything specific to assist the money laundering offense.
Money laundering is a serious crime under federal law. A violation of 18 U.S.C. §1956 can result in a sentence of up to 20 years in prison. A violation of 18 U.S.C. §1957 can result in a sentence of up to 10 years in prison. As with most federal financial crimes, the exact sentence will be determined primarily by the amount of money involved in the offense.
Read more about our firm’s success in federal criminal cases.
To learn about what happens in a federal criminal case, watch our federal crimes video.
If you want to know how to get the lowest possible sentence in federal court, watch our video on the Federal Sentencing Guidelines.
Defenses against Money Laundering Charges
In any money laundering case, other than an undercover “sting” operation, the government must prove that the money was in fact derived from a specific criminal activity under federal law. The government must also prove that the person being charged was aware that the money had been obtained from criminal activity.
While the government does not have to prove that the person was aware of the specific crime involved, the government must show that the facts and circumstances of the case would be enough to lead a reasonable person to conclude that the money included the proceeds of illegal activity. A person is not guilty of money laundering if they simply accept money without knowing that the money was obtained through criminal activity.
To convict someone of money laundering, the government must also show that there was a monetary or financial transaction involved. This generally means that the government would have to show that the person did something with the money other than put it in a safe or their closet. Depositing the money in a bank or spending the money in any way that helps promote or conceal criminal activities would normally be enough to show that a financial transaction was involved.
Of course, in any case other than an undercover “sting” operation, the government must show that the money involved in the case actually came from the commission of one of a list of specific crimes covered by federal law. If the money was not derived from one of these specific criminal activities, there can be no money laundering conviction regardless of how the person obtained the money or what the person did with it.
Current trends in money laundering cases
A recent indictment in the U.S. District Court for the Southern District of Georgia targeted an international money laundering, drug trafficking and illegal wildlife trade conspiracy.
FBI and FinCEN increased focus on possible money laundering transactions during the COVID-19 pandemic due to concerns for fraud with new relief funds available and banks flagging normal financial activity as suspicious when much activity either stopped or significantly reduced.
Medical and recreational marijuana use is legal in many states but concerns from banks they will violate federal anti-money laundering laws make banking services unavailable. New laws introduced in the latest Coronavirus legislation will amend the SAFE Banking Act to provide legal access to financial services for marijuana related businesses.
If You Need Help, Call Us
Federal money laundering laws can be incredibly complicated and tricky. For over 20 years, our firm has helped clients fight money laundering charges in federal courts across the United States and in several foreign countries.
While most of our clients contact us as soon as they think they may be a target of a federal money laundering investigation, we are also frequently hired by people when they have become dissatisfied with their current lawyer because the lawyer is either not very experienced in federal money laundering cases, or the lawyer has not been giving the client the time and attention he or she deserves. When we are hired in this situation, we can either assist the client’s current lawyer or take over the case completely, depending on what is best for the particular client.
We also help people who may be experiencing the stress of a federal criminal case for the first time and would like a “second opinion” about the strength of the government’s case. We can share our expertise in federal money laundering cases with the client and the client’s current lawyer and help them make what is often a life-changing decision about accepting a proposed plea agreement or taking the case to trial.
In addition to helping our clients win favorable resolutions or “not guilty” verdicts in federal money laundering cases, we also assist clients in federal criminal appeals, sentencing hearings and grand jury investigations involving related allegations.
If you or someone you know is currently facing money laundering charges in federal court, give us a call and we will let you know if we can help.
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