Federal Money Laundering
There are two statutes the Federal government uses to prosecute people for money laundering. These statutes are 18 U.S.C 1956 and 18 U.S.C 1957. They were both enacted to combat narcotic-trafficking organizations. The goal was to make it harder for members of these organizations to spend the money generated from illegal activity. So as a result of these statutes, not only could people be prosecuted for participating in the illegal drug trade, but they could also be independently prosecuted for laundering the money they generated from the illegal activity.
Today, U.S. Attorney's Offices across the country routinely prosecute individuals and organizations for money laundering in many more situations than in the context of the war on drugs. Prosecutions for money laundering often occur in the context of white-collar crimes. They even occur in situations where the underlying illegal activity is terrorism. Even a U.S. Representative got caught up in money laundering charges in the context of campaign financing.
To be found guilty of violating 18 U.S.C. 1956, the government needs to prove the following four elements. They need to prove:
- the person knowingly conducted or attempted to conduct a financial transaction;
- the person knew the property involved in that financial transaction was the proceed of some form of unlawful activity;
- the proceeds were actually from unlawful activity; and
- the person engaged in the financial transaction either (a) with the intent to promote the carrying on of specified unlawful activity, or (b) with the intent to engage in conduct which violates specific laws within the IRS Code, or (c) the person engaged in the transaction knowing the transaction is designed to conceal or disguise the source or ownership of the proceeds of the specified unlawful activity, or (d) the person knew the transaction was designed to avoid a transaction-reporting requirement under federal or state law.
To be found guilty of violating 18 U.S.C. 1957, the government needs to prove the following five elements. They need to prove:
- the person knowingly engaged in or attempted to engage in a monetary transaction;
- the person knew the transaction involved criminally derived property;
- the criminally derived property was of a value that exceeds $10,000;
- the criminally derived property was actually derived from a specified unlawful activity; and
- the monetary transaction either took place in the United States or the person is a "U.S. Person."
As you can see, these two charges are similar. The operative difference is that section 1956 covers "financial transactions" while section 1957 covers "monetary transactions." The legal definition of financial transactions is much broader than monetary transactions. Financial transactions encompass most transactions in life, whereas monetary transactions occur when a financial institution, like a bank, is involved. For a person to be guilty under section 1956, he needs to actually intend to launder the money for a specified purpose. However, with section 1957, he just needs to know the money is from an unlawful activity. The goal of section 1956 is to prohibit the actual act of laundering the money, whereas the goal of section 1957 is to criminalize the act of depositing this illegal money into a financial institution. These charges are often brought in conjunction when applicable. The significance of a money laundering accusation is that the person who is accused of laundering the money need not be accused of the underlying criminal activity to be guilty under either of these provisions.
Feel free to contact an experienced criminal defense attorney for a free consultation.