Money Laundering

Federal Money Laundering Prosecutions

In 1986, Congress passed the Anti-Drug Abuse Act. This law created the federal offense of money laundering. Money Laundering may be prosecuted under two different federal statutes; 18 U.S.C. §1956 or 18 U.S.C. §1957. Additionally, violations of the Mail Fraud or Wire Fraud statutes, 18 U.S.C. § 1341 and 18 U.S.C. §1343 respectively, constitute the specified unlawful activity which may form the basis for a prosecution under the Money Laundering statute. Furthermore, a conviction for Money Laundering has the potential for a more severe statute sentence than a conviction based only on the Mail Fraud or Wire Fraud statutes. Pursuant to 18 U.S.C. §§981 and 982, the government may seek civil or criminal forfeiture.

There are three distinct types of Money Laundering under 18 U.S.C. §1956. The first type of criminal conduct is referred to as domestic money laundering, the second is international money laundering, and the third involves an undercover “sting” money laundering investigation.

In a domestic money laundering scenario, a person must conduct, or attempt to conduct, a financial transaction knowing the property involved represents proceeds from an illegal activity, with one of the four listed intents. Additionally, the property involved must actually be derived from illegal activity.

18 U.S.C. §1956(c)(7) lists the forms of criminal activity from which the source of the funds must be derived. The RICO statute, 18 U.S.C. §1961(1) may also provide a source for the funds. Additionally, the government must prove the defendant initiated or concluded, or participated in initiating or concluding a financial transaction. 18 U.S.C. §1956(c)(3) defines a transaction as a purchase, sale, loan, pledge, gift, transfer, delivery, other disposition, and with respect to financial institution, a deposit, withdrawal, transfer between accounts, loan, exchange of currency, extension of credit, purchase or sale of a safe-deposit box, or any other payment, transfer or delivery by, through or to a financial institution.

A financial transaction is defined as a transaction affecting interstate or foreign commerce and involves the movement of funds by wire or other means, involve the use of monetary instrument, or involves the transfer of title to real property, a vehicle, a vessel or an aircraft, or involves the use of a financial institution which is engaged in, or the activities of which affect, commerce.

18 U.S.C. §1956(a)(2) prosecutions deal with monetary instruments or funds are transported, transmitted or transferred internationally, and the defendant acted with the requisite intent.

Both §1956(a)(2) and (a)(3) prosecutions require one of four specific intents. The intents include the intent to promote the carrying on of specified unlawful activity; the intent to engage in tax evasion or tax fraud; knowledge that the transaction was designed to conceal or disguise the nature, location, source, ownership or control of proceeds of the specified unlawful activity; or knowledge that the transaction was designed to avoid a transaction reporting requirement under State or Federal law.

Section 1953(a)(3) deals with undercover operations where the financial transaction involves property which is purportedly the proceeds of specified criminal activity. The distinction with Section 1953(a)(3) prosecutions is that the proceeds involved are actually undercover funds, and not derived from a real crime. The intent associated with this prosecution is slightly different.

18 U.S.C. §1956 convictions have a potential twenty year prison sentence as well as the possibility of a $500,000 fine, or twice the amount involved in the transactions, whichever is greater.

A prosecution under 18 U.S.C. §1957 consists of a defendant knowingly conducting a monetary transaction in criminally-derived property in an amount greater than $10,000, which is in fact proceeds of a specific criminal activity. The definition of a monetary transaction is the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument by, through, or to a financial transaction under section 1956(c)(4)(B). A conviction under §1957 carries a potential punishment of ten years in prison and a maximum fine of $250,000 or twice the value of the transaction.

Texas Money Laundering Prosecutions

The State of Texas also maintains a Money Laundering statute found at Section 34.02 of the Texas Penal Code. In Texas, a person commits the crime if the person knowingly acquires or maintains an interest in, conceals, possesses, transfers or transports the proceeds of criminal activity; conducts, supervises, or facilitates a transaction involving the proceeds of criminal activity; invests, expends, or receives, or offers to invest, expend, or receive, the proceeds of criminal activity or funds that the person believes are the proceeds of criminal activity; or finances or invests or intends to finance or invest funds that the person believes are intended to further the commission of criminal activity.

An conviction for Money Laundering in Texas State Courts range in punishment from a State Jail Felony if the amount is between $1500 and $20,000 to a First Degree Felony if the value is more than $200,000.

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