If you are facing prosecution in Federal court – whether for trafficking cocaine, conspiracy, fraud, or other offense, you are likely facing additional charges for money laundering. As a money laundering defense attorney, I help clients defend against such charges and even recover assets – depending on the circumstances.
Money laundering is actually a very easy concept to understand. Explained simply, money laundering occurs when a person takes steps to conceal the fact that his/her money was earned from criminal conduct. It is referred to as money “laundering” because the crime concerns “cleaning” the illegal nature of the money and making it appear as though the money was earned legitimately.
For obvious reasons, it is simply not possible to walk into a bank and deposit the proceeds of criminal conduct. This is especially so when those proceeds come in the form of cash, as they do when a person is involved in drug trafficking.
In order to disguise the illegal nature of such money, those engaged in criminal enterprises will filter their money through a number of different transactions to accomplish two goals. First, to make it appear as though the money was earned legitimately. Second, to make it difficult for auditors and investigators to determine the true source of the income.
For example, a trafficker may buy gift cards with cash he earned from selling drugs. He will then use the gift cards to purchase goods, such as electronics, jewelry, or other items that can be sold. The drug dealer will then sell the items to legitimate purchasers in legitimate transactions and deposit the proceeds in the bank account of a shell corporation or a front company.
He will then use the funds in the bank account to purchase real property in another country. Thereafter, the drug dealer will use the real property to secure a loan and then default on the loan. While the real property may get repossesed by the lender, the money he was loaned will be deposited into yet another bank account where he will make personal use of the funds.
By adding complex layers of legitimate transactions, the drug dealer uses an inherent weakness in the financial system to foil attempts by auditors and investigators who wish to trace the source income of any one transaction.
The idea is to split the money up and keep it moving.
While the above example is an extremely simplified version of what happens in the real world, it important to recognize how utterly complex things can become when a money launderer makes countless transactions using multiple currencies, accounts in correspondent banks, investments, purchases of valuable goods and property, and financial instruments like loans and life insurance in a whirlwind of transactions that span several countries, shell corporations, offshore banks, investment houses, and insurance companies, just to name a few.
The most successful money launderers spin such a complex web of fractionalized and diverse transactions that it is virtually impossible to trace the source of the money to its point of criminal origin.
Frankly, the way they manipulate the financial system is utterly brilliant.
Money Laundering as a Tool for Law Enforcement
While money laundering can be charged by itself as a stand alone offense, it is usually filed in conjunction with other crimes. As a money laundering defense attorney, I can tell you such charges are very common and are filed in a number of different types of cases – most of which have nothing to do with each other. Most commonly, money laundering charges are filed in Federal court by the U.S. Attorney’s Office, but they can also be filed in state court by the State Attorney’s Office. The following case types are most frequently accompanied by money laundering charges:
- Bank Fraud
- Credit Card Fraud
- Drug Offenses
- Identity Theft
- Mortgage Fraud
- RICO Cases
- Securities Fraud
- Structuring
- Tax Evasion
- Transaction Reports (CTR)
Under U.S. Federal law, money laundering is broken down into three main categories (see 18 USC §1956). They are as follows:
1) A person commits the crime of money laundering when they conduct or attempt to conduct a financial transaction involving proceeds that the know were earned from unlawful activity and which are actually the proceeds of unlawful activity, to:
- Intentionally promote the underlying unlawful activity, or
- Evade the payment of taxes, or
- Present fraudulent tax returns, or
- Knowingly conceal or disguise the nature, source, ownership,
- location, or control of the proceeds, or
- Knowingly avoid financial transaction reporting requirements
2) A person commits the crime of money laundering when he/she transports, transmits, or transfers (or attempts to transport, transmit, or transfer) any monetary instrument or funds from the United States to a foreign location or from a foreign location into the United States, for the purpose of:
- Intentionally promoting the underlying unlawful activity, or
- Knowingly conceal or disguise the nature, source, ownership,
- location, or control of the proceeds, or
- Knowingly avoiding financial transaction reporting requirements
3) A person commits the crime of money laundering when he/she conducts or attempts to conduct any financial transaction involving illegally earned proceeds or property used to facilitate the underlying illegal activity to intentionally:
- Promote the underlying illegal activity, or
- Knowingly conceal or disguise the nature, source, ownership,
- location, or control of the proceeds, or
- Knowingly avoiding financial transaction reporting requirements
Put simply, when a person takes steps to make illegally earned money look as though it was earned lawfully or to hide it from the Government, they commit the crime of money laundering. In fact, that’s where the name “laundering” comes from… you are in essence cleaning the money of its criminal stain.
Penalties for Money Laundering
Money laundering is punishable by up to 20 years in prison, a $500,000 fine or two times the value of the proceeds laundered (whichever is more), or a combination of prison and fines – per count. It is important to understand that these penalties can be exacted for each and every count of money laundering which a person is charged with.
For example, if you did an act of money laundering at the end of every month for two years, you could be charged with 24 counts of money laundering and be exposed to 480 years in prison and $12,000,000 in fines.
Money laundering is a crime that is taken very seriously by American law enforcement because it is a very effective tool for fighting crime. That is why hiring the right money laundering defense attorney is so crucial. Even though money laundering may be prosecuted as a secondary offense to trafficking cocaine, fraud, or whatever, it is still a serious threat.
When law enforcement targets someone for prosecution, they not only go for the crime itself, but for the financials as well. By taking away the profit of crime, they enhance the deterrent effect of law enforcement. Furthermore, it would make no sense to allow people to keep the proceeds of illegal activity.
By making money laundering a crime, American law empowers its law enforcement arsenal with another means for combating criminal activity.