"Money Laundering" generally refers to the crime of taking illegal money (the proceeds of a crime -- "dirty" money) and making it appear to be legal, or "clean." Frequently this is done by moving money from the cash economy to the banking economy. For example, drug dealers get cash for their product. Large quantities of cash are hard to spend. The drug dealers want to get the cash into banks so that it can be used to buy expensive things and be moved overseas. The people who move the cash into banks are the money launderers.

Money laundering is prohibited by Title 18 of the United States Code, sections 1956 and 1957 (18 USC §§ 1956, 1957).

Section 1956 forbids:

conducting financial transactions or transferring or transporting money if the money is the proceeds of a specified unlawful activity; and

if you know that the money involved is dirty, and

• if you intend to promote the illegal activity, or
• if you know that the transaction is designed to conceal the source of the money; or
• if you know that the transaction is designed to avoid a transaction reporting requirement.

The maximum penalty for violating section 1956 is 20 years in prison.

Section 1957 forbids knowingly engaging in monetary transactions "in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity." (Although it makes no sense, this is really what it says.) The maximum penalty is 10 years in prison. For example, if you knowingly deposit $11,000 in dirty money in the bank, and the money happens to be drug money, you violate section 1957.

"Specified unlawful activity" means any one of myriad crimes -- just about any crime. See the list in section 1956.

The money laundering statutes were written with racketeering and drug crimes in mind. Sentences for money laundering under the sentencing guidelines are severe. U.S. Attorneys sometimes charge people with money laundering in, for example, fraud cases where proceeds of the fraud were used to pay participants in the fraud, because the penalty for money laundering is harsher than the penalty for fraud. This probably satisfies the law's letter, but not its spirit.

The most common defense at trial to a money-laundering case is that the defendant did not know that the money was the proceeds of some illegal activity. The government will use circumstantial evidence ("he must have known, because these transactions were so unusual") and, often, coconspirator testimony to try to convince the jury that the defendant did in fact know.

This page is a work in progress. If you'd like to discuss a Federal money-laundering case, please contact me

--

Mark.