Money Laundering is the process of taking the proceeds of a criminal activity such as drug trafficking or illegal gambling and making them appear as legal.
Money laundering consists of three steps:
Placement: Placement is the depositing of funds in financial institutions or the conversion of cash into negotiable instruments such as cashier’s checks, money orders, or traveler’s checks. Placement of money into financial institutions is the most difficult because the Bank Secrecy Act of 1970 requires financial institutions to report deposits over $10,000 in a single day. Examples of Placement include: depositing bank accounts via tellers, ATMs, or night deposits; changing the currency to cashier’s checks, bankers drafts or other negotiable investment; exchanging small notes/bills for large notes/bills; smuggling or shipping cash outside the country.
Layering: Layering involves the wire transfer of funds through a series of accounts in an attempt to hide the fund’s true origins. Examples of Layering include: Sending funds to different onshore and offshore bank accounts; creating complex financial transactions; loans and borrowing against financial and non-financial assets; letters of credit, bank guarantees, financial instruments, etc.; investments and investment schemes; insurance products.
Integration: Integration involves the movement of layered funds, which are no longer traceable to their criminal origin, into the financial world, where they are mixed with funds of legitimate origin. Examples of Integration include: buying businesses; investing in luxury goods; buying commercial property; buying residential property.
To be criminally culpable under 18 U.S.C. § 1956(a)(1), a defendant must conduct or attempt to conduct a financial transaction, knowing that the property involved in the financial transaction represents the proceeds of any unlawful activity and the property must in fact be derived from a specified unlawful activity.
To prove a violation of § 1956(a)(1), the prosecutor must prove, either by direct or circumstantial evidence, that the defendant knew that the property involved was the proceeds of any felony under State, Federal or foreign law. The prosecutor need not show that the defendant knew the specific crime from which the proceeds were derived; the prosecutor must prove only that the defendant knew that the property was illegally derived in some way. See § 1956(c)(1).
The prosecutor must also prove that the defendant initiated or concluded, or participated in initiating or concluding, a financial transaction. A “transaction” is defined in § 1956(c)(3) as a purchase, sale, loan, pledge, gift, transfer, delivery, other disposition, and with respect to a financial institution, a deposit, withdrawal, transfer between accounts, loan, exchange of currency, extension of credit, purchase or sale safe-deposit box, or any other payment, transfer or delivery by, through or to a financial institution.
A “financial transaction” is defined in § 1956(c)(4) as a transaction which affects interstate or foreign commerce and: (1) involves the movement of funds by wire or by other means; (2) involves the use of a monetary instrument; or (3) involves the transfer of title to real property, a vehicle, a vessel or an aircraft; or (4) involves the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce.
The penalties for money laundering vary greatly depending on the circumstance and the amounts of funds involved. Penalties may also vary if the acts occurred in more than one jurisdiction. In addition to jail time, punishment for money laundering may include fines, restitution, and community service work.
If you have been charged with the crime of money laundering or have additional questions, please be sure to consult with an experienced local attorney near you such as the Criminal Defense Attorney San Francisco locals turn to.
Thanks to authors at The Morales Law Firm for their insight into Criminal Defense.