Although money laundering is a crime on its own, it usually accompanies some other criminal activity, as a way to hide the source of illicit funds. After criminal activity yields financial gains, individuals cannot simply deposit the cash in a regular bank account without raising suspicions. Instead, they will “wash” the funds to make them look like they are coming from a legitimate source, so they can be used just like any other funds.
Money laundering activity often involves financial crimes such as tax evasion, bribery, extortion, or fraud. It is also used to to hide other crimes, such as drug trafficking, or counterfeiting. Laundering activity can involve a number of small money transfers, or they can involve a complex worldwide network moving millions of dollars around at a time.
Obscuring the Source of the Money
When laundering money, individuals are looking to create space between the source of the money and the money itself. The funds to be laundered can come from any number of sources. This includes profits from trafficking, illegal gambling, tax evasion, insider trading, embezzlement, foreign corruption or forgery. Money laundering can also work to try and hide who money is being transferred to, for example, when money is funding criminal or terrorist organizations.
Money laundering does not only involve street criminals, gangs or corrupt politicians. Companies, businesses, banks and financial institutions may all play an active role in committing money laundering violations if they participate in the process of hiding the assets in other countries, to bypass U.S. regulations or avoid tax liability.
The process of laundering money usually involves three parts:
- Layering, and
In the first step, the launderer places money into a legitimate bank or financial institution, usually in the form of cash or a wire transfer.
Next, the money is layered, by sending it through a number of other financial transactions, mixing and shifting the money between different accounts, to different banks, in different account holders' names, across different countries, changing currency, withdrawing and redepositing the money to make the original source of the money much more difficult to trace.
Finally, the money is used in what would appear to be a legitimate transaction with a legitimate business. Once the money is legitimized, it can be used without being traced back to the original criminal source. The “dirty” money is now “clean.”
Money Laundering Investigations
Money laundering can be both a state, federal and international issue. Many agencies may be involved in investigating and prosecuting money laundering cases. Any federal agency that is involved in financial transactions may play a part in a money laundering investigation. This could include state law enforcement, the FBI, IRS, Immigration and Customs Enforcement (ICE), Department of Justice, DEA, or even Interpol.
Laundering investigations can be triggered by the investigation related to the underlying crime. For example, if an individual is arrested for a large drug transaction, investigators may try and trace the source and ultimate destination for the alleged drug money. It may lead them to a larger criminal organization conducting a complex money laundering scheme.
Money laundering can also lead to an investigation if a bank or financial organization reports a large transaction or suspicious transaction. Under the Bank Secrecy Act of 1970, banks, credit unions, and money services businesses (MSBs) like check-cashing companies, must report currency transactions involving more than $10,000. Multiple cash transactions that add up to $10,000 must also be reported. Currency exchanges of more than $1,000, and money transfers of $3,000 or more must also be reported.
If you or someone you know becomes aware of a financial crimes investigation, you may have a difficult decision to make. On one hand, cooperation with government investigators could resolve the issue. On the other hand, you may be exposing yourself to additional criminal liability, and end up prosecuted for criminal activity. Your federal criminal lawyer will be able to help you make these tough choices, and stand by you so that you do not end up on the other side of a jail cell. Your lawyer can communicate on your behalf, and negotiate with government investigators so that you don't face criminal liability.
Under 18 U.S. Code § 1956, whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct a financial transaction with those proceeds can be criminally charged with money laundering.
The person charged has to have the intent to promote the unlawful activity, or to evade taxes, or know that the transaction is designed to hide the source of the money or avoid reporting requirements.
It is not only those involved in the criminal activity who can be charged, but almost anyone along the laundering process involved in trying to conceal the nature of the proceeds, can be charged. Attempting to transport, transfer, or transmit funds in or out out of the United States, or even within the country is also a criminal offense.
The penalties for money laundering can include a fine of up to $500,000, or twice the value of the property involved in the money laundering transaction. In addition, an individual can face up to 20 years in prison for their part in the money laundering process. Civil penalties may also apply.
Prosecutors may charge each financial transaction as a separate and individual criminal count. If an individual involved in money laundering deposits money, makes a withdrawal, and then purchases an item with that money, they may be facing three separate counts of money laundering.
Money Laundering Legal Defenses
Money laundering cases can be inherently complicated, due to the nature of shifting and concealing the sources and amounts of money. Because of this, a completely innocent person could be caught up in a money laundering case. Or a person may have unwittingly played a role in a money laundering scheme, having no knowledge of what the financial transfers really entailed.
Possible defenses include the lack of intent to engage in promoting any specified unlawful activity, lack of intent to engage in tax fraud, or lack of knowledge that the transaction was designed to disguise the nature of the unlawful activity. A number of other legal defenses could be available, depending on the individual facts of the case. In the end, it is up to the prosecution to prove guilt beyond a reasonable doubt.
Your experienced federal criminal defense attorneys at Ayotte Carmichael Ellis & Brock, PLLC with a history of successfully defending their clients will be able to clarify the legal and factual issues at hand, and identify all of the elements required to prosecute a case of money laundering. With the possibility decades in prison, it is important to have the right lawyers on your side, who have experience successfully defending their clients charged with money laundering.