The old adage “crime doesn’t pay” may be true as an overall principle; yet, as a practical matter, crime often does pay – sometimes it pays quite a lot. In fact, the Internal Revenue Service (IRS) has reported that crimes involving money represent the majority of criminal activity in the United States. Because money laundering is often a component of many financial crimes, it is important to understand the law and sentencing for money laundering.
What is Money Laundering?
It is an oft-repeated phrase, but “money laundering” is sometimes hard to conceptualize. Indeed, how does one “clean” or “launder” money? And why is it a crime?
Stripped to its essence, money laundering covers any activity whereby a person converts money from criminal activity into money that appears to be from a legal source. Stated differently, money laundering is “cleaning” money to remove its illegal, or “dirty,” origin. Let’s look at an example to better understand the process.
Drug traffickers often need to employ money laundering to hide the fact that the cash they receive is from an illegal drug deal. Thus, a drug trafficker may take the large amount of cash from illegal drug transactions and purchase a number of gift cards. Then, those cards are used to buy expensive electronic equipment, jewelry, and other items that are relatively easy to sell. In recent years, iTunes gift cards have also been used in this capacity.
The drug trafficker then sells the items to buyers, which are legal transactions. The money from those legal transactions is then often deposited into a bank account. The drug trafficker may move on to use the money in the bank to buy real estate or expensive automobiles in legal transactions. With each subsequent legal transaction, it becomes harder and harder for law enforcement to trace the money back to its illegal source. This is why these money laundering techniques are employed.
Why is Money Laundering Illegal?
Because there is typically an original criminal act that generates the ill-gotten money, you may wonder why money laundering is illegal. The answer is rather simple. It is illegal because it is the act of hiding an illegal transaction.
It is similar to someone hiding a criminal in his home when the police are looking for him. After the fact, you are helping impede law enforcement from apprehending a person who committed a crime. In the same way, the act of money laundering is a way of hiding a crime, whether it is drug dealing, theft, or embezzlement.
Specifically, federal law views three types of money laundering activity:
- Using Illegal Money in Subsequent Transactions. Representing proceeds from criminal activity as legitimate in order to hide the illegal source of the funds is a form of money laundering.
- Transporting Funds. It is also money laundering to transport, transmit or transfer money or monetary instruments through the country to promote the original illegal activity or otherwise hide the money’s illegal source. In fact, being caught transporting huge amounts of cash could form the basis for a money laundering charge.
- False Statements. Lying about the source of funds in disclosures to banks or other institutions to, again, hide the illegal source of the funds, or avoid reporting requirements, is also money laundering.
The main statute used to charge money laundering in federal court is the Money Laundering Control Act of 1986, which consists of two sections: 18 U.S.C. § 1956 and § 1957. Section 1956 makes it a crime for individuals to engage in a financial transaction with proceeds that come from certain specific crimes, including drug distribution, murder, fraud, and bribery. Moreover, the law requires that the individual had the intent to disguise the source, ownership, location, or control of the money.
Section 1957, often called the “money spending statute,” makes it illegal to engage in a financial transaction in excess of $10,000, where the money was derived from unlawful activity. Notably, in contrast to section 1956, there is no intent-to-conceal requirement.
What is the Sentencing for Money Laundering?
In general, the maximum sentencing for money laundering can be a prison sentence of 20 years. Further, the maximum fine for a money laundering charge is $500,000. That said, the penalties for money laundering may vary based upon the amount of money involved in the crime.
It is important to note that the 20-year and $500,000 maximums are for one count of money laundering. If you engaged in a number of transactions with ill-gotten gains, then each transaction will be a separate count in a criminal indictment. So, if the federal government charges you with 12 counts of money laundering, then the maximum could be 240 years in prison, and $6 million in fines.
Moreover, money laundering is typically charged alongside the underlying crime that generated the ill-gotten gains. For example, if a drug deal resulted in a large amount of cash, which was then moved in a way to conceal the money’s source, then you are looking at charges for the drug distribution as well as money laundering. Penalties may be separate for each crime.
To learn more about federal criminal sentencing, please read our federal sentencing process article.
Defenses to Money Laundering.
While the sentencing for money laundering is significant, a seasoned money laundering defense attorney will be able to help you minimize, or even eliminate that exposure.
Significantly, the intent to conceal is a required element of money laundering under 18 U.S.C. § 1956. Therefore, if you lack the intent to conceal the source of funds, you cannot be proven guilty of money laundering. Many times, people who deal with large sums of money in their jobs (such as bankers or accountants) may be caught in such case, but had no intent to conceal the source of funds. Accordingly, such a lack of intent is a defense to money laundering.
In that vein, duress could also be a defense to money laundering. If you believed you or your family would be put in danger if you refused to participate in a money laundering scheme, then that may also serve as a defense to money laundering.
In short, the best way to challenge a money laundering charge, and avoid the sentencing for money laundering, is to retain the services of a top-notch money laundering criminal defense attorney. In that regard, we welcome you to contact Brandon Sample, Esq. Attorney, author, expert sentencing advocate, and activist, Brandon Sample will provide you with the highest quality legal representation. Call 802-444-HELP to learn more about what Brandon can do to help you defend a money laundering case in court. Call today.