Money Laundering

Federal Crime of Money Laundering – 18 U.S.C. § 1956

The laundering of monetary instruments, known as "money laundering," is a federal crime that involves concealing or disguising the source of illegally obtained money.

This federal offense is defined in Title 18 U.S. Code 1956, making it illegal for anyone to conduct financial transactions with proceeds from specified unlawful activities, such as drug trafficking and fraud.

18 U.S.C. § 1956 says, “Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which involves the proceeds of specified unlawful activity…”

It's known as the Money Laundering Control Act of 1986. Simply put, the crime of money laundering is making money appear as if it came from a legitimate source, but it's the product of unlawful conduct.

Federal law prohibits two forms of money laundering, including conducting a financial transaction with money obtained from illegal activity with the intent to promote unlawful activity or conceal the money's illegal source.

Money laundering is a crime that the federal government has enacted to prevent people from attempting to use ill-gotten gains from drug proceeds or some other crime committed and to launder that money through their account or another business account to hide it from the government.

The money involved can be generated by any number of criminal acts, including drug dealing, corruption, accounting and other types of fraud, and tax evasion. The methods by which money may be laundered are varied and can range in sophistication from simple to complex.

There is no minimum threshold of money, nor is there the requirement that the transaction succeeds in disguising the money. Merely passing money from one person to another, so long as there is intent to disguise the source, ownership, location, or control of the money, is considered a financial transaction under the law. 

And suppose people hide their money through legitimate accounts without reporting it to the federal government. In that case, the federal government will come in and attempt to prosecute those people, take that money, and find the involved individuals. 

A lot of time, the federal government doesn't have it right, and the person charged with federal money laundering under 18 U.S.C. § 1956 and 1957 has not done anything illegal, is not in an unlawful business, and is not attempting to hide money.

All these crimes at the federal level, including money laundering, require some guilty knowledge.  If the person who is involved in the criminal case had no intent to defraud the government, had no intent to hide the money, and had no intent not to pay their taxes on the money, then they really shouldn't be prosecuted for it.

What Is Money Laundering?

The definition of money laundering under 18 U.S.C. 1956 and 1957 is knowingly concealing sources of money that were obtained unlawfully. There are three steps in a money laundering process: placement, layering, and integration.

18 U.S.C. 1956 specifies three specific areas where any money laundering activities mentioned above constitute a federal crime, including: 

  • Domestic money laundering defined under 18 U.S.C. 1956(a)(1);.
  • International money laundering defined under 18 U.S.C. 1956(a)(2);
  • Money laundering stings defined under U.S.C. 1956(a)(3). 

The standard definition of money laundering involves taking proceeds from illegal activity and putting them through a series of transactions to hide their source. This is accomplished by transferring money between different accounts, using false identities, or even breaking up large sums into smaller amounts to avoid detection. The primary goal is to make it appear the funds came from a legitimate source.

Money laundering occurs when a person illegally wires money and then tries to cloak that money so that the federal government can't track or tax it. There are several forms of money laundering. Since laundering money prevents the federal government from taxing that money, they lose money due to it and therefore consider it a grave crime.

What Are the Penalties for 18 U.S.C. 1956?

The federal sentencing guidelines for money laundering are used nationwide and help guide judges in determining the sentence for a particular crime. However, case law allows judges to impose more or less severe penalties than the guidelines indicate. 

If convicted of money laundering under 18 U.S.C. 1956, you will likely face significant penalties, including: 

  • A fine of up to $500,000, or twice the value of the property involved in the money laundering, whichever is greater, and
  • Up to 20 years in federal prison.

A base-level offense is attached in all instances of money laundering. Still, the ultimate sentence will depend on several factors, such as the amount of money involved, whether the defendant accepts responsibility for the crime, and whether they have a prior criminal record.

There is typically a statute of limitations on money laundering charges under federal law, but it only applies once the federal government finds out about the illegal activity. After that, the government is permitted to conduct investigations for a couple of years as long as they can justify why that's necessary.

The defense can defend themselves by locating witnesses and obtaining evidence. In addition, certain motions can be filed to posit that the government has delayed prosecution, but the federal government is usually given a reasonable amount of time to investigate.

What Are the Legal Defenses?

One of the most effective defenses in these cases is that you were not attempting to do anything illegal and that the money gained was not from an illegal source.  Instead, the money is from legitimate funds; therefore, the government should not seize the money, should not be forfeited, and shouldn't be criminally prosecuted.

What it's going to boil down to is whether they can indeed prove that you have, number one – got money from an illegitimate source, and number two- whether or not you're trying to launder that money through an account and hide it from the government –  hide its source as being a bad source and attempting to do something so you don't have to pay your taxes.

That's where I see many of these money laundering cases: people try to avoid paying taxes on the money they're moving through their accounts. They also try to avoid showing the government they're involved in something illegal.

There are all sorts of different schemes.  You can't even begin to imagine the various schemes that people had come up with to try to make money – to try to hide money from the government, and ultimately if the government gets you for federal money laundering, you've got a lot of trouble. 

We're going to try to get the money paid back so the government is made whole, and if we can get the money paid back, then we're obviously in a much stronger position.  If, on the other hand, they don't have the goods on you, they can't prove the case to you, and you didn't do anything wrong, then obviously, you shouldn't have to swallow a federal conviction.

Strategies for Defending Federal Money Laundering Charges

Those people charged federally with money laundering face prison, and they need an attorney on their side immediately.  This offense usually involves someone who is misusing money or a bank. 

We need to have you come into my office, sit down and we'll go over the facts and circumstances surrounding your case and determine whether or not you did anything wrong. 

That's the first thing you want to do when you're charged with a federal money laundering case – figure out whether or not you committed any crime.  If you determine that you did commit a crime, you need to hire an attorney with much experience dealing with these types of cases. 

We must break the case down and go over the specific facts.  What did you do wrong?  Let's also look at precisely what you've claimed to have done wrong and see if the elements of a money laundering charge comply with the allegations you're charged with.

We'll go over all of the specific facts and details. Then, we'll discuss what they claim you did wrong and see if the prosecutors can prove the case against you.  If they can't prove the case, we will set the case for trial, fight it, and get a not-guilty verdict.

If, on the other hand, they've got the evidence that you've committed a federal crime and that you laundered money, then we're going to work out some resolution that takes into account your freedom, your reputation, your criminal record, and a host of other things that are important to you. 

That's the benefit of hiring a lawyer that has much experience, that has handled cases just like yours, and who knows how to deal with a federal money laundering charge. I've defended money laundering cases at the federal level for over 30 years. So pick up the phone now.  Ask for a meeting with Ron Hedding.  I stand at the ready to help you.

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