18 USC 1956, 18 USC 1957

Federal Money Laundering

Section 1956(a) defines three types of criminal conduct: domestic money laundering transactions, international money laundering transactions, and undercover “sting” money laundering transactions.

Domestic money laundering requires a person to conduct, or attempt to conduct, a financial transaction, knowing that the property involved in the financial transaction represents the proceeds of some unlawful activity.

The actual source of the funds related to the problematic financial transaction must be one of the specified forms of criminal activity, identified by statute in 18 U.S.C. section 1956(c)(7).

These include the following acts if committed in a foreign nation but where the financial transaction is in the United States:

  • The manufacture, importation, sale, or distribution of a controlled substance e.g. marijuana, methamphetamine, cocaine, or heroin.
  • Murder, kidnapping, robbery, extortion, destruction of property by means of explosive or fire, or a crime of violence
  • Fraud, or any scheme or attempt to defraud, by or against a foreign bank
  • Bribery of a public official, or the misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official
  • Smuggling or export control violations involving weapons, ammunition, or goods sensitive to national security
  • An offense with respect to which the United States would be obligated by a multilateral treaty, either to extradite the alleged offender or to submit the case for prosecution, if the offender were found within the territory of the United States
  • Trafficking in persons, selling or buying of children, sexual exploitation of children, or transporting, recruiting or harboring a person, including a child, for commercial sex acts e.g. human smuggling of children for a prostitution ring.

The following is a partial list of criminal acts, if committed in the United States, where a financial transaction to launder proceeds would create criminal liability:

  • Organized crime
  • Bank fraud
  • Mail fraud
  • Copyright infringement
  • Terrorism
  • Arms dealing
  • Smuggling of people and/or drugs
  • Illegal dumping
  • And others…

Consult a licensed criminal defense attorney to determine if your case is included in the above list or is considered a criminal act qualifying your financial transaction as money laundering. Only a licensed criminal defense attorney can adequately give you legal advice related to your individual circumstances.

What the Government Has to Prove

  1. To prove a violation of section 1956, the prosecutor must prove that you knew that the property involved was the proceeds of any felony under State, Federal or foreign law. The government does not have to prove that you knew the specific crime from which the proceeds were derived; the prosecutor must prove only that you knew that the proceeds were illegally derived in some way.
  2. The prosecutor must also prove that you initiated or concluded, or participated in initiating or concluding, a financial transaction. A “transaction” is defined in 18 U.S.C. 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. As you can imagine, this covers a wide range of conduct.
  3. A “financial transaction” is defined in 18 U.S.C. 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.

Before you can be found guilty, the government must prove that you acted with one of the following four specific intents, meaning your mind had one of the following purposes:

  • Intent to promote the carrying on of specified unlawful activity;
  • Intent to engage in tax evasion or tax fraud;
  • Knowledge that the transaction was designed to conceal or disguise the nature, location, source, ownership or control of proceeds of the specified unlawful activity;
  • Knowledge that the transaction was designed to avoid a transaction reporting requirement under State or Federal

Consult a licensed criminal defense attorney for a deeper explanation of the law cited above and to determine what your liability may be.

To reiterate, the offense arises when you use financial instruments to move, conceal, or legitimize the proceeds of criminal activity.

What Kinds of Activity is Prohibited?

  • If the transportation, transmission or transfer of the financial instrument was conducted with the intent to conceal the proceeds of specified unlawful activity or to avoid a bank reporting requirement, the government must show that you knew the monetary instrument or funds represented the proceeds of some form of unlawful activity. However, if the transportation, transmission or transfer is conducted with the intent to promote the carrying on of a listed crime, the government does not need to prove that the funds or monetary instruments were actually derived from any criminal activity. If you believed you were furthering a specified crime, then you can be guilty of money laundering.
  • For international money laundering, the transportation, transmission or transfer must cross the border — either originating or terminating in the United States. That term includes all means of transporting funds or monetary instruments, including wire or electronic funds transfers, and the transfer of currency, checks, money orders, bearer securities and negotiable instruments.
  • Undercover sting operations where the financial transaction involves property represented to be proceeds of specified unlawful activity. The proceeds in some of these cases are not actually derived from a real crime; they are undercover funds supplied by an authorized federal officer. What this means is that the funds don’t actually have to be derived from illegal activity, you only need to believe they were.

Penalties for Section 1956

Violations for money laundering under section 19567 have a maximum penalty of 20 years in federal prison and a $500,000 fine OR twice the amount involved in the transaction, whichever is greater.

There may also be civil penalties. Consult a licensed criminal defense attorney for more information about your unique case.

Section 1957

Prosecutions under 18 U.S.C. section 1957 arise when the defendant knowingly conducts a monetary transaction involving property in an amount greater than $10,000, which is in fact proceeds of a specified crime.

Section 1957 defines a monetary transaction as a:

  • Deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument
  • By, through, or to a financial institution (as defined in section 1956 of this title), including any transaction that would be a financial transaction under section 1956
  • Section 1957 carries a maximum penalty of 10 years in federal prison and maximum fine of $250,000 OR twice the value of the transaction. There is no civil penalty provision but consult a licensed criminal defense attorney to determine your liability.

The most significant difference from section 1956 prosecutions is the intent requirement. Under section 1957, intent has been replaced by a $10,000 threshold amount for each transaction, and the requirement that a financial institution be involved in the transaction. Although the government does not need to prove you intended to promote, conceal or avoid the reporting requirements, it still must show that you knew the property was derived from some criminal activity and that the funds were in fact derived from one of the specified crimes.

Conclusion

This is a complex, sensitive, and lengthy area of law. The punishments can be severe, and it is difficult to determine if charges for related offenses will follow. Consult a licensed criminal defense attorney to ensure that you are adequately advised of the details related to the facts and circumstances of your unique case.

Free Consultation

If you have recently been arrested for Money Laundering or related offense, please don’t hesitate to call us for a free, no-obligation consultation with Seppi Esfandi. During your call, Esfandi will hear the details of the case and advice you on the best approach to defend yourself. If you wish, a consultation in our office can be promptly scheduled.

Call Us for a FREE Case Review: 310-274-6529

Read our Client Reviews

Case Evaluation

We Respond Immediately

Call Now For a Free Case Review
Seppi Esfandi

© 2017 Law Offices of Seppi Esfandi | Seppi Esfandi Law Scholarship