The Difference Between Money Laundering and Embezzlement

July 11, 2022 by Seppi Esfandi in California  Federal Crime  
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White Collar Crimes involving Money

Both money laundering and embezzlement involve hiding money which is why in some cases they are often confused with each other.

However, the only thing that these two crimes have in common is that they are both considered white-collar crimes.

Let us take a closer look at the differences between these two crimes:

What Is Money Laundering?

When someone earns money using illegal means, they cannot simply go to the bank and deposit their money in the bank. This will raise questions, like how the individual earns their money and likely bring in the issue of taxes and tax evasion. This means that person will receive more attention, which may bring to light the illegal activities he is involved in.

This is a huge problem for most individuals involved in criminal activities such as drug or sex trafficking. These businesses usually earn huge amounts of money that need to be concealed to avoid attracting unnecessary attention to criminal activities. This is where money laundering comes in.

Money laundering is the process of making money earned through an illegal source and making it look like it came from legitimate means. The main purpose of money laundering is to wash the dirty money obtained from criminal activities through legal businesses or any other legal means so it no longer has any connections to illegitimate means used to acquire it. Thus, allowing the owner to use it without worrying about attracting the interest of law enforcement.

How Does Money Laundering Work?

Normally, money laundering occurs in three steps:

Placement – The first stage of the money laundering process, this step involves placing your illegal money into a legitimate financial system such as a cash-only business or an offshore account.
Layering – The second step of money laundering. This stage is all about hiding the trail of the “dirty” money by creating and layering several financial transactions and some fraudulent bookkeeping to make it impossible to trace the cash to its initial source.
Integration – The final stage of the laundering process. Once the dirty money is placed and layered, it is integrated into the legal financial system in use to create a reasonable explanation of where the money came from. The money is then given to the initial owner, who can then use it without worrying about it being tied to illegal activities.

The Penalties for Money Laundering?

Money laundering is charged as a federal felony offense. If convicted the defendant could be looking at a maximum of 20 years in prison and a maximum fine of $500,000 or double the money an individual laundered, depending on which amount is greater.

What Is Embezzlement?

Embezzlement is basically a theft crime. However, unlike most theft crimes which usually involve threatening someone or using force to obtain the item you want. Embezzlement is the misappropriation or stealing of funds or property entrusted to them.

Unlike money laundering, embezzlement involves taking money the embezzler obtained legally. Take, for example, an accountant entrusted with the funds of a business. However, if the accountant chooses to use the business’s money to carry out an unsanctioned personal purchase like buying themself a Ferrari. This can be considered embezzlement.

Thus, for a crime to be considered embezzlement. Two things have to happen. The embezzler needs to be an individual that has been entrusted with the money or property, and they also need to be using the funds in a way that was not intended. Embezzling schemes can be as simple as taking a lying on your expense account to skim a few bucks off the top to something as complex as a Ponzi scheme.

The Penalties for Embezzlement

The penalties you receive for an embezzlement conviction will largely depend on the amount you embezzled. In most cases, anyone convicted for embezzling more than $1000 will have committed a federal felony. This could carry a minimum penalty of up to 10 years in prison and a $15,000 fine if there are no aggravating factors.

Nonetheless, the defendant could receive harsher penalties if more money is embezzled or there are aggravating factors.

Contact A Lawyer

If you are accused of either embezzlement or money laundering, our firm can help. Our defense attorneys have the experience you need to handle these financial crimes and ensure you do not have to experience devastating consequences.

Need an Attorney? CALL NOW: 310-274-6529

Seppi Esfandi is an Expert Attorney who has over 21 years of practice defending a variety of cases.

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Lara S.
December 3, 2019
Seppi had my case reduced to just an infraction, and thanks to him I was able to keep my job. Jorge was extremely helpful too, the reason I went with this law firm. Overall pleased.

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