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Money Laundering Crimes

In general, money laundering involves an effort by a person or persons to conceal the existence, illegal source, or illegal application of income, and disguising that income to make it appear legitimate. Two statutes were passed by Congress to address money laundering, 18 U.S.C. § 1956 and § 1957. Both statutes criminalize activity or money transactions by an individual or individuals knowing that the funds involved are derived from criminal activity.

A shorthand way to understand these two statutes is to think of § 1956 as the promotion and concealment statute and § 1957 as the spending statute. Specifically, § 1956 addresses the knowing and intentional transportation or transfer of monetary funds derived from specified criminal offenses. These specified offenses, referred to in the statute as “specified unlawful activity,” are set out in detail § 1956(c)(7)(D), which in turn refers to § 1961(1) (the “RICO” statute) among other statutes, and include, inter alia, mail fraud, wire fraud and bank fraud, interference with interstate commerce by extortion (Hobbs Act). Section 1957 addresses transactions involving property exceeding $10,000 derived from the same specified unlawful activities set out in § 1956, § 1957(f)(3), and reaches a broad range of routine commercial transactions. 18 U.S.C. § 1957. The specific elements of both are discussed below. Put simply, if a defendant is convicted of any of the listed “specified unlawful activities” referred to in § 1956(c)(7) and §1957(f)(3), just about anything they do with the money they obtain as a result of the putative criminal activity can be considered money laundering (promoting, concealing, spending) under § 1956 and/or § 1957.

(1) Money laundering – conspiracy

Federal money laundering statutes, in addition to providing substantive offenses, have their own conspiracy provision in 18 U.S.C. § 1956(h). Regarding a conspiracy to launder money, prohibited by § 1956(h), the question to be determined is whether the government has presented sufficient evidence to prove beyond a reasonable doubt that the two or more persons knowingly became involved in a plan to launder money, and that he or she or they knew the proceeds used to further the scheme were derived from an illegal activity. Unlike conspiracies prosecuted under § 371, the government does not have to allege and prove the commission of an overt act when proceeding under § 1956(h).

(2) Money laundering – substantive offenses

(a) 18 U.S.C. § 1956

To prove that a defendant engaged in money laundering under 18 U.S.C. § 1956, the government has to establish that: (1) the defendant conducted or attempted to conduct a financial transaction; (2) the transaction involved the proceeds of a statutorily specified unlawful activity; (3) the defendant knew the proceeds were from some form of illegal activity; and (4) the defendant knew a purpose of the transaction was to (a) conceal or disguise the nature, location, source, ownership, or control of the proceeds, (b) promote the specified unlawful activity, or (c) engage in conduct constituting violations of certain tax offenses. However, the underlying activity must be separate from the actual money laundering; cases where the allegations of money laundering are based on the same transaction charged in the predicate act raise double jeopardy concerns.

(b) 18 U.S.C. § 1957

To convict a defendant of money laundering under § 1957, the government must prove beyond a reasonable doubt that: (1) the defendant engaged or attempted to engage in a monetary transaction as set out in the indictment; (2) that he or she knew that the transaction involved criminally derived property as set out in the indictment; (3) that the property had a value greater than $10,000; (4) that the property was criminal proceeds; and (5) that the transaction occurred in the United States. Given the clear knowledge requirement to convict under § 1957, a mere showing that a defendant had reason to suspect the funds were criminally derived is insufficient.

18 U.S.C. § 1960

18 U.S.C. § 1960(a) it is illegal when anyone “knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business.” According to the statue itself, “the term “money transmitting” includes “transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier.” § 1960(b)(2).  Under § 1960(a) the government must prove that the defendant had “knowledge” that the business he or she was operating was an unlicensed money transmitting business, transferring money for others for a fee. See generally, United States v. Elfgeeh, 515 F.3d 100, 132-33 (2d Cir.) (“In amending § 1960. . . in October 2001, congress made §1960(a) stricter by eliminating the requirement that the defendant knew that a license was required. . . [h]owever, the language of the amended section…  still requires proof that the defendant knew that the business was engaged in money-transmitting and also knew that the business had no money-transfer license.”), cert. denied, 555 U.S. 902, 129 S. Ct. 232, 172 L. Ed. 2d 177 (2008); United States v. Talebnejad, 460 F.3d 563, 566-67 (4th Cir. 2006)(“A money transmitting business is one that, for a fee, accepts currency for transfer within or outside of the United States for transfer within or outside the United States through foreign currency exchanges and financial institutions.”), cert denied, 549 U.S. 1234, 127 S.Ct. 1313, 167 L. Ed. 2d 124 (2007); United States v. $715,031.27 Seized From Wachovia Bank Account Numbers x-4390,Etc.,587 F.Supp.2d 1275, 1277 (N.D.Ga. 2008)(“To convict a person of owning or conducting a business in violation of 18 U.S.C. § 1960(a), the government need prove only that the defendant had knowledge that the business was an unlicensed money transmitting business.“).

 

31 U.S.C. § 5316, § 5322 and § 5331

31 U.S.C. § 5316 requires the filing of certain reports with the government when someone is involved in the transporting of more than $10,000 in monetary instruments at one time within the United States, or to or from the United States from a place outside the United States. § 5316(a)(1)(A) and (B) and (a)(2). 31 U.S.C. § 5531 requires the filing of certain reports with the government when a person “being involved in a trade or business, receives more than $10,000 in coins or currency in 1 transaction (or 2 or more related transactions), [] or who is [otherwise] required to file a report [by law].” Both require that the government prove that the accused acted willfully, and that the accused knew that a breach of the statute was unlawful. See,  Ratzlaf v. United States, 510 U.S. 135, 137,  114 S.Ct. 168, 126  L. Ed.2d 615 (1994); United States v. Tatoyan, 474 F.3d 1174, 1177 (9th Cir. 2007); United States v. Granda, 565 F.2d 922, 926 (5th Cir. 1978)2; United States v. Ramirez, 2009 WL 10675380 (M.D.Fl. 2009)(Scrivens, J.)(Unpublished)(Reviewing essential elements of  both § 5316 and § 5331);  see also and compare, Congressional Research Service, Money Laundering: An Overview of 18 U.S.C. § 1956 and Related Federal Criminal Law at pp. 32-33. (November 30, 2017), https://fas.org/sgp/crs/misc/RL33315.pdf (last visited Feb. 22, 2018).  31 U.S.C. § 5322 provides criminal penalties for anyone “willfully” violating Subchapter 53 of Title 31 which contains both § 5316 and § 5331. Finally, and of particular import here, 31 U.S.C. § 5312 provides the definitions applicable to § 5316, § 5322, and § 5331, specifically defining the term “monetary instruments” as “(A) United States coins and currency; (B) . . . currency of a foreign country, travelers’ checks, bearer negotiable instruments, bearer investment securities, bearer securities, stock on which title is passed on delivery, and similar material; and (C) . . . checks, drafts, notes, money orders, and other similar instruments which are drawn on or by a foreign financial institution and are not in bearer form.” § 5312(3)(A)-(C) (emphasis added.)

 

2In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (En Banc), the Eleventh Circuit adopted all decision of the former Fifth Circuit as binding precedent.

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