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.
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