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18 U.S.C. § 1956 – Money laundering

The Harsh Reality of Money Laundering Charges

So, what do you do if you get hit with one of these things? A money laundering charge is no joke – it’s a serious federal offense that can land you behind bars for up to 20 years. But, take a deep breath. We’re here to guide you through this legal minefield, one step at a time.It’s simple. Every single client deserves honesty and white glove service. At Spodek Law Group, we leave no stone unturned to protect your rights and secure the best possible outcome. Our criminal defense attorneys have a well-earned reputation for tenacity and expertise in the most complex federal cases.

Understanding the Basics

Before we dive into the nitty-gritty, let’s start with the fundamentals. What exactly is money laundering? In essence, it’s the process of disguising the origins of money obtained through illegal activities, making it appear legitimate.The key federal statute governing money laundering is 18 U.S.C. § 1956. This law criminalizes four distinct types of money laundering:

  1. Promotional Money Laundering: Using illicit proceeds to promote further criminal activities.
  2. Concealment Money Laundering: Disguising the true nature, location, source, ownership, or control of illegal funds.
  3. Structuring: Breaking up transactions to evade reporting requirements.
  4. Tax Evasion: Laundering money to avoid paying taxes on illegal income.

Each of these offenses can be committed under one of three jurisdictional conditions:

  • Domestic money laundering involving financial transactions within the United States [18 U.S.C. § 1956(a)(1)].
  • International money laundering involving cross-border fund transfers [18 U.S.C. § 1956(a)(2)].
  • Undercover “sting” operations where law enforcement portrays the funds as illegal proceeds [18 U.S.C. § 1956(a)(3)].

The Four Paths to Conviction

To secure a conviction under 18 U.S.C. § 1956, prosecutors must prove four key elements beyond a reasonable doubt:

  1. A Financial Transaction: You conducted (or attempted) a financial transaction affecting interstate commerce.
  2. Illegal Proceeds: The transaction involved proceeds from a specified unlawful activity (e.g., drug trafficking, fraud, racketeering).
  3. Knowledge of Illegality: You knew the transaction involved proceeds from some form of illegal conduct.
  4. Illegal Intent: You intended to promote further illegal activity, conceal the source of the funds, evade reporting requirements, or avoid taxes.

Let’s break these down with some real-world examples:Financial Transaction
This element is broad, encompassing virtually any transfer or movement of funds, from cash deposits to wire transfers, purchases, or investments. Even attempting an illegal transaction can satisfy this prong.Illegal Proceeds
The money must derive from offenses specified in the statute, such as drug crimes, fraud, embezzlement, or racketeering. Mere suspicion of illegality is insufficient – prosecutors must tie the funds to a particular predicate crime.Knowledge of Illegality
You don’t need to know the specific underlying crime, but you must be aware (or willfully blind) that the money came from some illegal source. Circumstantial evidence, like suspicious banking activity or lavish spending inconsistent with your income, can establish this knowledge. 1Illegal Intent
This is often the trickiest element. Prosecutors might argue you intended to conceal illegal funds by commingling them with legitimate business income, using shell companies, or structuring cash deposits below reporting thresholds. 2 Alternatively, they could claim you aimed to promote further crimes by reinvesting dirty money into a criminal enterprise.

Severe Penalties for Severe Crimes

Convicted under 18 U.S.C. § 1956? Brace yourself, because the penalties are severe:

  • Up to 20 years in federal prison
  • Fines up to $500,000 or twice the value of the laundered funds (whichever is greater)
  • Potential civil penalties of $10,000 per violation
  • Forfeiture of all property involved in or traceable to the money laundering scheme

And that’s just the start. You could face additional charges for conspiracy, tax evasion, or the underlying crimes that generated the illegal proceeds. 3The precise sentence hinges on multiple factors, including:

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  • The amount of money laundered
  • Your role in the scheme (leader, manager, minor player)
  • Whether you abused a position of trust
  • Your criminal history
  • Acceptance of responsibility

Judges have significant discretion, but the U.S. Sentencing Guidelines treat money laundering harshly, often resulting in lengthy prison terms even for first-time offenders. 4

An Ounce of Prevention: Compliance is Key

Let’s be real – nobody wants to end up in the crosshairs of a federal money laundering investigation. The best defense is a robust compliance program to prevent illicit funds from entering your business or financial institution.At a minimum, you should:

  • Implement rigorous Know Your Customer (KYC) protocols to verify client identities and vet their funds’ sources.
  • Conduct enhanced due diligence on high-risk clients (e.g., politically exposed persons, cash-intensive businesses).
  • Monitor transactions for red flags like structuring, shell company activity, or unexplained fund movements.
  • Maintain comprehensive records and promptly file Suspicious Activity Reports (SARs) when appropriate.
  • Train employees to identify money laundering typologies and escalate concerns.
  • Designate a qualified compliance officer to oversee your anti-money laundering (AML) program.

Compliance is a complex, ongoing process – but it’s far preferable to the alternative of potential criminal liability. An ounce of prevention is worth a pound of cure when it comes to money laundering risks. 5

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