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18 U.s.c. 1956
Understanding 18 U.S.C. 1956 – Money Laundering Laws in the United States
Money laundering involves concealing the origins of money obtained through illegal activities. 18 U.S.C. 1956 is the primary federal law in the United States that criminalizes money laundering. This law makes it illegal to conduct a financial transaction with money that came from certain kinds of criminal activity, like drug trafficking or fraud. There are also laws against spending money that someone else obtained illegally.
Background of 18 U.S.C. 1956
The U.S. Congress passed 18 U.S.C. 1956 as part of the Money Laundering Control Act of 1986. This law was intended to make it easier for law enforcement to investigate and prosecute complex criminal organizations that were laundering money. Before this law existed, it was not necessarily illegal to conduct transactions with money obtained through criminal acts.
Key Provisions
There are a few key provisions of 18 U.S.C. 1956 that are important to understand:
- It applies to financial transactions involving the proceeds of certain kinds of illegal activity, known as “specified unlawful activity”. This includes over 200 serious federal crimes.
- The law prohibits conducting financial transactions knowing that the money came from some form of criminal activity, as well as spending money obtained illegally.
- There are also prohibitions on transporting money into or out of the country in order to conceal its criminal origins or avoid reporting requirements.
- Violations are considered felonies punishable by hefty fines and up to 20 years in prison.
Elements of the Crime
For a person to be found guilty of money laundering under 18 U.S.C. 1956, prosecutors must prove several key elements beyond a reasonable doubt:
- The person conducted or attempted to conduct a financial transaction.
- The money or property involved the proceeds of a specific unlawful activity.
- The person knew the money came from some form of illegal activity.
- The transaction was conducted with intent to conceal the nature or source of the funds, avoid reporting requirements, or further the illegal activity.
The law defines “financial transaction” very broadly to include any transfer, withdrawal, exchange, etc. involving a financial institution. “Specified unlawful activity” covers over 200 serious crimes listed in the law.
Real Estate Transactions
An increasingly common form of money laundering involves real estate transactions. Criminals will funnel dirty money through shell companies to purchase luxury real estate. This allows them to conceal the source of funds and create the appearance that money came from legitimate real estate investments.
18 U.S.C. 1956 directly prohibits conducting financial transactions involving real estate in order to conceal criminal proceeds. So real estate agents, brokers, developers, and others may face prosecution if they knowingly participate in tainted real estate deals.
Penalties and Enforcement
Money laundering under 18 U.S.C. 1956 is a very serious federal felony. The maximum prison sentences and fines depend on the specific nature of the offense:
- Up to 20 years in prison and a fine of $500,000 or twice the value of the funds for basic violations.
- Up to 10 years in prison and a $250,000 fine for violations involving illegal activity abroad.
- Up to 5 years in prison and a fine of the greater of $250,000 or twice the value of the funds for simple transportation or transfer violations.
The federal agencies most commonly bringing charges under this statute are the Department of Justice, FBI, IRS, and ICE. Various state and local agencies also pursue money laundering prosecutions under state laws.
Civil and Criminal Forfeiture
In addition to fines and imprisonment, violating 18 U.S.C. 1956 often leads to forfeiture of assets. Criminal forfeiture allows the government to seize assets directly linked to the crime, like money laundered funds or property involved in the offense. The government can also pursue civil forfeiture to confiscate assets connected more broadly to criminal activity.
Defenses
There are a few potential defenses that a skilled criminal defense lawyer may be able to assert on behalf of someone facing money laundering charges:
- Lack of knowledge – One defense is that the person did not actually know the funds came from unlawful activity. This relies on the prosecution’s inability to prove subjective knowledge and intent.
- Entrapment – If law enforcement pressured the person into committing an offense they otherwise would not have, an entrapment defense may succeed.
- Duress – If the violations resulted from some form of coercion or threat, a duress defense could potentially apply.
An experienced attorney can assess the evidence and determine if any viable defenses may warrant dismissal or an acquittal at trial.
Recent Trends and Issues
Money laundering tactics are always evolving along with the latest technologies and global trends. Some key issues surrounding 18 U.S.C. 1956 enforcement today include:
Cryptocurrency
The rise of cryptocurrency has made it easier for criminals to launder money via digital transactions. Major darknet marketplaces frequently use crypto to sell drugs, firearms, and other illegal items. Law enforcement is trying to catch up with the unique money laundering challenges posed by decentralized digital currencies and anonymous transactions.
Foreign Shell Companies
Setting up shell companies in foreign jurisdictions with lax regulations remains a common way for criminals to launder money. This can conceal the true ownership and criminal origins of funds. U.S. enforcement aims to pierce the veil of secretive offshore businesses used to clean dirty money.
Trade-Based Money Laundering
Trade-based money laundering uses global trade transactions to disguise illegal cash flows. This may include trade invoice manipulation, black market currency exchanges, and exploiting jurisdictions with weak oversight. As global trade grows, such techniques present an increasing money laundering threat.
So in summary, 18 U.S.C. 1956 serves as a broad and flexible federal money laundering statute. It empowers law enforcement to prosecute those who knowingly try to conceal, transmit, or clean funds obtained from a wide range of serious underlying crimes. The penalties are steep, and the methods for violating the law are always adapting to new technologies and markets. This will continue posing unique enforcement challenges both domestically and globally moving forward.