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How does forfeiture relate to money laundering charges?

How Forfeiture Relates to Money Laundering Charges

Money laundering and forfeiture often go hand in hand in federal criminal cases. Money laundering involves concealing the source of illegally obtained money by funneling it through legitimate businesses. Forfeiture allows the government to seize assets connected to criminal activity.

Overview of Money Laundering

Money laundering entails knowingly conducting a financial transaction with money that came from criminal activity, like drug trafficking or fraud. The purpose is to hide the illegal source of the funds and make the money appear legitimate.Common money laundering techniques include:

• Structuring – Making multiple small deposits or withdrawals to evade reporting requirements
• Smurfing – Using couriers, called “smurfs,” to make deposits below $10,000 to avoid triggering reporting rules
• Trade-based laundering – Misrepresenting the price, quantity or quality of imports or exports to disguise fund transfers
• Shell companies – Creating business entities without real operations to obscure ownership and fund transfers
• Cryptocurrencies – Using digital currencies with decentralized ledgers to conceal fund sources

How Forfeiture Relates to Money Laundering

Two key federal laws authorize forfeiture in money laundering cases – 18 USC 981 and 18 USC 982. Section 981 allows civil forfeiture of property involved in money laundering. Section 982 provides for criminal forfeiture of assets linked to money laundering as part of sentencing.Forfeiture is a powerful tool for prosecutors in money laundering cases. The government can confiscate property connected to laundered funds – like cars, real estate and bank accounts. The assets don’t have to be the actual money laundered. There just needs to be a traceable connection between the seized property and the money laundering offense.This allows prosecutors to “follow the money” and take assets tied to illegal activity, even if the assets themselves aren’t directly derived from crime. For example, if a defendant buys a house with laundered drug money, the house could be subject to forfeiture.

Key Points on Forfeiture in Money Laundering Cases:

• Unlike criminal charges that require proof “beyond a reasonable doubt,” the government only needs to show a “preponderance of evidence” to forfeit assets civilly under Section 981.
• Assets can be forfeited administratively in civil cases without a criminal conviction if there is evidence of involvement in money laundering.
• In criminal cases under Section 982, assets must be linked to the specific money laundering offense proven beyond a reasonable doubt.
• Substitute assets of equal value can be forfeited if the defendant transfers or conceals assets after being notified of potential forfeiture.
• Forfeited assets go to the Department of Justice Assets Forfeiture Fund for law enforcement purposes.
• Innocent owners can contest forfeiture of assets connected to money laundering without their knowledge or consent.

Key Defenses Against Forfeiture in Money Laundering Cases

There are several potential defenses in contesting forfeiture of assets in money laundering cases:

Innocent Owner Defense

A person unaware their property was involved in money laundering can argue they’re an innocent owner. They must show no knowledge of or consent to the activity. It’s an uphill battle if the defendant owned the assets while money laundering occurred.

Proportionality Challenge

The Eighth Amendment prohibits excessive fines. Defendants can argue forfeiture of certain assets is disproportionate to the offense conduct. The success often turns on the nature of the assets and their role in the laundering activity.

Excessive Fines Claim

Similar to a proportionality challenge, defendants can assert forfeiture amounts to an excessive fine violating the Eighth Amendment. But most courts require a high showing of gross disproportionality between the forfeited assets and gravity of the offense.

Statute of Limitations Defense

Section 981 has a 5-year statute of limitations. Section 982 has no limitations period. For forfeitures under Section 981, defendants can argue the activity occurred beyond the 5-year window.

Illegal Seizure Challenge

Evidence obtained through illegal searches or seizures can be suppressed. Defendants may claim forfeited assets were obtained improperly in violation of the Fourth or Fifth Amendments.

Insufficient Notice Argument

The government must provide adequate notice of assets sought for forfeiture. Defendants can assert they didn’t get proper notice to contest specific assets before seizure.

Forfeiture Implications and Consequences

Forfeiture can have major implications for defendants in money laundering cases:

• It allows the government to seize assets outside the statute of limitations for the underlying offense.
• Administrative forfeiture can occur without criminal prosecution if evidence shows involvement in money laundering.
• Forfeiting assets prevents defendants from benefiting from proceeds of illegal activity.
• It provides significant leverage to prosecutors in plea negotiations.
• Defendants must prove legitimate sources for assets or an innocent owner defense to avoid forfeiture.
• There is no Sixth Amendment right to counsel in civil forfeiture proceedings.
• Losing assets to forfeiture can have severe financial consequences for defendants.

Conclusion

In sum, forfeiture is an extremely powerful tool for prosecutors in money laundering cases. The government can seize assets connected to laundered funds civilly or criminally with a lower standard of proof compared to criminal charges. Defendants face an uphill battle contesting forfeiture with limited defenses available. Given the broad reach of forfeiture in targeting assets tied to illegal activity, any assets acquired directly or indirectly through money laundering are at risk. Forfeiture allows prosecutors to hit defendants where it hurts most – in the pocketbook.

Resources

DOJ Guide to ForfeitureMoney Laundering LawsInnocent Owner DefenseEighth Amendment ChallengesStatute of LimitationsFourth Amendment Challenges

Videos

How Asset Forfeiture WorksMoney Laundering ExplainedInnocent Owner Defense

Additional Reading

DOJ Asset Forfeiture Policy ManualContesting Forfeiture of AssetsSuccessfully Challenging ForfeitureMoney Laundering ChargesAsset Forfeiture Abuse