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How Serious are the Penalties for Money Laundering?
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How Serious are the Penalties for Money Laundering?
Money laundering can lead to some pretty serious penalties, depending on the circumstances. Let’s take a look at what money laundering is, what laws apply, and what kind of penalties you could face if convicted.
What is Money Laundering?
Money laundering is the process of making illegally-gained money look like it came from a legitimate source. It’s a way for criminals to hide and “clean” money obtained through criminal activity so it appears legal.
There are a few common methods of money laundering:
- Structuring – Making multiple small deposits or withdrawals to avoid reporting requirements
- Smurfing – Using others to make deposits/withdrawals to avoid reporting requirements
- Trade-based laundering – Misrepresenting the price/quality of goods to justify transfers
- Shell companies – Creating fake businesses to mix legal and illegal money
The goal is to make dirty money look clean on paper so criminals can spend it without raising suspicion. Money laundering allows criminal enterprises to continue operating.
Federal Anti-Money Laundering Laws
There are a few key federal laws that target money laundering activities:
Bank Secrecy Act
Passed in 1970, this law requires financial institutions to keep records and file reports on cash transactions over $10,000. This provides a paper trail for large deposits and transfers that could indicate money laundering.
Money Laundering Control Act
This 1986 law made money laundering a federal crime for the first time. It prohibited individuals from knowingly conducting financial transactions with money gained from certain criminal activities.
Annunzio-Wylie Anti-Money Laundering Act
This 1992 law strengthened the government’s ability to investigate and prosecute money laundering cases. It required banks to establish anti-money laundering programs.
USA PATRIOT Act
Passed after 9/11, this 2001 law expanded the definition of money laundering and required regulations for industries vulnerable to money laundering beyond just banks.
Penalties for Federal Money Laundering Convictions
Now let’s look at the penalties someone can face if convicted of federal money laundering charges:
Fines
Money laundering fines can be up to $500,000 or twice the amount laundered, whichever is greater. For instances involving $100,000 or more, fines can reach $500,000 or 5 times the amount laundered.[1]
Prison Time
Prison sentences for money laundering can range from 0 to 20 years depending on the circumstances. Harsher penalties come into play as the amount of money laundered increases.[2]
Forfeiture
Individuals convicted of money laundering may have to forfeit any property involved in or traceable to the money laundering offense. This includes money, real estate, vehicles, etc.[3]
State Money Laundering Laws
In addition to federal laws, most states also have their own statutes prohibiting money laundering activities. Here are some examples of state money laundering laws and penalties:
California
California money laundering can be charged as a misdemeanor or felony. As a felony, it carries up to 3 years in prison and a fine of $250,000 or twice the amount laundered.[4]
Texas
Texas law imposes 2nd degree felony charges for money laundering over $100,000. This can result in 2-20 years in prison and fines up to $10,000.[5]
New York
Money laundering over $50,000 in New York is a class B felony, carrying up to 25 years in prison and a fine up to double the amount laundered.
Money Laundering Defenses
There are a few legal defenses that may apply in money laundering cases:
- Lack of knowledge – Defendant was unaware funds came from illegal activity
- No underlying crime – The money didn’t stem from criminal conduct
- Entrapment – Defendant was induced by law enforcement
An experienced criminal defense lawyer can evaluate the evidence and determine if any defenses are viable given the specific circumstances of your case.
Takeaways
Money laundering should be taken very seriously given the steep fines and lengthy prison sentences that can result from federal or state convictions. Penalties tend to increase as the amount of money laundered grows larger.
Some key takeaways:
- Fines up to $500,000 or more, or up to double the amount laundered
- Prison sentences ranging from 0-25 years typically
- Forfeiture of assets and property involved
- An attorney may be able to raise defenses like lack of knowledge
Overall, the penalties for money laundering can be severe. Anyone facing charges should seek guidance from an experienced criminal defense lawyer right away.
Sources
[2] Federal Charges – Money Laundering Laws, Charges, Statute of Limitations
[3] FindLaw – Money Laundering
[4] California Penal Code Section 186.10 PC: Money Laundering
[5] Texas Penal Code § 34.02 | FindLaw
New York Consolidated Laws, Penal Law – PEN § 470.20 | FindLaw