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29 Nov 23

How Serious are the Penalties for Money Laundering?

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Last Updated on: 14th December 2023, 04:46 pm

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]

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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

[1] 18 U.S. Code § 1956

[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