New York Money Laundering Defense – When the Proceeds Element Saves You

The prosecutor claims you laundered $500,000. But here’s the overlooked defense: New York Penal Law § 470.05 requires the money be proceeds of criminal activity. Not suspicious money. Not unexplained money. Actual criminal proceeds.

If prosecutors can’t prove the predicate crime that generated the money, they can’t prove money laundering. This seems obvious, but prosecutors routinely charge laundering without proving where the money came from.

The Two-Crime Requirement That Creates Reasonable Doubt

Money laundering isn’t a standalone crime in New York. It requires two elements prosecutors often can’t prove simultaneously.

First, a specified criminal activity must generate proceeds. Drug dealing, fraud, extortion – something illegal that makes money. Second, financial transactions designed to conceal those proceeds.

The gap prosecutors face: proving both crimes to different juries. Drug dealers rarely document sales. Fraud victims can’t always identify what they lost. The money might be dirty, but without proving the specific predicate crime, laundering charges fail.

In federal court, they use the “specified unlawful activity” list in 18 U.S.C. § 1956. Over 200 predicates. But New York’s statute is narrower. The predicate must be a felony. Misdemeanor fraud proceeds can’t support laundering charges.

This technicality matters. Your client sold counterfeit goods – a misdemeanor in many cases. The $50,000 profit looks like laundering. But if the underlying sales were misdemeanors, no laundering under New York law.

Structuring Versus Legitimate Privacy

Banks must report cash transactions over $10,000 under the Bank Secrecy Act. Depositing $9,999 to avoid reporting is structuring – a federal crime. But it’s not automatically money laundering.

People structure legitimate money for privacy reasons. Divorce proceedings. Business competitors. Nosy relatives. The desire for financial privacy doesn’t prove criminal intent.

The key distinction: structuring becomes laundering only when concealing criminal proceeds. If the money is legitimate, structuring might violate federal reporting requirements but doesn’t constitute money laundering under New York law.

Defense attorneys miss this distinction. They fight the structuring evidence instead of focusing on the proceeds element. Prove the money was legitimate, and structuring becomes irrelevant to laundering charges.

The Temporal Defense Nobody Uses

New York Penal Law § 470.15 (money laundering first degree) requires transactions “with intent to promote the carrying on of specified criminal conduct.”

Notice the present tense – “carrying on.” Past crimes don’t count. If the predicate crime is complete, subsequent transactions can’t “promote” it.

Example: Your client sold drugs five years ago. Now they’re investing those old proceeds in real estate. Prosecutors charge money laundering. But the drug dealing isn’t “carrying on” – it’s finished. The investment can’t promote completed conduct.

Federal law covers proceeds from past crimes. New York’s “promote the carrying on” language requires ongoing criminal activity. This temporal distinction defeats many state laundering charges.

International Wire Transfers – The Venue Gift

Money laundering prosecutions involving international transfers create venue challenges prosecutors hate discussing.

Each wire transfer touches multiple jurisdictions. Sending bank, correspondent banks, receiving bank. Under CPL § 20.40, venue is proper where any element occurs. But this also means you can demand transfer to more favorable venues.

Money sent from Manhattan through correspondence banks in Albany to an offshore account? Albany has venue. Their prosecutors handle fewer financial crimes. Juries are less jaded. Sentences are lighter.

The strategy: Map the complete transfer path. Identify every jurisdiction touched. Move for venue transfer to the most favorable location. Prosecutors often dismiss rather than litigate in unfamiliar venues.

The Business Records Trap for Prosecutors

Proving money laundering requires extensive financial records. Bank statements, wire confirmations, transaction histories. But getting these records into evidence requires business records foundations under CPLR 4518.

Banks must produce qualified witnesses to authenticate records. Those witnesses must understand the bank’s record-keeping systems. With bank consolidations and employee turnover, finding qualified witnesses becomes difficult.

Foreign banks present bigger problems. They won’t send employees to testify in New York courts. Letters rogatory take years. Meanwhile, speedy trial clocks run.

The defense: Challenge every document’s foundation. Demand live testimony from records custodians. Object to foreign bank records without proper authentication. Make prosecutors prove their case with admissible evidence, not suspicious-looking papers.

Cryptocurrency Changes Everything

Traditional money laundering analysis breaks down with cryptocurrency. The blockchain is public. Every transaction is recorded permanently. But wallet ownership is pseudonymous.

Prosecutors must prove you controlled specific wallets. IP addresses aren’t enough – VPNs and TOR obscure origins. Exchange KYC records might identify account holders but not actual transaction controllers.

The novel defense: Admit the blockchain transactions while denying wallet control. “Yes, that wallet received stolen funds. No, I didn’t control it.” Without private keys or definitive control evidence, prosecutors can’t prove you conducted the transactions.

New York courts haven’t developed cryptocurrency-specific laundering precedents. Federal decisions don’t bind state courts. This legal uncertainty creates defense opportunities.

Parallel Civil Forfeiture Proceedings

While criminal charges proceed, prosecutors simultaneously file civil forfeiture actions under CPLR Article 13-A. Lower burden of proof. No right to counsel. No Fifth Amendment protection.

The trap: Defending forfeiture requires explaining your assets. Those explanations become evidence in criminal proceedings. Asserting the Fifth in civil proceedings creates adverse inferences.

The strategic response: Bifurcate proceedings. Move to stay civil forfeiture pending criminal resolution. Courts often grant stays to protect Fifth Amendment rights. Without stays, you’re defending two proceedings with conflicting strategies.

If bifurcation fails, consider strategic admissions. Admit legitimate income sources in forfeiture proceedings. This explains assets without admitting crimes. Prosecutors can’t use legitimate source evidence to prove laundering.

The Professional Money Launderers Statute Backfire

New York Penal Law § 470.20, enacted in 2019, criminalizes professional money laundering – conducting transactions for others’ criminal proceeds.

Prosecutors love this statute because it doesn’t require proving defendants committed predicate crimes. Just that they laundered for others.

But the statute contains a fatal flaw: “in whole or in part his or her business.” Isolated transactions don’t qualify. Prosecutors must prove pattern conduct constituting a business.

The defense: Your client helped a friend once. Maybe twice. Not a business. Personal favors don’t constitute professional money laundering. Without evidence of systematic laundering operations, the enhanced charge fails.