Money Laundering Lawyers

| by Max Soni

Last Updated on: 26th August 2023, 10:25 pm

White Collar Crimes and Money Laundering

White collar crimes often involve complex schemes and multiple participants, allowing corrupt individuals to earn significant amounts of money illegally. One common form of such malfeasance is money laundering. In this blog, our team of experienced criminal defense attorneys provides an overview of money laundering, the potential penalties for conviction, and possible defenses for those accused of this crime.

Overview of Money Laundering

Money laundering is the process of disguising illegally obtained funds to make them appear legitimate. This is often done through various criminal activities such as drug offenses, prostitution rings, and funding terrorist activities.

Specific Types of Money Laundering

There are several specific types of money laundering:

Cash-Based Money Laundering

In this method, money launderers deposit large amounts of illegally obtained cash into the accounts of legitimate businesses. Banks often struggle to determine the legality of these deposits, making it challenging to prove the illicit nature of the funds.

Trade-Based Money Laundering

Trade-based money laundering involves manipulating legitimate documents, such as bills or business statements, to create a paper trail that appears legal and justifies illegal transactions.

Real Estate Money Laundering

Some individuals may use profits from real estate transactions, such as house-flipping, for illegal purposes.

Bank Capture Money Laundering

In this form of money laundering, individuals in positions of authority within financial institutions, such as bank presidents or managers, wire or deposit dirty money into seemingly legal accounts. This behavior often goes unnoticed as it appears to be legitimate business activity.

Structuring Money Laundering

Structuring involves breaking large sums of illegally obtained money into smaller amounts and transferring or funneling these lesser sums to create the appearance of legitimate transactions.

Casino Money Laundering

Some individuals purchase gambling chips with illicit funds and immediately cash them in to obtain large sums of clean money.

Proving Money Laundering

Proving money laundering is a complex task for prosecuting attorneys. They must demonstrate that the perpetrators were involved in criminal activity, knowingly profited from it, engaged in elaborate plans to make their actions appear legal, and used the money for personal or professional gain. Additionally, prosecutors must prove intent, showing that the accused individuals were aware of their unlawful actions, profited from them, and engaged in deceptive activities to mislead financial institutions and law enforcement agencies.

Potential Penalties for Money Laundering

In the state of New Jersey, money laundering carries steep penalties. Additionally, money laundering is often prosecuted by both state and federal authorities, which can lead to serious charges from the United States government.

Money laundering is considered an indictable crime, the most serious category of criminal offenses. Penalties can range from third to first degree, depending on factors such as the amount of money involved, the defendant’s criminal record, and any other associated criminal offenses.

Specific penalties for money laundering in New Jersey are as follows:

Third Degree

Individuals face third-degree charges when involved in transactions totaling $75,000 or less. Convictions can result in three to five years of imprisonment.

Second Degree

Second-degree money laundering occurs when an individual engages in illegal transactions involving amounts ranging from more than $75,000 to $499,000. Convictions typically carry prison sentences of five to ten years.

First Degree

First-degree money laundering involves obtaining and processing $500,000 or more of illicit funds. Convicted individuals could face up to 10 years of incarceration, with a requirement to serve at least one-third of the sentence before parole consideration.

Monetary Restitution

Courts may order convicted individuals to pay fines, typically three times the value of all property involved in the initial crime.

Potential Defenses for Money Laundering

While it may seem challenging to mount a defense for money laundering, skilled federal criminal defense attorneys can formulate arguments in certain cases:

Coercion

In some instances, individuals may be forced to engage in money laundering under the threat of harm to themselves or their families. Professionals such as accountants or business managers may be coerced by powerful criminals into participating in these activities.

No Provable Intent

Some defense strategies may aim to demonstrate that the accused party was unaware they were involved in illegal activities. For example, professionals processing large sums of money for unscrupulous individuals may claim they had no knowledge of the funds’ illicit origins or the criminal actions of those involved.

Money laundering is the process of generating money and financial assets through illegal means. The cash is laundered using criminal activities, which may include smuggling, drug trafficking, and sales of unlicensed weapons. In some countries, financial regulators also consider economic goods generated by fraud as a form of money laundering.

Since money laundering is a serious crime in many countries, criminals often try to disguise money laundering activities so that the illegal funds may appear to come from a legal source. In a way, criminals seek to make their illegal profits look clean.

Money launderers use a variety of methods to prevent attracting undue attention from law enforcement authorities. One of the most widely used practices is corporate fraud, which uses false accounting entries to deceive stakeholders. Also known as white-collar crime, such illegal corporate activities involve insider trading and tax violations.

Besides white-collar criminals, money laundering is rampant among street-level criminals. They sell drugs, run prostitution rings, and extort money from kidnapping to generate profit. Due to the nature of their crimes, it often becomes difficult for hardened criminals to hide the profit; therefore, they frequently transfer the cash to other jurisdictions to avoid scrutiny.

The Curse of Money Laundering

According to the United Nations Office on Drugs and Crime, money laundering constitutes 2% to 5% of the global GDP. Due to the clandestine nature of the crime, there is no precise estimate of the loss. Regardless of the amount of money laundering, it is apparent that there is a lot of illegal money used by criminals and its impact cannot be calculated merely in financial terms.

For instance, illegal funding is the main source of income for terrorist organizations. Since these organizations can’t fund their activities by legal means, they rely on kidnapping, drugs, prostitution, and the sale of weapons to finance their operations. As a result, the money ends up harming civil society and disrupting peace. Unlike regular financing activities, which are easy to trace, terrorist financing is not cyclical and doesn’t end up with the person who generated it.

Money laundering to gain access to weapons of mass destruction is a fairly recent phenomenon. It is more dangerous than fraud and criminal activities. FATF, Financial Action Task Force, suggests that proliferation financing can have a detrimental impact on the world. Therefore, it is important to curb money laundering. Proper regulations will prevent terrorist groups to gain access to weapons of mass destruction and stop them from getting the necessary training to launch them.

How Is Money Laundered?

People use specific methods to safeguard their illegal means of income. After raising unauthorized funds, they break the large sums of cash into smaller amounts to reintroduce it into the financial system. Depositing small amounts into more than one account at regular intervals keeps such transactions away from the prying eyes of the regulatory authorities.

To distance themselves from the source, the money launderer may also move the fund to another jurisdiction – often called tax heavens. These jurisdictions have privacy laws, which prevent authorities from investigating the source of funds and finding the culprit. Recently, the International Consortium of Investigative Journalists released Panama Papers and Pandora Papers identifying celebrities and Heads of States who use tax havens to move funds without declaring the income in their native countries.

Similarly, it is typical for people to use illegal funds to invest in overseas property or an offshore project. Under normal circumstances, everyone thinks that the person is just taking advantage of an investment scheme, and the local banks seldom object to such transactions. This is a seemingly inconspicuous method that doesn’t raise eyebrows and lets criminals transfer their illegal proceeds.

In other cases, illegal funds are reintroduced in the local economy by purchasing physical objects and luxury items. The laundered money is invested in real estate funds and business assets. Charities and NGOs are also used to transfer illegal funds to unauthorized individuals and financial entities.

Electronic Money Laundering

While technology has benefited the financial sector, it has also made money laundering much easier. The introduction of online money transfer platforms, P2P networks, anonymous servers, and proxies are all part of the problem. Using these online modes of transfer, anyone can easily transfer funds without leaving any trace or the IP address of the computer.

Gambling websites, gaming sites, and online auctions dealing in virtual currencies are equally vulnerable to the illegal transfer of money. Users on these websites can convert the physical currency into virtual tokens and goods, which can be transferred to another account in a different country. Some of these websites are increasingly used in large-scale money laundering schemes.

The rising popularity of block-chain-backed currency, such as Bitcoin, is another major setback for policymakers. The adaption of such virtual currencies without a global framework can prove disastrous for anti-money laundering efforts.

Prevention of Money Laundering

To regulate illegal money transfer, Group of Seven, G-7, has formed an international task force, FATF. The Financial Action Task Force requires financial institutions to put a solid mechanism in place that can detect and report suspicious activities. Since 1989, FATF has stepped up its efforts to ensure that every country abides by the goals set by the United Nations, international regulators, and law enforcement authorities.

The AML, Anti-money laundering laws, also require financial institutions to identify their customers, keep records, and report suspicious transactions. The KYC, Know Your Customer, guideline evolved from such laws. It requires financial platforms operating on blockchain networks and dealing with cryptocurrencies to identify everyone who opens an account.

While these are early days of combating massive money-laundering schemes but global regulations are turning the screw. New laws, high-level investigations, high-tech monitoring tools, and increasing pressure on financial institutions are producing positive outcomes. The future looks bright …