Federal Money Laundering Defense

The federal government does not charge money laundering because it cares about your bank account. It charges money laundering because money laundering transforms every predicate offense into a sentence multiplier, a forfeiture mechanism, and a bargaining instrument that places the accused in a position of total procedural subordination.

In fiscal year 2024, the United States Sentencing Commission reported 1,095 money laundering cases, a 45 percent increase from 2020. The average sentence imposed was 62 months. The average guideline minimum was 108 months. That distance between the two numbers is where federal defense counsel operates, and it is the only distance that matters to the person sitting in the courtroom.

Two Statutes Govern the Same Conduct at Different Thresholds

Section 1956 of Title 18 criminalizes financial transactions involving proceeds of specified unlawful activity when the defendant knows the property represents those proceeds and conducts the transaction with one of several enumerated purposes: to promote the underlying offense, to conceal the nature or source of the funds, to evade reporting requirements, or to avoid a state or federal transaction reporting obligation. The maximum penalty is 20 years of imprisonment and a fine of $500,000 or twice the value of the property involved, whichever is greater.

Section 1957 addresses monetary transactions in criminally derived property exceeding $10,000. The mental state requirement is lower. The maximum sentence is 10 years. Prosecutors select between the two statutes based on the evidence available and the pressure they wish to exert. The selection itself communicates intention.

Under the Sentencing Guidelines, a conviction under Section 1956 triggers a two level increase. A conviction under Section 1957 triggers one. If the offense involved what the Commission terms “sophisticated laundering,” meaning shell corporations, fictitious entities, layered transactions, or offshore accounts, an additional two levels attach. For every two levels, months compound. Months become years. Years become decades, if the conduct spans sufficient volume.

The architecture of these statutes means that the money laundering charge is rarely the point. It is the frame around the point.

Willful Blindness Has Replaced Actual Knowledge in Practice

The text of Section 1956 requires that the defendant “know” the property involved in the transaction represents the proceeds of some form of unlawful activity. Knowledge is a high bar. It should be a high bar. The doctrine of willful blindness has eroded that bar to its foundation.

Willful blindness, which some circuits call conscious avoidance, permits a jury to infer knowledge where the defendant took steps to avoid confirming a fact that was probable. The Supreme Court endorsed the doctrine in Global-Tech Appliances, Inc. v. SEB S.A., establishing a two part test: the defendant must have held a subjective belief that a high probability existed, and the defendant must have taken deliberate actions to avoid learning that fact. In practice, this standard is applied with less precision than it promises. A request to instruct the jury on willful blindness often arrives late in trial, on the strength of circumstantial evidence, and invites a conviction for what resembles negligence more than it resembles intent.

One receives a wire transfer from a business associate in a jurisdiction known for financial opacity. One does not ask the origin of the funds. One deposits the transfer and continues ordinary operations. That sequence, under the willful blindness doctrine, can constitute knowledge sufficient for a Section 1956 conviction carrying 20 years of imprisonment.

The question prosecutors never ask is whether the person had reason to investigate. The question they ask is whether the person chose not to.

The Government Charges Money Laundering to Seize Property

Forfeiture is the gravitational center of federal money laundering prosecution. Under Section 1956, the government may seek forfeiture of all property involved in the offense and all property traceable to the offense. This is not a theoretical power. In October 2024, TD Bank pleaded guilty to conspiracy to commit money laundering and agreed to forfeit $452,432,302 as part of a resolution totaling approximately $3 billion in combined penalties from the DOJ, the Federal Reserve, FinCEN, and the OCC. The bank had failed to monitor $18.3 trillion in transaction activity over six years, enabling three separate laundering networks to move more than $670 million through its accounts.

TD Bank was the first major financial institution to plead guilty to a money laundering conspiracy charge. That fact matters less than what enabled the plea: five bank employees had provided direct assistance to one of the networks. The institution did not fail to detect alone. It participated, through the conduct of its own personnel, in the movement of funds it had reason to question.

For individual defendants, forfeiture operates with equal severity but without the corporate capacity to absorb loss. The government may restrain assets pretrial, which deprives the accused of resources to mount a defense. This is the mechanism that produces the greatest pressure toward plea agreements, and it functions as designed.

Defense Begins Before the Indictment

The most effective defense in a federal money laundering case is the defense that prevents charges from being filed. This is not rhetorical. Federal prosecutors operate under internal approval requirements for money laundering charges, and the decision to charge involves an assessment of whether the evidence supports the knowledge element, whether the underlying predicate offense is provable, and whether the forfeiture exposure justifies the resources required for trial. A defense attorney who engages with the government during the investigation phase, who presents exculpatory evidence and legal arguments before the grand jury convenes, alters the prosecutorial calculus at the point where alteration is still possible.

I have represented individuals who were subjects of federal money laundering investigations that never became indictments. The reason was not luck. The reason was early identification of the government’s theory, early production of evidence contradicting that theory, and early communication of the cost the government would incur at trial. Prosecutors respond to evidence. They also respond to preparation.

After indictment, the defense pivots to the elements. The government must prove that the funds were proceeds of specified unlawful activity, that the defendant knew or was willfully blind to that fact, and that the transaction was conducted with the requisite intent. Each element presents an independent point of failure for the prosecution.

Good Faith Is Not a Technicality

A defendant who relied on the advice of legal counsel, who conducted due diligence on the source of funds, who maintained records and filed reports as required, possesses a defense that goes beyond mere denial. Good faith negates the mental state that Section 1956 demands. The difficulty is that good faith must be demonstrated through documentation, not testimony. What you believed matters. What you can prove you believed matters more.

Constitutional violations offer a second line of defense that is often overlooked in the focus on financial complexity. Illegal searches produce inadmissible evidence. Coerced statements collapse under suppression motions. Grand jury irregularities, while difficult to establish, can void an indictment in full. The government’s case in a money laundering prosecution depends on financial records, electronic communications, and witness cooperation. Each of those categories is vulnerable to challenge if the collection methods violated the Fourth, Fifth, or Sixth Amendments.

A federal money laundering charge is a statement of intent by the government. It is not a statement of fact.

The Enforcement Apparatus Shifted in 2025

In April 2025, Deputy Attorney General Todd Blanche issued a memorandum directing the Department of Justice to cease pursuing enforcement actions that impose regulatory frameworks on digital assets. The Samourai Wallet prosecution, which had targeted the founders of a cryptocurrency mixing service for laundering over $2 billion, illustrated the prior administration’s approach: charge the infrastructure, not the users alone. The new memorandum reversed that posture for the digital asset sector in particular, though its broader implications remain uncertain.

The Corporate Transparency Act, which took effect on January 1, 2024, required more than 32 million domestic entities to report beneficial ownership information to FinCEN. By March 2025, FinCEN had issued an interim final rule exempting all U.S. companies and U.S. persons from that reporting requirement. The enforcement mechanism designed to prevent the use of shell corporations for money laundering was dismantled within fifteen months of its activation.

DEFENSE TEAM SPOTLIGHT

Todd Spodek

Lead Attorney & Founder

Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.

NY Bar Admitted Multi-State Licensed Federal Courts

Meet the Full Team

These two developments create a paradox for defendants. The DOJ continues to prosecute money laundering with increasing frequency, as the 1,095 cases in fiscal year 2024 confirm. At the same time, it has removed or restricted the regulatory architecture that would have generated the compliance records defendants need to demonstrate good faith. Spring 2025 is a season of contradictions in federal financial enforcement, and contradictions produce exposure for individuals who cannot predict which policy direction the next investigation will follow.

Sentencing Is Where Preparation Becomes Sentence Reduction

The Sentencing Guidelines for money laundering offenses are driven by the value of the funds laundered, the sophistication of the laundering method, and the defendant’s role in the offense. A base offense level of 8 under USSG Section 2S1.1 increases by reference to the loss table, which can add 20 or more levels for transactions involving millions of dollars. Combined with the two level enhancement for a Section 1956 conviction and the additional two levels for sophisticated laundering, a defendant with no criminal history can face a guideline range that begins at 70 months and extends well beyond 120.

Downward departures and variances exist. Acceptance of responsibility reduces the offense level by three levels if the defendant provides timely notice of intent to plead. Substantial assistance to the government, formalized in a Section 5K1.1 motion, permits a departure below the guideline minimum and, in cases involving mandatory minimums, below the statutory floor. Cooperation is transactional. What the defendant provides must have operational value to the government’s other investigations.

We have obtained sentences below the guideline range in money laundering cases by constructing sentencing memoranda that present the defendant’s conduct in its full context, that address the Section 3553(a) factors with specificity, and that offer the court a basis for distinguishing the case from the Commission’s data. The average sentence of 62 months against a guideline minimum of 108 months reflects a system in which advocacy at sentencing determines years of liberty.

What Representation Requires in This Category of Case

Federal money laundering defense requires a particular kind of attention. It requires counsel who can read financial records with the same fluency as legal briefs, who understands the Sentencing Guidelines not as an abstraction but as a system of inputs and outputs that can be altered through precise advocacy, and who has experience engaging with federal prosecutors before and after indictment. It requires resources for forensic accounting, expert testimony on banking practices, and the capacity to challenge the government’s forfeiture claims through parallel civil proceedings.

The first call is not a commitment. It is a diagnosis.

Spodek Law Group represents individuals and entities facing federal money laundering charges under 18 U.S.C. Sections 1956 and 1957. We maintain offices in New York City and represent clients in federal courts across the country. If you are under investigation or have been charged, contact us at info@spodeklawgroup.com for a confidential consultation.