An Overview of New Jersey’s Money Laundering Laws

Money laundering involves possessing, transporting, or participating in transactions with property derived from criminal activity. New Jersey has strict laws against money laundering, with the goal of preventing criminals from profiting off illegal activities and “cleaning” their dirty money. This article will provide an overview of the key aspects of New Jersey’s money laundering laws.

The Crime of Money Laundering

New Jersey’s money laundering law is codified in Section 2C:21-25 of the state’s criminal code. Under this law, a person commits money laundering if they:

• Transport or possess property known to be derived from criminal activity, or
• Engage in transactions with this property either to promote criminal activity or to conceal the source of the funds.

The law does not require prosecutors to prove the person was directly involved in the underlying criminal activity. They only need to show the person knew the property came from some form of illegal activity[3].

Some examples of money laundering include:

• Breaking up large amounts of cash into smaller deposits to avoid triggering reporting requirements[1]. Financial institutions must report currency transactions over $10,000.
• Using “smurfing” by making multiple small deposits through various people to avoid suspicion[3].
• Transferring dirty money between bank accounts or shell companies to disguise the source.
• Buying assets like real estate or luxury items to convert illegal cash into legitimate assets.

The goal is to hide the criminal origins of the money and make it appear legitimate.

Degrees of the Offense

New Jersey grades money laundering into three degrees depending on the amount of money involved[1]:

• 1st Degree – $500,000 or more
• 2nd Degree – Between $75,000-$500,000
• 3rd Degree – Less than $75,000

First degree money laundering carries 5-10 years in prison. Second degree is 3-5 years, while third degree ranges from 3-5 years. Fines up to $150,000 may also apply[2].

Anti-Money Laundering Profiteering Penalty

In addition to fines and prison time, New Jersey may impose an “anti-money laundering profiteering penalty” equal to up to three times the amount involved in the illegal transactions[5].

For example, if a person laundered $100,000, they could face a $300,000 penalty on top of any other sanctions. This penalty is designed to disgorge the profit from the illegal activity.

Forfeiture

Property connected to money laundering may also be subject to forfeiture. This includes property used to facilitate the crime or traceable proceeds of the illegal activity[5].

New Jersey uses both criminal and civil forfeiture. In criminal forfeiture, the property is seized after a conviction. In civil cases, the property itself is the defendant.

Investigative Interrogatories

Prosecutors have broad power to investigate potential money laundering. The Attorney General can issue “investigative interrogatories” forcing people to answer questions and produce documents[4].

This tool helps develop evidence when officials suspect someone has information relevant to an investigation.

Federal Money Laundering Laws

In addition to state laws, federal statutes also prohibit money laundering. These include provisions in Title 18 and the Bank Secrecy Act. Federal charges often carry stiffer penalties than state crimes.

Prosecutors sometimes pursue federal and state money laundering charges together. The federal laws do not preempt New Jersey’s statutes, so state charges can proceed independently.

Defenses to Money Laundering

There are several possible defenses to money laundering charges:

• Lack of knowledge – The state must prove the person knew the funds came from illegal activity. If the source was unclear, it may undermine this element[3].
• No intent to conceal – Merely depositing dirty money is not enough. There must be intent to hide the source or promote criminal activity[1].
• Entrapment – If police improperly induced the crime, entrapment may apply.
• Statute of limitations – There is a 5-year limit for prosecuting money laundering in NJ after the illegal conduct[2].

An experienced criminal defense lawyer can evaluate the evidence and determine if any defenses could apply in a particular case.