Money Laundering: What must a Prosecutor Prove

Money Laundering

Money laundering involves the transfer of money obtained from a criminal activity into legitimate channels to disguise its illegal origins. For money laundering to take place, there needs to have been a crime in the first place, which has produced a profit.

The most common type of crimes includes drug dealing, people trafficking, armed robbery, fraud, corruption, blackmail and terrorism.

Laundering consists of three steps:

1) Obtaining illegal cash

2) A financial transaction takes place in order to disguise the source of the funds, money is often moved around to create confusion, sometimes by wiring or transferring to numerous accounts.

3) Money is used as legal funds

To be criminally culpable under 18 U.S.C. §1956(a)(1), a defendant must conduct or attempt to conduct a financial transaction, knowing that the property involved in the financial transaction represents the proceeds of any unlawful activity, with one of the specific intents, and the property must in fact be derived from a specified unlawful activity.

To be criminally culpable under 18 U.S.C §1956(a)(1), a defendant must conduct or attempt to conduct a financial transaction, knowing that the property involved in the financial transaction represents the proceeds of any unlawful activity, with one of the specific intents, and the property must in fact be derived from a specified unlawful activity.

To prove violation of §1956(a)(1), the prosecutor must prove:

1)      Either by direct circumstantial evidence that the defendant knew that the property involved was the proceeds of any felony under State, Federal or foreign law. The prosecutors need not to show that the defendant knew the specific crime from which the proceeds were derived; the prosecutor must prove only that the defendant knew that the property was illegally derived in some way.

2)      The prosecutor must also prove that the defendant initiated or concluded, or participated in initiating or concluding, a financial transaction. A “transaction” is defined in §1956 (c) (3) as a purchase, sale, loan, pledge, gift, transfer, delivery, or other disposition, and with respect to a financial institution, a deposit, withdrawal, transfer between accounts, loan, exchange of currency, extension of credit, purchase or sale-deposit box, or any other payment, transfer or delivery by, through or to a financial institution.

1. A “financial transaction” is defined in §1956(c)(4) as a transaction which affects interstate or foreign commerce and; (1) involves the movement of funds by wire or by other means; (2) involves the use of a monetary instrument; (3) involves the transfer of title to real property, a vehicle, a vessel or an aircraft; or (4) involves the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce.

In conducting the financial transaction, the defendant must have acted with one of the following four specific intents:

v  §1956(a)(1)(A)(I): intent to promote the carrying on of specified unlawful activity;

v  §1956(a)(1)(A)(II): intent to engage in tax evasion or tax fraud;

v  §1956(a)(1)(B)(I): knowledge that the transaction was designed to conceal or disguise the nature, location, source, ownership or control of proceeds of the specified unlawful activity; or

v  §1956(a)(1)(B)(II): knowledge that the transaction was designed to avoid a transaction reporting requirement under State or Federal law [e.g., in violation of 31 U.S.C. §§ 5313 (Currency Transaction Reports) or 5316 (Currency and Monetary Instruments Reports), or 26 U.S.C. §6050I (Internal Revenue Service Form 8300)].

Punishment for money laundering depends on the number of separate offenses, the value amount of the financial transactions, and the defendant’s prior conviction record. A conviction for one offense of money laundering may result in a sentence of imprisonment in county jail or state prison for up to one year. However, California laws correlate imprisonment to the value of the transaction.

If you have been accused of money laundering, whether you are guilty or not, you will need to hire an attorney who specializes in criminal law.