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The Money Laundering Cycle, Statutes And Penalties

Money laundering is a significant criminal offense with harsh penalties like lengthy prison terms and hefty fines. If you or someone you know is faced with a money laundering allegation or charge, having experienced legal counsel advocate on your behalf can make a meaningful difference in the courtroom.

Money laundering occurs when someone makes large amounts of money (also known as “dirty money”) from criminal activity and then attempts to hide or conceal the source, amount or destination of the funds. Examples of criminal activity include drug trafficking and embezzlement. The point of concealing the true origins of the money is to make it appear to authorities that the money came from lawful sources.

A money laundering conviction can bring significant penalties. At the Law Offices of Peter Katz, I offer a free consultation to help those charged understand their rights and options. Call me, attorney Peter Katz, at 609-900-2648 to arrange a meeting.

The Money Laundering Cycle

The three stages of money laundering are placement, layering and integration, which involve the following:

  • Placement: Here, the illegal funds enter the legitimate financial system, like a bank account.
  • Layering: Under this stage, the person moves the illegal funds, concealing its source to make it more difficult for someone to trace. Ways to conceal funds include wiring or transferring monies to offshore bank accounts.
  • Integration: Lastly, the funds reemerge in the economy through legitimate transactions, making it seem like the funds belong to legitimate sources.

Other charges can be brought in relation to money laundering, such as mail or bank fraud.

Three Money Laundering Definitions

Some helpful money laundering definitions are:

  • Financial transaction: Title 18 U.S.C. Section 1956(c)(4) defines “financial transaction” as one that affects interstate or foreign commerce and involves the movement of funds by wire or other means and the use of a monetary instrument.
  • Specified unlawful activity: Title 18 U.S.C. Section 1956(c)(7) includes a whole host of crimes in its definition of specified unlawful activity. These offenses include embezzlement, bribery and health care fraud.
  • Money instrument: Defined under Title 18 U.S.C. Section 1956(c)(5), a money instrument includes U.S. or foreign coin or currency, traveler’s checks, personal checks, bank checks and money orders or investment securities or negotiable instruments such as promissory notes.

If funds were transferred or interstate or international communication happened that allowed or facilitated money laundering, related charges such as wire fraud may also be introduced to your case.

Relevant Money Laundering Statutes

The two primary money laundering statutes are Title 18 U.S.C. Sections 1956 and 1957:

  • Title 18 U.S.C. Section 1956: Under this provision, one must conduct or attempt to conduct a financial transaction knowing that the property involved in the financial transaction derives from some form unlawful activity. The government must prove each of the following elements beyond a reasonable doubt:
    • The defendant knowingly conducted or attempted to conduct a financial transaction.
    • The defendant knew that the property involved in the financial transaction represented the proceeds of some form of unlawful activity.
    • The property involved in the financial transaction did, in fact, involve the proceeds of specified unlawful activity.
    • The defendant engaged in the financial transaction knowing that the transaction was designed, in whole or in part, to conceal or disguise the nature, location, source, ownership or control of the proceeds of the specified unlawful activity.
  • Title 18 U.S.C. Section 1957: One violates this statute if they knowingly engage or attempt to engage in a monetary transaction exceeding in criminally derived property valued at over $10,000. The government must prove each of the following elements beyond a reasonable doubt:
    • The defendant knowingly engaged or attempted to engage in a monetary transaction.
    • The defendant knew that the transaction involved criminally derived property.
    • The criminally derived property’s value was greater than $10,000.
    • The criminally derived property did, in fact, derive from a specified unlawful activity.
    • The monetary transaction took place in the United States or outside the United States and the defendant is a U.S. citizen.

In many cases, money laundering charges also engender other charges – often conspiracy – even if a crime was not committed.

Money Laundering Penalties

One facing a money laundering charge risks a lengthy federal prison sentence and the need to pay significant amounts of money in restitution. A conviction under Title 18 U.S.C Section 1956 comes with a possible prison term of 20 years and/or a fine of up to $500,000 or twice the value of the money that was laundered, whichever is greater. A conviction under Title 18 U.S.C. Section 1957 carries a sentence of up to 10 years in federal prison.

Why Seek Legal Counsel In Money Laundering Charges?

The possibility of going to prison and having a criminal record can have significant ramifications on one’s reputation and livelihood. Not only does a money laundering conviction carry with it a stigma of being a federal felon, but it can affect other aspects of your life, like revocation of professional licenses and, if you are a non-U.S. citizen, deportation.

Get Proven, Agile Representation And Guidance

During my nearly 30 years in law, I have worked as both a prosecutor and as a defense attorney. I understand what these white collar cases entail and the effective defense strategies that are needed. I know what is at stake for you, your career and your family, so I focus my efforts on your case and the outcome. Call me at my firm, the Law Offices of Peter Katz, at 609-900-2648 or contact me online to begin preparing your defense today. I help clients in both New York and New Jersey.