A Look At Federal Money Laundering Laws
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As described in the statute 18 U.S.C. § 1956, money laundering is:
The process of transforming money from a crime into legitimate money or assets. Money laundering is defined as knowingly engaging in a financial transaction with the proceeds of a crime for the purpose of concealing or disguising the illicit origin of the property from governments.
A conviction will result in a possible prison sentence of 20 years and a fine of up to $500,000, or twice the value of the funds involved. As with any crime, the government must prove every element of the offense. For instance, the government must show that the money is from the proceeds of a crime to prove money laundering has occurred. If the government has no evidence showing that the money is tainted, there can generally be no conviction. Also, many people might be involved in transactions with proceeds of an illegal activity without being aware that the money was obtained through illegal activity.
Money obtained from certain crimes such as extortion, insider trading, drug trafficking, illegal gambling and tax evasion is “dirty.” It needs to be “cleaned” to appear to have resulted from noncriminal activities so that banks and other financial institutions will deal with it without suspicion.
How Does Money Laundering Occur?
Typically, money laundering happens in three steps: The first step involves introducing cash into the financial system (called placement). The next step is to carry out complex financial transactions that obscure the source of the money (called layering). The final step involves securing funds generated from the transactions of the illegal funds (called integration).
Layering in money laundering can happen in a variety of ways, including:
- Structuring, which is a method by which cash is divided into smaller deposits. This is used to displace suspicion of money laundering and to avoid the possibility of being reported by a bank for potential money laundering.
- Bulk cash smuggling involves the physical transportation of cash to another country and then depositing it into an offshore bank account that has increased bank secrecy or is less likely to enforce money laundering laws.
- Cash-intensive businesses can use accounts to deposit legitimate and criminally derived cash, while still claiming it all as legitimate earnings. Service businesses are often used for this method because such businesses have no variable costs, meaning it may be hard to detect discrepancies between the business’s costs and its revenue. Examples of service businesses used for money laundering including car washes, casinos, tanning beds, strip clubs and even parking structures.
- Trusts and shell companies disguise the true owner of money. Trusts and corporate vehicles, depending on the jurisdiction, need not disclose their true, beneficial owner.
- Casinos are often used in laundering money schemes because an individual may play at an establishment, then cash in chips only to claim illegally obtained funds as gambling winnings.
- Gambling in general can be used for money laundering because betting typically involves higher odds, meaning higher payouts. Illegally obtained funds may be concealed within winnings, making it much harder to trace a money laundering scheme.
- Real estate is another thing that can be involved in money laundering activities. A property purchased with illegally obtained funds may be turned around and sold. This subsequent transaction may hide the true intentions of the seller.
- A goal of money laundering is to keep dirty money off the books and to then have it for private use. If electronic concealment is not possible or would raise suspicion, those accused of money laundering have been known to keep physical stashes of illegally obtained funds at their homes or businesses.
With the stated mission of safeguarding the financial system from the abuses of financial crime such as terrorist financing, money laundering and other illicit activity, the Financial Crimes Enforcement Network acts as the administrator of the Bank Secrecy Act. The BSA was established in 1970 and has become one of the most important tools in the fight against money laundering. Since then, numerous other laws have enhanced and amended the BSA to provide law enforcement and regulatory agencies with the most effective tools to combat money laundering, including the Money Laundering Suppression Act of 1994 and the U.S. Patriot Act in 2001.
Contact Our Firm
If you are being investigated for allegedly laundering money or have already been charged with a crime, protect your rights now by retaining a lawyer. The attorneys at McKellar, Easter & DeVore, Attorneys at Law, have considerable experience handling a wide variety of federal crimes, including money laundering. We know how to create a strong defense strategy and ensure the protection of your constitutional rights.
To get started with your free initial telephone consultation, call 865-566-0125 or send us an email. Appointments are available at any of our three offices: Knoxville, Tennessee; Nashville, Tennessee; and Atlanta, Georgia. We accept credit cards.