Money laundering applies to the general process when crime proceeds are disguised so they appear to have come from a legitimate source. Original laws against money laundering intended to curtail mob activities but now, it is recognized money laundering arises in other crimes including drug sales, sex trafficking, and even tax evasion. Financial institutions can also face these charges if they are “willfully blind” to suspicious transactions.
Being a federal crime, money laundering can expose you to harsh penalties and upend your life–especially if prosecutors tack on other charges. Here is what to know about the charge of money laundering and why you need to act quickly if you face these charges.
Elements of Money Laundering
Most transactions involve three stages: placement, layering, and integration.
- Placement is the fraudulent step that takes process from criminal activity disguises it as a legitimate one, such as a service performed by a legal business entity.
- Layering is the stage where funds are “washed” so their original source becomes obscured.
- Integration is where the proceeds are re-introduced into the legitimate economy often through purchases or investments which appear legitimate on the surface.
Money laundering is often difficult to prove since there are several stages and often times, the original source of proceeds cannot be determined. This is good news in that charges may be dismissed because the evidence of money laundering no longer exists.
Also, money laundering includes a large intent element which is also difficult to prove. To face charges for money laundering, the prosecutor must show you:
- Knew proceeds arose from a criminal activity;
- Intend to continue that activity; and
- Knew the transaction intended to conceal the original source of the proceeds or avoid reporting requirements under federal or state law.
Laws affect activities occurring within domestic channels and outside the U.S. Both activities are equally penalized since the law allows jurisdiction over foreign property and citizens.
The process of money laundering is often involved and extensive. Most of these transactions are complex and take years to be discovered. Generally, funds from criminal activities are filtered through legitimate systems, like LLCs or investment accounts. They may have been through so many “layers” that evidence against a defendant could be merely circumstantial–unless there are other charges involved with this activity.
The Laws
Since money laundering involves proceeds from criminal activity, the charges rarely stand alone. Defendants accused of money laundering may also face charges for drug dealing, tax evasion or embezzlement.
The primary law regarding money laundering is the Money Laundering Control Act. It addresses activities arising from drug sales, Medicare fraud, embezzlement, and several other offenses. Most defendants facing charges for money laundering face the penalties under this act–especially if they are also facing penalties for drug trafficking.
IRS statutes consider money laundering tax evasion. The code defines gross income as proceeds from whatever sources it was derived. Since criminal proceeds are not normally reported as income to the IRS, tax evasion is another charge that arises alongside money laundering.
Other laws hold financial institutions responsible. Laws arising under the U.S. Patriot Act require deposits of over $10,000 to be reported and a failure to do so (being “willfully blind”) results in regulatory penalties. This also includes foreign currency. Sometimes, an individual working at a financial institution may face criminal charges if they were the primary contact for managing criminal proceeds and making deposits appear legitimate.
Penalties
Violations of the Money Laundering Control Act may result in a fine, imprisonment up to 20 years or both. The amount of the fine depends on the value of the funds laundered or $10,000–whichever is higher.
This may be in addition to tax evasion penalties. In that case, imprisonment up to five years plus a fine for $250,000 can also become possibilities in addition to any money laundering penalties.
Asset forfeiture is another possibility in tax evasion or money laundering cases. The federal governments this as a common tool to dismantle criminal enterprises. You may not only lose business property but also personal, including homes, automobiles or any other property believed to be purchased with the laundered assets.
Money laundering is not a small charge since it often accompanies others as well. These penalties can accumulate quickly leaving you vulnerable to long jail sentences, high fines, and forfeiture of everything you own. If you face these charges, you need a criminal defense attorney who is experienced with these white collar crimes.
Gabriel L. Grasso offers 25 years of experience representing defendants facing state or federal charges. Contact our office today to schedule a consultation and start designing your defense.