What is Money Laundering?We hear the phrase whenever we are watching a procedural drama on television, or watching a movie about the mob. This phrase immediately engenders images of nefarious characters transacting business in the organized crime underworld. Indeed, recent news indicates that the current occupant of the White House is possibly mired in a scheme involving this very crime. Of course, the crime we’re talking about is Money Laundering. While the phrase “money laundering” is ubiquitous, few people know precisely what type of crime it is meant to describe. In fact, money laundering is not just one type of activity. Rather, it contains many different types of activities focused on one goal. That goal being to conceal the illegal source of money in someone’s possession.

Money Laundering: The Basics

  • Understanding the crime based on its title – Money Laundering

The phrase “money laundering” is descriptive enough to give us an idea of what the crime encompasses. In essence, the perpetrator is trying to “launder” or “clean” money. What about the money needs to be cleaned? The fact that the money is the result of illegal activity, i.e., stained by illegality.  Thus, the person with the tainted money needs to put it through another transaction or entity. That transaction or entity will separate the stained money from the perpetrator. Accordingly, as a result of the transaction, the perpetrator gets money back that is no longer tainted as money from illegal activity.

  • Money Laundering – the three common steps

The description above can break down into three essential steps in the process of money laundering. First, the perpetrator will engage in illegal activity that results in money going into the perpetrator’s hands. Second, the perpetrator passes the money through a transaction or number of transactions to hide the identity of the person who initially received the money from the illegal activity. Third, the transaction or series of transactions returns money to the perpetrator in an indirect way. As a result, the money has been “laundered.”

To use a pop-culture reference, take the television show Breaking Bad. In that show, the main character, former science teacher Walter White, made a great deal of money selling high-quality crystal meth. He eventually purchased a car wash business with all the money he made. Analyzing that into our three-step process above, (i) Walter had lots of money from illegal drug sales; (ii) he engaged in a transaction — purchasing the car wash — to hide the fact that the money was from ill-gotten gains; (iii) the stained money that went into the car wash was “laundered,” so that the money coming out of the car wash (profit made from running the business) was not associated with the initial illegal activity of selling drugs.

Money Laundering – The Law

  • The Bank Secrecy Act of 1970

To combat money laundering on the federal level, Congress passed the Bank Secrecy Act of 1970. That law requires banks to report any financial transaction that exceeds $10,000. Accordingly, if someone comes into a bank to deposit a large amount of cash, over $10,000, that deposit will trigger a reporting requirement on the part of the bank.

  • The Money Laundering Control Act of 1986

A little less than two decades later, Congress passed the Money Laundering Control Act of 1986, which officially made it a federal crime. The Act consists of two sections; 18 U.S.C. § 1956 and § 1957. Section 1956 makes it a crime for individuals to engage in a financial transaction with proceeds that came from certain specific crimes, so-called “specified unlawful activities” (SUAs). SUAs include drug distribution, murder, fraud, and bribery. Moreover, the law requires that the individual had the intent to disguise the source, ownership, location, or control of the money.

Section 1957, nicknamed the “money spending statute,” makes it illegal to engage in a financial transaction in excess of $10,000, where the money was derived from an SUA. Notably, in contrast to section 1956, there is no intent-to-conceal requirement. Thus, if an individual spends more than $10,000 of ill-gotten gains, regardless of whether the individual wanted to disguise it, then he or she violated section 1957.

  • The USA Patriot Act in 2001 and Supreme Court decisions

The USA Patriot Act passed in 2001, which added additional reporting responsibilities on banks in order to stop the financing of terrorist activities. Finally, the United States Supreme Court, in 2008, clarified the federal money laundering statute in two cases that term: Cuellar v. United States, and United States v. Santos.

Money laundering can be a complicated crime to prove for prosecutors.  Yet oftentimes, a person in possession of an unusual amount of cash will raise a red flag that money laundering is afoot.  Hopefully, the information above gives you a better understanding of the crime.  If you have any questions, do not hesitate to consult an attorney with experience in handling money laundering cases.

Brandon Sample is an attorney who has extensive experience handling money laundering matters. If you have been charged with federal money laundering, the penalties are significant. Brandon Sample will aggressively advocate on your behalf to minimize the impact of any money laundering charge against you. Call for a free consultation today.

Additional Resources

https://www.law.cornell.edu/wex/money_laundering

https://gettingthedealthrough.com/area/50/jurisdiction/23/anti-money-laundering-2016-united-states/

Leave a Comment