Money laundering
Money laundering occurs when a person takes "proceeds" generated (or represented to be generated) by a Specified Unlawful Activity (SUA) and moves, attempts to move, or conspires to move them in a prohibited manner.
Title 18 U.S.C. §§ 1956 and
1957 define eleven money laundering crimes, which are grouped in four broad categories: domestic money laundering (§ 1956(a)(1)), international money laundering (§ 1956(a)(2)), money laundering stings (reverse money laundering) (§ 1956(a)(3)), and money laundering spending (§ 1957).
Money laundering conspiracies may be charged under
18 U.S.C. §§ 371 or 1956(h).
The Q&A that follows can be used to determine which, if any, of these money laundering crimes have been committed. A graphical overview is provided by the flow chart on the right (click on it for a full size PDF).
Start the Q&A
start → domestic or international?
International money laundering occurs where the transaction flows from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States.
The transaction was:
start → domestic
→ SUA?
A Specified Unlawful Activity (SUA) is one of the crimes listed or cross-referenced in 18 U.S.C. § 1956(c)(7). That list includes by reference all of the racketeering predicates listed in
18 U.S.C. § 1961(1). It also includes financial transactions associated with drug crimes, enumerated violent crimes, fraud, smuggling, bribery, sex trafficking; and much more.
The proceeds were:
start → domestic → sting
→ represented
Represented means "any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized
[in 18 U.S.C. § 1956(e)] to investigate or prosecute violations of [18 U.S.C. § 1956]."
18 U.S.C. § 1956(3).
start → domestic → sting
→ represented → financial transaction?
Financial transaction is defined in 18 U.S.C. § 1956(c)(4) to mean:
(A) a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments, or (iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or (B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree;
Note the requirement of a (minimal) effect on commerce.
The defendant:
start → domestic → sting
→ represented → financial transaction
→ intent
Transaction reporting requirements include Currency Transaction Reports (CTRs) for cash transactions over $10,000.
The financial transaction was done:
start → domestic →
sting → intent → 1956(a)(3)(A)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(3)(A) (promotion money laundering sting):
with the intent to promote the carrying on of specified unlawful activity ... conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity
A violation of this provision is a twenty year felony.
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start → domestic →
sting → intent → 1956(a)(3)(B)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(3)(B) (concealment money laundering sting):
with the intent ... to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity ... conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity
A violation of this provision is a twenty year felony.
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start → domestic →
sting → intent → 1956(a)(3)(C)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(3)(C) (reporting requirement money laundering sting):
with the intent ... to avoid a transaction reporting requirement under State or Federal law ... conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity
A violation of this provision is a twenty year felony.
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start → domestic → SUA
→ knowing
The government must prove that the defendant knew that the money or property involved in the transaction represented the proceeds of some form of activity that constitutes a felony under state, federal, or foreign law, but it need not prove that the defendant knew that the property was an SUA. 18 U.S.C.
§ 1956(c)(1).
The defendant, at the time of the transaction:
start → domestic → SUA
→ knowing → financial transaction?
Financial transaction is defined in 18 U.S.C. § 1956(c)(4) to mean:
(A) a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments, or (iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or (B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree;
Note the requirement of a (minimal) effect on commerce.
The defendant:
start → domestic → SUA
→ knowing → financial transaction
→ intent
Title 26 U.S.C. §§ 7201 is the tax evasion statute.
Title 26 U.S.C. § 7206 covers false and fraudulent tax returns.
Transaction reporting requirements include Currency Transaction Reports (CTRs) for cash transactions over $10,000.
The financial transaction was done:
start → domestic → SUA
→ 1956(a)(1)(A)(i)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(1)(A)(i) (promotion money laundering):
knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity (A)(i) with the intent to promote the carrying on of specified unlawful activity
A violation of this provision is a twenty year felony.
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start → domestic → SUA
→ 1956(a)(1)(A)(ii)
The applicable money laundering provision is 18 U.S.C. §1956(a)(1)(A)(ii) (tax violations):
knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity (A) ... (ii) with intent to engage in conduct constituting a violation of [26 U.S.C. §§ 7201 or 7206]
A violation of this provision is a twenty year felony.
Go back to the starting page
start → domestic → SUA
→ 1956(a)(1)(B)(i)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(1)(B)(i) (concealment money laundering):
knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity ... (B) knowing that the transaction is designed in whole or in part (i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity
A violation of this provision is a twenty year felony.
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start → domestic → SUA
→ 1956(b)(1)(ii)
The applicable money laundering provision is 18 U.S.C. §1956(a)(1)(B)(ii) (avoid reporting):
knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity ... (B) knowing that the transaction is designed in whole or in part ... (ii) to avoid a transaction reporting requirement under State or Federal law
A violation of this provision is a twenty year felony.
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start → international
→ monetary instrument?
International money laundering requires proof that the defendant transported, transmitted, or transfered (or attempted or conspired to do so) a monetary instrument or funds.
A "monetary instrument" is "(i) coin or currency of the United States or of any other country, travelers’ checks, personal checks, bank checks, and money orders, or (ii) investment securities or negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery."
18 U.S.C. § 1956(c)(5).
start → international
→ monetary instrument → intent
A Specified Unlawful Activity (SUA) is one of the crimes listed or cross-referenced in 18 U.S.C. § 1956(c)(7). That list includes by reference all of the racketeering predicates listed in
18 U.S.C. § 1961(1). It also includes financial transactions associated with drug crimes, enumerated violent crimes, fraud, smuggling, bribery, sex trafficking; and much more.
- Unlawful activity is activity that constitutes a felony under State, Federal, or foreign law.
- Currency transaction reporting requirements include Currency Transaction Reports (CTRs) for cash transactions over $10,000, and Reports of International Transportation of Currency or Monetary Instruments (CMIRs) filed by individuals or businesses that transport $10,000 or more in currency or other negotiable instruments into or out of the
United States.
- The transaction (or attempt or conspiracy)
start → international
→ monetary instrument → 1956(a)(2)(A)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(2)(A) (international promotion money laundering):
transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States with the intent to promote the carrying on of specified unlawful activity
A violation of this provision is a twenty year felony.
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start → international
→ monetary instrument → 1956(a)(2)(B)(i)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(2)(B)(i) (international concealment money laundering):
transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States ... knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represent the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity
A violation of this provision is a twenty year felony.
Go back to the starting page
start → international
→ monetary instrument → 1956(a)(2)(B)(ii)
The applicable money laundering provision is 18 U.S.C. § 1956(a)(2)(B)(ii) (avoiding international transaction reporting):
transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States ... knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represent the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part ... to avoid a transaction reporting requirement under State or Federal law
A violation of this provision is a twenty year felony.
Go back to the starting page
start → domestic
→ monetary transaction?
The definition of a monetary transaction is broader than (but includes)
"financial transactions." It includes:
the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined in section 1956(c)(5) of this title) by, through, or to a financial institution (as defined in section 1956 of this title), including any transaction that would be a financial transaction under section 1956(c)(4)(B) of this title, but such term does not include any transaction necessary to preserve a person's right to representation as guaranteed by the sixth amendment to the Constitution;
Note the required use of a financial institution.
The transaction was:
start → domestic
→ monetary transaction → criminally derived?
Title 18 U.S.C. § 1957 makes it unlawful to knowingly conduct a monetary transaction involving more than $10,000 in criminally derived property. "Criminally derived
property" is defined as "any property constituting, or derived from, proceeds obtained from a criminal offense." 18 U.S.C. § 1957(f)(2).
The defendant
start → monetary transaction
→ criminally derived? → jurisdiction?
The jurisdictional element of § 1957 requires that the monetary transaction (or the attempt or conspiracy) must take place "in the United States or in the special maritime and territorial jurisdiction of the United States; [or] the defendant is a United States person (as defined in
[18 U.S.C. § 3077], but excluding the class described in [18 U.S.C. § 3077(2)(D)]." 18 U.S.C. § 1957(d).
The "special maritime and territorial jurisdiction of the United States" is defined in
18 U.S.C. §7.
The monetary transaction (or the attempt or conspiracy):
start → monetary transaction
→ criminally derived? → jurisdiction?
→ 1957
The applicable money laundering provision is 18 U.S.C. § 1957 (engaging in monetary transactions in property derived from an SUA) (money laundering spending):
knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful
activity
A violation of this provision is a ten year felony.
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The defendant cannot be convicted of money laundering on this theory.
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