Money Laundering

Money laundering is a centerpiece charge in many federal investigations. It’s the government’s tool for attacking the movement, concealment, or “cleaning” or proceeds from unlawful activity. In tax, white collar, and criminal investigations, laundering counts are often added to reach beyond the original alleged offense and to pursue forfeiture of assets.

What Are the Core Money-Laundering Statutes?

  • 18 U.S.C. 1956—The principal money-laundering statute. It criminalizes transactions intended to: (a) promote unlawful activity, (b) conceal or disguise the nature, source, ownership or control of proceeds from unlawful activity; or (c) evade reporting requirements. Section 1956 covers both “financial transactions” and international transfers tied to “dirty” money.

  • 18 U.S.C. 1957—This statute makes it a crime to knowingly engage in monetary transactions in criminally-derived property of a value greater than $10,000. Section 1957 is often charged alongside section 1956; it requires fewer proof elements but triggers serious consequences and forfeiture exposure.

Both statutes carry significant prison exposure, fines, and mandatory forfeiture of assets traceable to the alleged criminal proceeds.

Common Money-Laundering Scenarios

  • Cash Structuring/Layering: Breaking large cash receipts into smaller deposits or transfers to avoid reporting requirements (or to obscure origin)

  • Use of Third-Party Accounts: Moving funds through relatives, shell companies, trust accounts, or foreign banks to hid beneficial ownership.

  • Business Masking: Commingling unlawful proceeds in legitimate business (e.g., restaurants, construction) to produce apparently “clean” revenue

  • Offshore Transfers & Nominees: Routing proceeds to foreign accounts through a chain or entities and nominees.

  • Trade-based Laundering: Misstating invoices, over/under invoicing, or using bogus vendor payments to shift value across borders.

  • Integration via Loans/Investments: Using loans, capital contributions, or investments to launder proceeds into legitimate assets (real estate, vehicles, luxury goods).

Why Money-Laundering Charges Are Dangerous

  • Broad Reach: The statute covers many types of transactions and can be applied to a wide range of financial conduct.

  • Stacking and Layering Counts: Prosecutors often charge multiple laundering counts based on separate transactions—each count carries exposure.

  • Forfeiture Risk: Convictions (and sometimes pre-trial civil actions) can lead to forfeiture of bank accounts, real estate, vehicles, and other assets.

  • Link to Underlying Predicate Crimes: Section 1956 requires that the property be “proceeds” of unlawful activity; the government can base that predicate on many offenses (tax crimes, frauds, drug offenses, bribery, etc.)

  • Sentencing Exposure: Sentences can be lengthy, especially when combined with other felonies. Guideline calculations depend heavily on the value and traceability of proceeds.

Because intent and knowledge are central, money-laundering defenses often focus on disproving scienter (state of mind) or showing legitimate explanations for the transactions.

Typical Defenses

  • Lack of Knowledge. The target or defendant may not have known that the funds were illicit and had no reason to suspect wrongdoing. Reasonable business explanations for transfers may be powerful rebuttals.

  • No Criminal Proceeds. A defense lawyer may demonstrate that the money was legitimate income, loan proceeds, or other lawful funds—not proceeds of a predicate offense.

  • No Intent to Conceal: Many transactions look suspicious in hindsight but were ordinary business dealings or otherwise immaterial—not concealment or an attempt to promote crime.

  • Challenging Traceability: Forfeiture requires tracing illicit proceeds to specific assets; robust accounting and expert witnesses can help defend any chain of traceability.

Investigation and Litigation Strategy

  • Early Internal Investigation. Rapid, lawyer-led reviews of bank records, contracts, and communications are essential to field the facts, preserve privilege, and plan strategy.

  • Expert Assistance. Financial forensics, accounting, and other expert witnesses are often critical in reconstructing cash flows and rebutting government reconstructions.

  • Negotiation and Cooperation. In some matters, limited cooperation or proffers can potentially narrow exposure—especially where culpability varies among actors.

  • Sentencing Mitigation. If conviction is likely, mitigate by showing lack of sophistication, limited role, acceptance of responsibility, restitution, and substantial cooperation, if those items best fit the defendant’s goals.

Money-laundering charges dramatically increase the stakes of any investigation. Successful defense requires swift action and a strategy tailored to the facts of the case. When the stakes are high, and with early, experienced counsel, it is often possible to eliminate or mitigate exposure, reduce forfeiture risk, and if necessary, mount a persuasive trial defense.