If you deal in dirty money, chances are good that at some point you are going to be involved in money laundering. Sometimes doesn’t even matter if you were aware you were dealing with a criminal enterprise or that the funds were the proceeds of illegal activity. Once you are caught up in it, the law may see you as one of the bad guys.

And these types of charges can have a significant impact on your life. Money laundering, along with other white-collar crimes, will stick with you forever and can affect the types of businesses you can work for or even own. It can affect professional certifications that you hold and severely limit how you can function in certain professional settings.

So, if you are facing money laundering charges you need a criminal defense attorney who knows how to navigate the legal system and to ensure that your rights are protected.

You need The Litvak Law Firm.

Overview of Money Laundering

The crime of money laundering is the process that is used to make ill-gotten or “dirty” money appear to be legitimate. There are several techniques that criminals use to achieve this. Cryptocurrencies and online banking have made money laundering even easier because criminals can withdraw and transfer funds without being detected. 

Many companies, especially financial institutions such as banks, are under specific Anti Money Laundering laws that put certain responsibilities on them to stop and prevent money laundering. For instance, they are required to monitor the transactions that customers make and report any financial activity that is suspicious to the proper authorities.

Money laundering is accomplished in three distinct phases:

  • Placement – this is where the illegally obtained money enters the financial system
  • Layering – this is the process that separates or strips the ill-gotten funds from their illegal source. Anonymous shell companies are a common tool used at this phase
  • Integration – this is the point where the “laundered” money is returned to the criminal, appearing to have come from a legitimate, legal source.

There are many methods that money launderers use to move funds. These traditional methods are typically used at the placement phase of the process and may include:

  • High-value investments and movable commodities like gold and diamonds
  • Blending of funds
  • Gambling 
  • Smurfing (Dividing large sums of money into many small transactions using the banking system)
  • Foreign bank accounts
  • Shell companies
  • Invoice fraud
  • Using foreign exchanges
  • Discreet real estate investments and sales or other valuable assets
  • Offshore accounts
  • Moving funds across borders using wire transfers and cash smugglers
  • Aborted transactions
  • Counterfeiting

The internet and digital technology have opened up even more opportunities and, in some cases, made it easier to launder money. Some of the more modern methods include:

  • Fake identity via the internet
  • Online banking
  • Virtual currencies like bitcoin and other cryptocurrencies
  • Anonymous online payment services

Some of these methods can incur additional charges as well.

Bank Secrecy Act

The Currency and Foreign Transactions Reporting Act of 1970, or the Bank Secrecy Act,  requires financial institutions in the US to aid United States government agencies in preventing and detecting money laundering. Under this act, financial institutions must:

  • Keep records of any negotiable instruments that were paid for with cash
  • File reports on any cash transactions that have a daily aggregate amount that exceeds $10,000
  • Report any activity that is suspicious and/or may indicate crimes including tax evasion, money laundering, and others

Related and relevant statutes and regulations include:

Bank Secrecy Act (BSA) Statute

Codified Bank Secrecy Act (BSA) Regulations

Federal Money Laundering Laws

Two federal laws deal with money laundering.

18 U.S. Code § 1956 – Laundering of monetary instruments

18 U.S. Code § 1957 – Engaging in monetary transactions in property derived from specified unlawful activity

There are three types or categories of money laundering defined under Section 1956(a). All of these categories of money laundering have specific activities that make the financial transactions criminal:

  1. The transactions promote the ongoing success of the illegal activity that is specified in the law
  2. The transactions attempt to disguise or hide the control, source, or nature of the proceeds that have been acquired illegally
  3. The transactions avoid a federal or state requirement for transaction reporting

The categories that are defined under Section 1956(a) include:

  • Domestic money laundering – Money laundering in the United States
  • Includes the three activities. 
  • Additionally, there is a fourth activity that makes financial transactions involving false statements that are tax-related or involving tax evasion illegal
  • To be able to convict, the prosecution must show that the defendant was aware that the property or funds (in whole or in part) were proceeds from illegal activity.
  • International money laundering – Money laundering outside of the United States
  • Includes the three activities. 
  • It differs from the domestic offense because a financial transaction is not necessary. The transfer or transport – or attempted – of funds or monetary instrument can take place from a location in the US to a location that is outside of the US, or to a location in the US from a location outside of the US. ‘
  • The monetary instrument is any negotiable instrument that includes:
  • US currency
  • Foreign currency
  • Bank checks
  • Personal checks
  • Travelers’ checks
  • Bonds
  • Stocks
  • The defendant does not have to have knowledge that the funds or monetary instruments that are involved in the transfer or transport are the proceeds from illegal activity to be convicted.
  • Money laundering sting operations – Money that an undercover law enforcement officer claims to be proceeds from illegal activity that are the result of a sting operation. In other words, the officer used deception to trap the defendant in their commission of a crime.
  • Includes the three activities.
  • The prosecution must prove that the defendant had knowledge that they conducted or attempted to conduct a financial transaction affecting foreign or interstate commerce.

The law also makes it illegal to deposit or spend proceeds that are the result of illegal activity. This includes the actions of third parties that choose to engage in business transactions with anyone who attempts to deposit or spend those proceeds. In order to convict, the prosecution must show that the defendant attempted to engage or engaged in a monetary transaction. This differs from a financial transaction. While both require using a financial institution, a monetary transaction does not require interstate commerce. Additionally, the defendant must have knowledge that the transaction involves property that is a) criminally obtained, and b) has a value that exceeds $10,000. Furthermore, it must be shown that the transaction took place in the United States.

New York Money Laundering Laws

New York Penal Law defines money laundering using several criteria:

  • The defendant had knowledge of the illegal action and acted deliberately to use a financial transaction that would otherwise be legal in order to:
      • Conceal the ownership of the money that is derived from any activity that the New York Penal Code defines as criminal activity
      • Conceal the amount of the money that is derived from any activity that the New York Penal Code defines as criminal activity
      • Conceal the origin of the money that is derived from any activity that the New York Penal Code defines as criminal activity

Under New York law, money laundering is a felony. There are four degrees of money laundering in New York. The primary factor that distinguishes one degree from the other is the amount of money that is involved:

  • 4th Degree Money Laundering – $5,000 to $50.000
  • 3rd Degree Money Laundering – $50,000 to $100,000
  • 2nd Degree Money Laundering – $100,000 to $1 million
  • 1st Degree Money Laundering – Amounts exceeding $1 million

Overall, there are four degrees of money laundering offenses as well as four degrees of money laundering in support of terrorism offenses:

New York Penal Law – Article 470 – Money Laundering

New York Penal Law 470.05 – Money Laundering in the Fourth Degree

New York Penal Law 470.10 – Money Laundering in the Third Degree

New York Penal Law 470.15 – Money Laundering in the Second Degree

New York Penal Law 470.20 – Money Laundering in the First Degree

New York Penal Law 470.21 – Money Laundering in Support of Terrorism in the Fourth Degree

New York Penal Law 470.22 – Money Laundering in Support of Terrorism in the Third Degree

New York Penal Law 470.23 – Money Laundering in Support of Terrorism in the Second Degree

New York Penal Law 470.24 – Money Laundering in Support of Terrorism in the First Degree

Penalties for a Federal Money Laundering Conviction

Individuals, as well as banks, can face penalties for participating in the crime of money laundering. Violating 18 U.S.C. §1956 carries a maximum of 20 years in prison and fines but ultimately the penalty depends on various factors present during the crime.

18 U.S. Code § 1956 – Laundering of monetary instruments

Penalties

  • In general. —Whoever conducts or attempts to conduct a transaction described in subsection (a)(1) or (a)(3), or section 1957, or transportation, transmission, or transfer described in subsection (a)(2), is liable to the United States for a civil penalty of not more than the greater of—
      • The value of the property, funds, or monetary instruments involved in the transaction; or
      • $10,000.
  • Jurisdiction over foreign persons.—For purposes of adjudicating an action filed or enforcing a penalty ordered under this section, the district courts shall have jurisdiction over any foreign person, including any financial institution authorized under the laws of a foreign country, against whom the action is brought, if service of process upon the foreign person is made under the Federal Rules of Civil Procedure or the laws of the country in which the foreign person is found, and:
    • The foreign person commits an offense under subsection (a) involving a financial transaction that occurs in whole or in part in the United States;
    • The foreign person converts to his or her own use, property in which the United States has an ownership interest by virtue of the entry of an order of forfeiture by a court of the United States; or
    • A foreign person is a financial institution that maintains a bank account at a financial institution in the United States.
  • Court authority over assets. —A court may issue a pretrial restraining order or take any other action necessary to ensure that any bank account or other property held by the defendant in the United States is available to satisfy a judgment under this section.
  • Federal receiver. —A court may appoint a Federal Receiver to collect, marshal, and take custody, control, and possession of all assets of the defendant, wherever located, to satisfy a civil judgment under this subsection, a forfeiture judgment under section 981 or 982, or a criminal sentence under section 1957 or subsection (a) of this section, including an order of restitution to any victim of a specified unlawful activity.
  • Appointment and authority. —Federal Receiver 
    • May be appointed upon application of a Federal prosecutor or a Federal or State regulator, by the court that has jurisdiction over the defendant in the case.
    • Shall be an officer of the court, and the powers of the Federal Receiver shall include the powers set out in section 754 of title 28, United States Code.
    • Shall have standing equivalent to that of a Federal prosecutor for the purpose of submitting requests to obtain information regarding the assets of the defendant.
      • From the Financial Crimes Enforcement Network of the Department of the Treasury; or
      • From a foreign country pursuant to a mutual legal assistance treaty, multilateral agreement, or another arrangement for international law enforcement assistance, provided that such requests are in accordance with the policies and procedures of the Attorney General.
  • Notice of Conviction of Financial Institutions. —If any financial institution or any officer, director, or employee of any financial institution has been found guilty of an offense under this section, section 1957 or 1960 of this title, or section 5322 or 5324 of title 31, the Attorney General shall provide written notice of such fact to the appropriate regulatory agency for the financial institution.

18 U.S. Code § 1957 – Engaging in monetary transactions in property derived from specified unlawful activity

  • Maximum 10 years in prison
  • Fine 

Penalties for a Money Laundering Conviction in New York

Under New York law, New York Penal Law – Article 470 – Money Laundering, the crime of money laundering is a felony. The penalties increase as the monetary amount increases.

  • New York Penal Law 470.05 – Money Laundering in the Fourth Degree
    • Class E Felony
      • Maximum fine two times the value of the monetary instruments that are the proceeds of the specified criminal activity
      • Maximum 4 years in prison
  • New York Penal Law 470.10 – Money Laundering in the Third Degree
    • Class D Felony
      • Maximum fine two times the value of the monetary instruments that are the proceeds of the specified criminal activity
      • Maximum 7 years in prison
  • New York Penal Law 470.15 – Money Laundering in the Second Degree
    • Class C Felony
      • Maximum fine two times the value of the monetary instruments that are the proceeds of the specified criminal activity
      • Maximum 15 years in prison
  • New York Penal Law 470.20 – Money Laundering in the First Degree
    • Class B Felony
      • Maximum fine two times the value of the monetary instruments that are the proceeds of the specified criminal activity
      • Maximum 25 years in prison
  • New York Penal Law 470.21 – Money Laundering in Support of Terrorism in the Fourth Degree
    • Class E Felony
      • Maximum 4 years in prison
      • Probation
  • New York Penal Law 470.22 – Money Laundering in Support of Terrorism in the Third Degree
    • Class D Felony
      • Maximum 7 years in prison
      • Probation
  • New York Penal Law 470.23 – Money Laundering in Support of Terrorism in the Second Degree
    • Class C Felony
      • Maximum 15 years in prison
      • Probation 
  • New York Penal Law 470.24 – Money Laundering in Support of Terrorism in the First Degree
    • Class B Felony
      • Maximum 25 years in prison
      • Probation

Defenses for Money Laundering

There are several defenses that your attorney could use to defend you against a money laundering charge:

  • Lack of intent to launder money
  • Lack of evidence
  • Insufficient evidence
  • Duress 
  • The accused did not gain any benefit from the crime

Money laundering charges are serious under both federal and New York laws. If you are charged with money laundering or if you suspect you may be under investigation for the crime, you need to seek legal representation immediately. These are intricate laws though, so not every criminal defense attorney will be qualified to represent you.

You need a lawyer who has experience in defending money laundering cases, one who has the training, and who has spent time in a courtroom defending clients against this serious crime. A conviction could leave you with a felony record and exorbitant fines that could bankrupt you.

You need The Litvak Law Firm. Mr. Litvak has worked on many high-profile criminal defense cases, including money laundering. He has the experience and training to represent you and ensure that your rights are protected. Contact his office today at 718-989-2908 and schedule your free phone consultation. In cases like this, you can’t afford to wait. Call today.