Money Laundering Prosecutions In Us Law
Overview
Money laundering is the process of disguising the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses. The goal is to make "dirty" money appear "clean."
Key Federal Statutes
18 U.S.C. § 1956 – Laundering of monetary instruments
18 U.S.C. § 1957 – Engaging in monetary transactions in property derived from unlawful activity
18 U.S.C. § 982 – Criminal forfeiture of property involved in money laundering
31 U.S.C. § 5313 – Currency transaction reporting
31 U.S.C. § 5324 – Structuring transactions to evade reporting requirements
Elements of Money Laundering
To convict under § 1956, the government must prove:
A financial transaction occurred involving criminally derived property.
The defendant knew the property was derived from some form of unlawful activity.
The transaction was done with the intent to promote unlawful activity, conceal the origins of the proceeds, avoid reporting requirements, or otherwise facilitate criminal activity.
Key Case Laws
Case 1: United States v. Santos (2007)
Court: U.S. Supreme Court
Facts: Santos was convicted for money laundering under § 1956 for structuring transactions with gambling proceeds, which are illegal under state law but not federal.
Issue: Whether illegal gambling winnings count as "proceeds" under the money laundering statute.
Ruling: The Court held that “proceeds” means profits, not gross receipts. Since Santos only broke even, the money did not qualify.
Significance: Limited the scope of "proceeds" in § 1956, requiring that the property be actual profits from illegal activity.
Case 2: United States v. Russell (2002)
Court: 11th Circuit Court of Appeals
Facts: Russell was charged with laundering drug money by transferring it through various accounts to hide its origin.
Ruling: The court upheld the conviction, emphasizing that knowingly engaging in transactions designed to conceal criminal origins satisfies § 1956.
Significance: Reinforced that layering and structuring financial transactions to conceal money origin is criminal.
Case 3: United States v. Bajakajian (1998)
Court: U.S. Supreme Court
Facts: Bajakajian failed to report transporting over $350,000 out of the U.S., violating currency reporting laws and charged with money laundering.
Issue: Whether forfeiture of all the money was excessive punishment.
Ruling: The Court ruled forfeiture was unconstitutional as it was grossly disproportionate to the offense.
Significance: Set limits on penalties and emphasized proportionality in forfeiture related to money laundering.
Case 4: United States v. Santos (2005, 2nd Circuit)
Facts: Different from the Supreme Court Santos, this involved prosecution of drug dealers accused of laundering gross receipts instead of profits.
Ruling: The Second Circuit initially sided with a broad interpretation of "proceeds," but the Supreme Court later narrowed it.
Significance: Highlights circuit splits before Supreme Court clarity on "proceeds."
Case 5: United States v. McNab (2004)
Court: 9th Circuit
Facts: McNab laundered drug proceeds through cash deposits into businesses.
Ruling: Upheld conviction; the court stressed that knowledge and intent to conceal illegal origins are key elements.
Significance: Demonstrates courts’ consistent application of money laundering statutes to drug proceeds.
Case 6: United States v. Renteria (2010)
Court: 7th Circuit
Facts: Defendant structured cash deposits to avoid reporting requirements.
Ruling: Convicted under § 5324 for structuring; court affirmed that intent to evade currency transaction reports qualifies as money laundering.
Significance: Shows structuring as a common money laundering method that courts punish vigorously.
Case 7: United States v. Stephenson (2013)
Court: 6th Circuit
Facts: Stephenson laundered proceeds by investing in real estate to hide illicit funds.
Ruling: Conviction affirmed; use of legitimate businesses to conceal illegal funds meets laundering statutes.
Significance: Confirms investment in legal assets can constitute laundering if intent to disguise illegal source exists.
Case 8: United States v. Santos-Brito (2012)
Court: 1st Circuit
Facts: Laundering scheme involving international wire transfers of drug money.
Ruling: Court held that knowledge and involvement in wire transfers for criminal proceeds support laundering charges.
Significance: Emphasizes prosecution of international financial schemes in money laundering.
Summary
Money laundering prosecutions focus on illegal financial transactions designed to disguise the source of criminal proceeds.
The government must prove knowledge, intent, and financial transactions involving criminal proceeds.
Courts interpret "proceeds" as profits, not gross receipts.
Penalties include forfeiture, fines, and imprisonment, but courts guard against excessive punishment.
Structuring transactions to avoid reporting is a common money laundering method prosecuted under federal law.
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