Money Laundering

Money laundering refers to a process where money acquired illegally—through criminal activities—is run through a legitimate business, becoming “clean.” The end goal of this “laundering” process is to make it difficult to determine that the washed money was obtained through illegal sources. For money laundering charges to be considered federal generally requires that the money or illegal activities that garnered the money have crossed a state border or were taken from a government agency. Income that is earned through drug trafficking has usually crossed multiple states, and drug trafficking income is one of the primary types of income that is laundered through a legitimate business.

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While most of us are most familiar with a scenario in which a drug trafficker launders the money made from selling drugs through something like a restaurant (where people could, conceivably, pay cash for their meals), there are less-common methods of money laundering. Rather than laundering the money through an actual business, a drug trafficker could purchase gift cards with the drug cash, then use the gift cards to buy jewelry or other high-ticket items that are relatively easy to sell. The proceeds are then put into a bank account, sometimes the bank account of a shell corporation.

The funds in that bank account could be used to buy real estate, both in the United States and abroad. To add yet another layer to the money laundering scheme, the property could be used to secure loans that are subsequently defaulted on. While the property would certainly be repossessed, the money loaned would be put into another bank account for personal use. Each layer of “legal” transactions makes it that much more difficult for the money to be traced back to its origin, from the sale of illegal drugs. The federal government does have highly trained forensic accountants on their side, making it easier to untangle these complex transactions.

Pennsylvania Money Laundering Charges

In the state of Pennsylvania, money laundering is considered a first-degree felony, with penalties including up to 20 years in prison, and fines that are twice the monetary amount involved, up to $100,000. Pennsylvania law describes money laundering as “dealing in the proceeds of unlawful activities,” by using financial transactions to disguise or conceal money and other proceeds gained via criminal acts. State or federal laws must classify the underlying offense as a first-degree misdemeanor or a felony to qualify for charges of money laundering. Pennsylvania’s money laundering laws are meant to discourage financial gains from criminal activities and to weaken groups engaged in racketeering or organized crime.

Under 18 Pa. Cons. Stat. Section 5111, the defendant charged with money laundering must have been aware that the money came from criminal activities, then intentionally acted to promote those activities. The defendant must have understood that the financial transaction was being made to conceal, disguise or protect the proceeds, and must have acted to avoid any transaction reporting requirements under state or federal laws. Laundered money may go through a bank, a credit card company, a loan company, an investment bank, or any other type of financial institution. The state of Pennsylvania also allows civil penalties for money laundering to be paid to the state in an amount equal to the value of the financial transaction, or a flat fine of $10,000.

Federal Money Laundering Charges

In addition to it being illegal to engage in any financial transaction in which the monies were acquired through illegal or criminal activities, promoting the criminal activity that creates the funds, or willfully concealing the resulting money is also a federal crime. If a person is aware that money was garnered through an illegal act or illegal behavior, then it is against the law to be involved in any monetary transaction larger than $10,000.

Money Laundering Charges are Usually Accompanied by Other Charges

It is generally rare for a person to only be charged with money laundering, as there are usually underlying offenses such as:

Drug crimes
Conspiracy
Mail fraud
Racketeering
Bank fraud
Credit card fraud
Human trafficking
Counterfeiting
Tax evasion
Securities fraud
RICO charges
Mortgage fraud
ID theft

Money laundering affects both domestic and international financial transactions, and agents are often involved in sting operations, particularly when international money laundering is suspected.

Money Laundering Charges Require Concealment

According to the Supreme Court, simply making money from a crime, then spending that money does not constitute money laundering, because there was no attempt to hide the money. If you are running an illegal gambling ring where you collect money from those who want to play, then pay the winners, your charges may relate to the actual illegal gambling ring. Unless you run the money you earn from the illegal gambling ring through another business to hide your profits, you won’t be charged with money laundering.

In the same vein, if you sell items you have stolen for $5,000, then take that money and buy a car, you may be guilty of stealing and dealing in stolen goods, but not money laundering—unless you attempt to conceal where the money originally came from. The crime of money laundering requires you to make money from an illegal activity, then try to make it appear as though it came from a legitimate source.

Federal Statutes of Limitations for Money Laundering

Statutes of limitations tell us how long state or federal law enforcement has to prosecute a person who has committed a criminal act. Statutes of limitations generally vary from state to state, and for federal crimes, there are federal statutes. Under federal law, no person can be prosecuted for any offense other than a capital offense unless there is an indictment within five years from the time the offense was committed.

Federal Penalties for Money Laundering

Money laundering is a serious federal crime, with a conviction usually resulting in fines, prison, probation, or a combination of these penalties. Money laundering is almost always charged as a felony, although on the state level some states charge money launderers with a misdemeanor, which can still result in a jail sentence. Sentencing for a federal money laundering conviction will depend on the amount of money laundered, as well as whether the laundered money was a part of an ongoing criminal enterprise or was related to terrorist activities. Prison sentences could range from one year to thirty-five years or more depending on the specific facts surrounding the money laundering charges.

Fines in federal money laundering cases can be steep—up to $500,000 or double the amount of money that was laundered (whichever is greater). State fines are likely to be significantly less, particularly if the charge is a misdemeanor. An individual convicted of federal money laundering could also be sentenced to probation which would last for a specific time—usually one year, but sometimes as long as three years or more.

If you are sentenced to probation, you will be required to meet your stated probate conditions which will likely include reporting regularly to your probation officer, random drug tests, and random home checks. You must not commit any additional crime while on probation, and if you violate any condition of your probation, you could be ordered to serve time in prison, you could be assessed additional fines, your probation period could be increased, or you could be sentenced to other penalties.

Defenses for Those Charged with Money Laundering

The government has the burden of proof as far as showing you were actively involved in the money laundering process. You must have been aware that you were engaging in criminal activity—in some instances, an accountant working for the owner of the business could be the perpetrator of the money laundering operation, while the manager of the company could truly be unaware of the money laundering operation. The government is required to show that a “reasonable” person would have known that money laundering was occurring.

To prove that you were aware of the ongoing money laundering, the state or federal prosecutors must show you were expecting to receive funds back, not just that you received proceeds from illegal activity. In other words, there must have been intent on your part. Often, federal money laundering charges are brought against those charged in narcotics cases, largely as a bargaining chip for a potential plea deal on the part of prosecutors. Depending on the exact circumstances surrounding your charges, your attorney could use one of the following defenses against your money laundering charges:

There was no intent on your part to commit money laundering. If you can show you had no knowledge that the money you had was illegal, then there was no intent to commit the criminal offense of money laundering.
You were under duress, in that you believed you or your loved ones would be in danger if you refused to participate in the money laundering activities.
There is a lack of evidence against you. Not only must the defense show the money was laundered through a legitimate business it must also show the money came from illegal activities.
The amount of money alleged to have been laundered is important as far as the severity of the initial charges and the sentencing in the event of a conviction. An experienced criminal defense attorney may attempt to show that not all of the money claimed as laundered can be traced back to a specific illegal activity.

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