Money Laundering

Money laundering is a criminal offense whereby an individual attempts to conceal the source of illegally obtained funds by funneling the money through a financial institution and then reaping the pecuniary gains of the activity.

Concealing the funds generally takes the skill and knowledge of someone who has financial expertise, but less complex means can be performed to accomplish the same result. For instance, merely moving funds from one account to another is an act of concealment. So long as you are know that the funds or property was gained from an illegal or illicit activity, you have committed a criminal offense.

Concealment is done to hide the source, location and ownership of the proceeds of the unlawful activity to avoid reporting the funds to the IRS or to avoid detection by law enforcement. Changing the form of the money to or from securities, or into other currencies is also concealment.

Since funds are usually transferred across state lines or internationally, the offense is commonly a federal crime. In the states, the offense is a felony.

If you face federal or state charges for money laundering, immediately contact the offices of criminal defense attorney James Silverstein.

Illegal Activities

Money laundering is usually associated with funds obtained from sales of illegal narcotics, but other illegal activities like prostitution, arms smuggling, embezzlement, insider trading gains, extortion, bribery, and computer fraud are all examples of unlawful activities where money laundering is used to conceal the source and ownership of the funds.

How It is Done

Typically, the funds are broken up into smaller amounts and deposited into several bank accounts in various countries, or it is used to buy stock or other financial instruments. The money launderer may also conceal the funds by representing them as payment for legitimate goods or services.

Once the money is transferred, the person may continue the concealment by investing the money into legitimate businesses, real estate, automobiles, or other items. This is the laundering or cleansing of the funds from an illegal source into a legitimate one.

Federal Legislation

Banks will report any deposits of over $10,000 to the IRS as one measure to prevent or discourage money laundering, but individuals do break up the funds to avoid the reporting requirement. Under the Money Laundering Control Act of 1986, individuals must also avoid another federal requirement that businesses that wire internationally funds exceeding $750 be registered with the government and file a report including the names of the transferor and recipient.

Penalties

Federal sentencing guidelines may impose up to 20-years in federal prison per count of money laundering. Business and personal assets can be seized and fines can be as high as $50,000, or double the money involved.

State penalties range from one to several years imprisonment along with fines that are double the value of the transacted funds, or even five times the value if the defendant has prior offenses and along with fines up to $500,000.