Protecting Clients From Harsh Penalties and Forfeitures
Money laundering is one of the most frequently charged crimes in federal court. In part, this is because the money laundering laws are so broad as to reach otherwise innocent activity far removed from the common understanding of “money laundering,” resulting in abuse by prosecutors seeking to avail themselves of the heavy penalties for laundering convictions.
At David B. Smith, PLLC, our money laundering defense attorneys have the subject-matter knowledge and practical experience to protect the rights of clients charged with this serious offense. Based in Alexandria, Virginia, we serve clients nationwide, and we are frequently called upon to assist other lawyers in cases involving money laundering allegations.
Defending Against Federal Money Laundering Charges
The federal money laundering statute, the Money Laundering Control Act, consists of two sections, both of which have been expanded greatly since the statute was adopted in 1986.
- 18 U.S.C. § 1956 prohibits several different types of activity, most of which are far removed from the normal understanding of “money laundering.”* The elements of a § 1956 offense are defined in exceptionally broad terms, sweeping in many transactions that one would not expect to be covered.
- A person violates 18 U.S.C. § 1957 merely by engaging in a “monetary transaction” over $10,000 at a “financial institution” with knowledge that the transaction involves “criminally derived property” (defined in § 1957(f)(2) as “property constituting, or derived from, proceeds obtained from a criminal offense”). The property must in fact derive from “specified unlawful activity,” contained in a laundry list of federal predicate offenses. There is no requirement that the transaction be designed for any particular purpose.+
Both of these sections are frequently used to pile additional criminal penalties and excessive forfeitures on defendants who already stand accused of the underlying offenses. Our attorneys have extensive experience defending clients against these draconian consequences. Partner David B. Smith is an authority on the money laundering laws and the often drastic forfeiture penalties incurred under them.
Mr. Smith was an active member of a task force assembled by the National Association of Criminal Defense Lawyers to propose reforms of the money laundering laws, and he has testified on the need for such reforms before the House Judiciary Committee.
To discuss how our attorneys can assist you with the defense of money laundering charges, please contact our firm today or schedule a consultation.
* Section 1956(a)(1) makes it a 20-year felony to conduct or attempt to conduct a broadly defined “financial transaction” knowing that the property involved is the proceeds of some form of unlawful activity (if it in fact involves the proceeds of a laundry list of specified unlawful activity” either (1) “with the intent to promote the carrying on of specified unlawful activity” or (2) with the intent to engage in conduct constituting a violation of 26 U.S.C. § 7201 or 7206 (tax evasion or making false statements on tax returns) or (3) knowing that the transaction is designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds or to avoid a transaction reporting requirement under state or federal law. (Prosecution and Defense of Forfeiture Cases, ¶ 5.01[1][c], 5-8.1 (2016).)
+ As the Justice Department’s summary of the 1986 Act concedes, this offense is really a “receiving and depositing proceeds” offense. It states that the provision “should be utilized with caution where bona fide payments for personal services are simply being deposited into a bank. Proof of knowledge should be absolutely clear.” (Prosecution and Defense of Forfeiture Cases, ¶ 5.01[1][b], 5-3 (2016).)
No one has ever adequately explained what legitimate law enforcement purpose is served by section 1957 and its draconian penalties. The ostensible purpose of section 1957 is to keep “dirty” money out of our banking system by making it a crime to simply deposit or withdraw dirty money, irrespective of whether there is any effort at concealment. But what exactly would be accomplished if dirty money was kept from entering the banking system? Would our bankers be morally purer? Once the money enters the system it becomes visible to law enforcement and can be taxed and/or seized. Dirty money concealed under a mattress or in a sealed plastic tube underground benefits only the criminal. In any event, criminals continue to deposit their ill-gotten gains in the banking system, as any rational person would do. Section 1957 illogically makes the deposit of criminal proceeds in a bank — an innocuous act that is often performed by someone not involved in the underlying criminal activity — a more serious offense than most of the predicate crimes that generate the proceeds.
The legislative history demonstrates that Congress had another purpose in mind when it enacted section 1957, apart from keeping dirty money out of the banking system. The legislative history “reflects that Congress wished to dissuade the public from transacting business with … drug traffick[ers] or [those engaged in] other criminal conduct.” The House Report stated that “outstanding business people who are otherwise totally moral … are accepting these funds and profiting greatly from drug trafficking that is going on throughout this country, and this will put a stop to it.” In short, section 1957 was designed to “make the drug dealers’ money worthless” by criminalizing transactions in which the participants knowingly accept money derived from unlawful activity.
As so often happens, prosecutors did not use section 1957 the way Congress intended. Few legitimate business people were prosecuted for accepting and depositing dirty money from drug dealers. Instead, prosecutors regularly used section 1957 as another blunderbuss, piling additional charges and forfeitures on top of the drug trafficker or other criminal defendant for the crime of depositing his own dirty money in his own bank account — an action that in no way adds to the social harm caused by the underlying criminal activity. (Prosecution and Defense of Forfeiture Cases, ¶ 5.01[1][b], 5-8 (2016).