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Money Laundering Crimes

Black’s Law Dictionary defines money laundering as an “act of transferring illegally obtained money through legitimate people or accounts so that its original source cannot be traced." Black's Law Dictionary 1027 (8th ed. 2005). Since money laundering is usually perpetrated in conjunction with other crimes, the offender may be charged for multiple crimes simultaneously. There have been numerous cases in which the defendant was charged with violating the money laundering statutes, 18 U.S.C. §§ 1956 and 1957, in addition to other statutes. Some such cases include: United States v. Ladum, 141 F.3d 1328 (9th Cir. 1998), in which the accused was charged with money laundering in addition to tax and bankruptcy fraud; United States v. Dennis, 237 F.3d 1295 (11th Cir. 2001), in which the accused was prosecuted for 29 counts of money laundering, 5 counts of bankruptcy fraud, 1 count of bank fraud, and 2 counts of wire fraud; United States v. Bearden, 265 F.3d 732 (8th Cir. 2001), which involved a defendant convicted of conspiracy, mail fraud, and money laundering under both 18 U.S.C. § 1956 and U.S.C. § 1957; United States v. Evans, 272 F.3d 1069 (8th Cir. 2001), a case in which the accused was charged with money laundering, conspiracy, and illegally transporting people across state boundaries for the purpose of prostitution; and United States v. Moloney, 287 F.3d 236 (2d Cir. 2002), involving a defendant who confessed to laundering money and committing multiple counts of bank, mail, and wire fraud.

Those individuals who attempt to launder illegally obtained money are subject to punishment under current money laundering statutes, as are the individuals who agree to convert that money into untraceable currency that seems legitimate. The United States vigorously enforces international money laundering offenses involving the U.S., because international terrorist organizations often engage in money laundering schemes.  For more information, refer to Walter Perkel, Note: Money Laundering and Terrorism: Informal Transfer Systems, 41 AM. CRIM. L. REV. 183 (2004) and Marian Hagler, International Money Laundering and U.S. Law: A Need to "Know-Your-Partner," 31 SYRACUSE J. INT'L L. & COM. 227 (2004). The money laundering statutes, 18 U.S.C. §§ 1956 and 1957, are explained below.

18 U.S.C. § 1956 (2005)

The Crime
There are quite a few ways to violate section 1956.

Section 1956(a)(1)
Under subsection (a)(1) it is a crime for a person, "knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity" to:

  • conduct or attempt to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity-
    • with the intent
      • to promote the carrying on of specified unlawful activity, 18 U.S.C. § 1956(a)(1)(A)(i); or
      • with intent to engage in conduct constituting a violation 26 U.S.C. §§ 7201 or 7206 (relating to the Internal Revenue Code), 18 U.S.C. § 1956(a)(1)(A)(ii) ; or
    • knowing that the transaction is designed in whole or in part-
      • to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity, 18 U.S.C. § 1956(a)(1)(B)(i); or
      • to avoid a transaction reporting requirement under State or Federal law. Id. § 1956(a)(1)(B)(ii).

Section 1956(a)(2)
Under subsection (a)(2), it is a crime for a person to

  • transport, transmit, or transfer, (or attempt to transport, transmit, or transfer) a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States-
    • with the intent to promote the carrying on of specified unlawful activity, 18 U.S.C. § 1956(a)(2)(A); or
    • knowing that the monetary instrument or funds involved in the transportation represent the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part-
      • to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity, Id. § 1956(a)(2)(B)(i); or
      • to avoid a transaction reporting requirement under State or Federal law. Id. § 1956(a)(2)(B)(ii).

Section 1956(a)(3)
Under subsection (a)(3), it is a crime for a person to have the intent to

  • promote the carrying on of specified unlawful activity, 18 U.S.C. § 1956(a)(3)(A);
  • conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity, Id. § 1956(a)(3)(B); or
  • avoid a transaction reporting requirement under State or Federal law, Id. § 1956(a)(3)(C),
and
  • conduct or attempt to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity. Id. § 1956(a)(3).

The Punishment
The punishment for a violation of 18 U.S.C. § 1956(a)(1) is

  • a fine of not more than $ 500,000 or twice the value of the property involved in the transaction, whichever is greater,
  • imprisonment for not more than twenty years,
  • or both. 18 U.S.C. § 1956(a)(1)

The punishment for a violation of 18 U.S.C. § 1956(a)(2) is

  • a fine of not more than $ 500,000 or twice the value of the monetary instrument or funds involved in the transportation, transmission, or transfer, whichever is greater,
  • imprisonment for not more than twenty years,
  • or both. 18 U.S.C. § 1956(a)(2)
  • For the purpose of the offense described in18 U.S.C. § 1956(a)(2)(B), the defendant's knowledge may be established by proof that a law enforcement officer represented the matter specified in 18 U.S.C. § 1956(a)(2)(B) as true, and the defendant's subsequent statements or actions indicate that the defendant believed such representations to be true. 18 U.S.C. § 1956(a)(2).

The punishment for a violation of 18 U.S.C. § 1956(a)(3) is

  • a fine under this title
  • imprisonment for not more than 20 years
  • or both. 18 U.S.C. § 1956(a)(3).
    • For purposes of 18 U.S.C. §§ 1956(a)(3) and (2), the term "represented" means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section. 18 U.S.C. § 1956(a)(3).

In addition to the criminal penalties, there are civil penalties owed to the United States for violations of 18 U.S.C. §§ 1956 or 1957. The penalty in this situation is not more than the greater of

  • the value of the property, funds, or monetary instruments involved in the transaction, 18 U.S.C. § 1956(b)(1)(A); or
  • $ 10,000. Id. § 1956(b)(1)(B).

Furthermore, a district court dealing with foreign persons can 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. 18 U.S.C. § 1956(b)(3).

Finally, a district court dealing with a foreign person can also 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 18 U.S.C. §§ 981 or 982, or a criminal sentence under 18 U.S.C. §§ 1956(a) or 1957, including an order of restitution to any victim of a specified unlawful activity. 18 U.S.C. § 1956(b)(4).

Definitions

  • "knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity" means that the person knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law, regardless of whether or not such activity is specified in 18 U.S.C. § 1956(c)(7). 18 U.S.C. § 1956(c)(1).
  • "conducts" includes initiating, concluding, or participating in initiating, or concluding a transaction. Id. § 1956(c)(2);
  • "transaction" includes a purchase, sale, loan, pledge, gift, transfer, delivery, or other disposition, and with respect to a financial institution includes a deposit, withdrawal, transfer between accounts, exchange of currency, loan, extension of credit, purchase or sale of any stock, bond, certificate of deposit, or other monetary instrument, use of a safe deposit box, or any other payment, transfer, or delivery by, through, or to a financial institution, by whatever means effected. Id. § 1956(c)(3).
  • "financial transaction" means (A) a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments, or (iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or (B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree. Id. § 1956(c)(4).
  • "monetary instruments" means
    • coin or currency of the United States or of any other country, travelers' checks, personal checks, bank checks, and money orders, Id. § 1956(c)(5)(i),
    • investment securities or negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery. Id. § 1956(c)(5)(ii);
  • the term "financial institution" includes-
    • any financial institution, as defined in 31 U.S.C. § 5312(a)(2) of title 31, United States Code, or the regulations promulgated thereunder, Id. § 1956(c)(6)(A); and
    • any foreign bank, as defined in section 1 of the International Banking Act of 1978 (12 U.S.C. 3101). 18 U.S.C. § 1956(c)(6)(B).
  • "State" includes a State of the United States, the District of Columbia, and any commonwealth, territory, or possession of the United States. Id. § 1956(c)(8)

Specified Unlawful Activity
18 U.S.C. § 1956(c)(7) contains a non-exclusive (by virtue of 18 U.S.C. § 1956(c)(1)) laundry list of activities that will trigger the money laundering statute. These activities are:

  • any act or activity constituting a racketeering offense as defined in 18 U.S.C. § 1961(1) except an act which is indictable under 31 U.S.C. §§ 5311 et seq., 18 U.S.C. § 1956(c)(7)(A);
  • with respect to a financial transaction occurring in whole or in part in the United States, an offense against a foreign nation involving-
    • the manufacture, importation, sale, or distribution of a controlled substance (as such term is defined for the purposes of the Controlled Substances Act), 18 U.S.C. § 1956(c)(7)(B)(i);
    • murder, kidnapping, robbery, extortion, destruction of property by means of explosive or fire, or a crime of violence (as defined in 18 U.S.C. § 16), 18 U.S.C. § 1956(c)(7)(B)(ii);
    • fraud, or any scheme or attempt to defraud, by or against a foreign bank (as defined in 12 U.S.C. § 3101(7)), 18 U.S.C. § 1956(c)(7)(B)(iii);
    • bribery of a public official, or the misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official, Id. § 1956(c)(7)(B)(iv);
    • smuggling or export control violations involving-
      • an item controlled on the United States Munitions List established under section 38 of the Arms Export Control Act (22 U.S.C. § 2778), 18 U.S.C. § 1956(c)(7)(B)(v)(I); or
      • an item controlled under regulations under the Export Administration Regulations (15 C.F.R. Parts 730-774), 18 U.S.C. § 1956(c)(7)(B)(v)(II); or
    • an offense with respect to which the United States would be obligated by a multilateral treaty, either to extradite the alleged offender or to submit the case for prosecution, if the offender were found within the territory of the United States, 18 U.S.C. § 1956(c)(7)(B)(vi);
  • any act or acts constituting a continuing criminal enterprise, (as defined at 21 U.S.C. § 848), 18 U.S.C. § 1956(c)(7)(C);
  • an offense falling under the following statutes:
    • 18 U.S.C. § 32 (relating to the destruction of aircraft)
    • 18 U.S.C. § 37 (relating to violence at international airports)
    • 18 U.S.C. § 115 (relating to influencing, impeding, or retaliating against a Federal official by threatening or injuring a family member)
    • 18 U.S.C. § 152 (relating to concealment of assets; false oaths and claims; bribery)
    • 18 U.S.C. § 175c (relating to the variola virus)
    • 18 U.S.C. § 215 (relating to commissions or gifts for procuring loans)
    • 18 U.S.C. § 351 (relating to congressional or Cabinet officer assassination)
    • 18 U.S.C. §§ 500-503 (relating to certain counterfeiting offenses)
    • 18 U.S.C. § 513 (relating to securities of States and private entities)
    • 18 U.S.C. § 541 (relating to goods falsely classified)
    • 18 U.S.C. § 542 (relating to entry of goods by means of false statements)
    • 18 U.S.C. § 545 (relating to smuggling goods into the United States)
    • 18 U.S.C. § 549 (relating to removing goods from Customs custody)
    • 18 U.S.C. § 641 (relating to public money, property, or records)
    • 18 U.S.C. § 656 (relating to theft, embezzlement, or misapplication by bank officer or employee)
    • 18 U.S.C. § 657 (relating to lending, credit, and insurance institutions)
    • 18 U.S.C. § 658 (relating to property mortgaged or pledged to farm credit agencies)
    • 18 USCS § 666 (relating to theft or bribery concerning programs receiving Federal funds)
    • 18 U.S.C. §§ 793, 794, or 798 (relating to espionage)
    • 18 U.S.C. § 831 (relating to prohibited transactions involving nuclear materials)
    • 18 U.S.C. §§ 844(f) or (i) (relating to destruction by explosives or fire of Government property or property affecting interstate or foreign commerce)
    • 18 U.S.C. § 875 (relating to interstate communications)
    • 18 U.S.C. § 922(1) (relating to the unlawful importation of firearms)
    • 18 U.S.C. § 924(n) (relating to firearms trafficking)
    • 18 U.S.C. § 956 (relating to conspiracy to kill, kidnap, maim, or injure certain property in a foreign country)
    • 18 U.S.C. § 1005 (relating to fraudulent bank entries)
    • 18 U.S.C. § 1006 (relating to fraudulent Federal credit institution entries)
    • 18 U.S.C. § 1007 (relating to Federal Deposit Insurance transactions)
    • 18 U.S.C. § 1014 (relating to fraudulent loan or credit applications)
    • 18 U.S.C. § 1030 (relating to computer fraud and abuse)
    • 18 U.S.C. § 1032 (relating to concealment of assets from conservator, receiver, or liquidating agent of financial institution)
    • 18 U.S.C. § 1111 (relating to murder)
    • 18 U.S.C. § 1114 (relating to murder of United States law enforcement officials)
    • 18 U.S.C. § 1116 (relating to murder of foreign officials, official guests, or internationally protected persons)
    • 18 U.S.C. § 1201 (relating to kidnapping)
    • 18 U.S.C. § 1202 (relating to hostage taking)
    • 18 U.S.C. § 1361 (relating to willful injury of Government property)
    • 18 U.S.C. § 1363 (relating to destruction of property within the special maritime and territorial jurisdiction)
    • 18 U.S.C. § 1708 (theft from the mail)
    • 18 U.S.C. § 1751 (relating to Presidential assassination)
    • 18 U.S.C. §§ 2113 or 2114] (relating to bank and postal robbery and theft)
    • 18 U.S.C. § 2280 (relating to violence against maritime navigation)
    • 18 U.S.C. § 2281 (relating to violence against maritime fixed platforms)
    • 18 U.S.C. § 2319 (relating to copyright infringement)
    • 18 U.S.C. § 2320 (relating to trafficking in counterfeit goods and services)
    • 18 U.S.C. § 2332 (relating to terrorist acts abroad against United States nationals)
    • 18 U.S.C. § 2332a (relating to use of weapons of mass destruction)
    • 18 U.S.C. § 2332b (relating to international terrorist acts transcending national boundaries)
    • 18 U.S.C. § 2332g (relating to missile systems designed to destroy aircraft),
    • 18 U.S.C. § 2332h (relating to radiological dispersal devices)
    • 18 U.S.C. §§ 2339A or 2339B (relating to providing material support to terrorists)
    • 49 U.S.C. § 46502 (relating to a felonious release of precursor and essential chemicals)
    • 19 U.S.C. § 1590) (relating to aviation smuggling)
    • 21 U.S.C. § 863 (relating to transportation of drug paraphernalia)
    • 22 U.S.C. § 2778(c) (relating to criminal violations of the Arms Export Control Act)
    • 50 U.S.C. Appx. § 2410 (relating to violations of the Export Administration Act of 1979)
    • 50 U.S.C. § 1705 (relating to penalties of the International Emergency Economic Powers Act)
    • 50 U.S.C. Appx. § 16 (relating to offenses and punishment of the Trading with the Enemy Act)
    • 7 U.S.C. § 2024 (relating to food stamp fraud involving a quantity of coupons having a value of not less than $ 5,000)
    • 42 U.S.C. § 1490s(a)(1) (relating to equity skimming)
    • 22 U.S.C. §§ 611 (relating to felony violations of the Foreign Agents Registration Act of 1938)
    • 42 U.S.C. § 2122 (relating to prohibitions governing atomic weapons). 18 U.S.C. § 1956(c)(7)(D);
  • any act that would be a felony violation of the following environmental laws:
    • the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.)
    • the Ocean Dumping Act (33 U.S.C. § 1401 et seq.)
    • the Act to Prevent Pollution from Ships (33 U.S.C. § 1901 et seq.)
    • the Safe Drinking Water Act (42 U.S.C. § 300f et seq.)
    • the Resources Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), 18 U.S.C. § 1956(c)(7)(E); or
  • any act or activity constituting an offense involving a Federal health care offense. 18 U.S.C. § 1956(c)(7)(F).

Case Law Interpreting Section 1956
United States v. Sayakhom, 186 F.3d 928 (9th Cir. 1999).
Section 1956 requires the government to prove that the defendant conducted financial transactions involving the proceeds of the illegal activity charged in the indictment, knowing that the money represented the proceeds of the illegal activity, with the intent to promote the fraud. Sayahom at 942-43. The defendant here claimed that the government failed to prove that the money that was laundered resulted from "prior, separate criminal activity," but the court disagreed. Id. at 943. To prove the requisite intent, the government "must show that the defendant knew the property involved in the transaction represented the proceeds of some form of unlawful activity. Id.

United States v. Kramer, 73 F.3d 1067 (11th Cir. 1996).
In Kramer, one of the defendants was convicted of violating 18 U.S.C. § 1956(a)(2), which prohibits transporting illegally gained funds from a place in the United States to or through a place outside the United States. Kramer at 1072. The facts of the case, as most money laundering cases are, are quite convoluted, but in essence, one of the other defendants received large amounts of cash from the sale of marijuana and the primary defendant helped the smuggler transfer this money through various avenues into Liechtenstein. Id. at 1070. From there, it was further transferred into other countries in an attempt to disguise the origin of the money. Id. At some point the smuggler decided to convert his assets to cash and $9.5 million was sent from California to Switzerland and then to Luxembourg. Id. The primary defendant authorized the transfer of the funds from Switzerland to Luxembourg, but not the transfer from California to Switzerland. Id. This defendant, as noted was convicted of money laundering, based primarily on the fact that the jury found that he "intended to further the laundering scheme by causing the transfer of $9.5 million from Switzerland to Luxembourg. The jury, however, also found that [the defendant] did not cause the transfer of this same money from the United States to Switzerland." Id. at 1072. On appeal, the defendant argued that section 1956(a)(2)(B)(i) does not criminalize transfers which are not to or from the United States. Id. The statute does not make money laundering a continuing offense; instead, each transaction or transfer of money constitutes a separate offense, and as such, since the jury found that the defendant "was involved in only one transaction, and the transaction was totally outside of this country," the defendant's conviction could not be upheld on that basis. Id. at 1072-73.

This may be one of the final words on prosecuting section 1956(a)(2), but Tarkoff, below, offers a whole new way to look at international money laundering and it raises questions of whether more prosecutions will occur under subsection (a)(1).

United States v. Tarkoff, 242 F.3d 991 (11th Cir. 2001).
One particular case that highlights the reach of the United States and its ability to regulate foreign commerce is United States v. Tarkoff, 242 F.3d 991 (11th Cir. 2001). Tarkoff deals with "whether a defendant may be convicted for conspiring to violate and violating the money laundering statute, 18 U.S.C. § 1956(h) and (a)(1)(B)(i), where the indictment charged and the government proved that the two monetary transactions at issue occurred wholly outside the United States." Tarkoff at 991-92. The defendant was convicted for his participation in two transactions in contravention of the money laundering statute: 1) the wife transfer of $400,000 from Curacao to a bank account in Israel, and 2) the transfer of $50,000 of those funds to the defendant's Israeli bank account. Id. at 993. The defendant challenged the conviction on the grounds that the transactions in which he took part occurred wholly outside the United States, and therefore "did not affect interstate or foreign commerce, which is a necessary component of an element of the money laundering statute under which he was convicted." Id.

The discussion hinged upon the statutory definition of "financial transaction" which is defined at 18 U.S.C. § 1956(c)(4) as "(A) a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments …, or (B) a transaction involving the use of a financial institution which is engaged in, or the activities or which affect, interstate or foreign commerce in any way or degree." Tarkoff at 994 (quoting 18 U.S.C. § 1956(c)(4). Relying on an earlier case, United States v. Kramer, 73 F.3d 1067 (11th Cir. 1996), in which the court reversed a money laundering conviction because that defendant participated only in a transfer of money from Switzerland to Luxembourg and not a transfer of money to or from the United States, the defendant in Tarkoff argued that since the two transactions occurred wholly outside the United State, they were not financial transaction under section 1956(c)(4). Id. The court, however, distinguished the two cases, noting that the Kramer defendant was charged with money laundering under 18 U.S.C. § 1956(a)(2)(B)(i), which specifically requires a transfer of funds to or from the United States, while the Tarkoff defendant was convicted of violating 18 U.S.C. § 1956(a)(1)(B)(i), which provides that the defendant can be convicted so long as he was involved in a "financial transaction." Id.

The court, furthermore, notes that there are two ways to establish that a defendant conducted a financial transaction. The government must prove either "(1) that [the defendant] participated in a transaction that in any way or degree affected interstate or foreign commerce and involved the transfer of funds or the use of one or more monetary instruments, or (2) that [the defendant] participated in a transaction that involved the use of a financial institution that was engaged in, or the activities of which affected, interstate or foreign commerce in any way or degree." Id. (emphasis in original). The government argued, and the court agreed that this was proven in two separate ways: the first, that the defendant traveled from the United States to Israel to conduct business with a bank there which required telephone communication between Israel and Miami, and between Miami and Curacao, to arrange fro the funds transfer from Curacao to Israel, since that affected foreign commerce "in any way or degree"; and second, alternatively, the transactions involved the use of an Israeli bank, which was a "financial institution that was engaged in, or the activities of which affected, foreign commerce in any way or degree" by virtue of it communicating with parties in the United States and providing banking services to United States citizens. Id. at 995.

The decision is worded loosely enough to allow the United States to expand its jurisdiction to a very wide set of individuals and acts.

Other Considerations
Both distinct transactions and deliberate concealment must be shown to support a money laundering conviction under section 1956(a)(1)(B)(i). United States v. Esterman, 324 F.3d 565, 569 (7th Cir. 2003). Furthermore, subsection (a)(1) does not require allegations or proof that the defendant knows the precise nature of the unlawful activity that produced the money he is accused of laundering. United States v. Hill, 167 F. 3d 1055, 1066-67 (6th Cir. 1999). In other words, the defendant doesn't need to know whether the offense is a felony or a misdemeanor; all the government needs to show is that "the defendant knew the money was from some form of unlawful activity and further shows that the unlawful activity at issue was in fact a felony under state, federal or foreign law." Id. Finally, a defendant can, in some circumstances, be properly charged with violating the money laundering statute on the basis of code provisions that are not specifically enumerated in section 1956(c)(7)(D). See United States v. Lee, 937 F.2d 1388, 1397 (9th Cir. 1991) (defendant charged with money laundering based on violation of Lacey Act which is not enumerated; court approved because 18 U.S.C. § 545, which penalizes importation of merchandise illegally, is enumerated and the Lacey Act concerns the importation of fish and wildlife, which are considered merchandise).

18 U.S.C. § 1957 (2005).

Section 1957 is the second statute under which a prosecution for money laundering can occur.

The Crime
It is a violation of section 1957 for a person, in a certain set of circumstances, to "knowingly"

  • engage, or attempt to engage, in a monetary transaction in criminally derived property that is
    • of a value greater than $ 10,000 and
    • is derived from specified unlawful activity. 18 U.S.C. § 1957(a).

The circumstances that apply to section 1957(a) are

  • that the offense under this section takes place in the United States or in the special maritime and territorial jurisdiction of the United States, 18 U.S.C. § 1957(d)(1); or
  • that the offense under this section takes place outside the United States and such special jurisdiction, but the defendant is a United States person (as defined in 18 U.S.C. § 3077), other than an employee or contractor of the United States who is the victim or intended victim of an act of terrorism by virtue of that employment. 18 U.S.C. § 1957(d)(2).

Furthermore, it is not an element of a violation of section 1957 that the defendant knows the offense from which the criminally derived property was derived was a specified unlawful activity. 18 U.S.C. § 1957(c).

The Punishment
The punishment for a violation of section 1957 is

  • a fine, imprisonment for not more than ten years, or both. 18 U.S.C. § 1957(b)(1).
  • Alternatively, the court may impose a fine of not more than twice the amount of the criminally derived property involved in the transaction.

Definitions

  • "monetary transaction" means the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined by 18 U.S.C. § 1956) by, through, or to a financial institution (as defined in section 1956), including any transaction that would be a financial transaction under section 1956(c)(4)(B), but such term does not include any transaction necessary to preserve a person's right to representation as guaranteed by the sixth amendment to the Constitution, 18 U.S.C. § 1957(f)(1);
  • "criminally derived property" means any property constituting, or derived from, proceeds obtained from a criminal offense, id. § 1957(f)(2); and
  • "specified unlawful activity" has the meaning given that term in section 1956(c)(7). 18 U.S.C. § 1957(f)(3).

Case Law Interpreting Section 1957
An essential element of a violation of section 1957 is that the government must present evidence that the funds used in an illegal monetary transaction were the proceeds of criminal activity. See United States v. Cavin, 39 F.3d 1299, 1307 (5th Cir. 1994) (indictment charged the use of criminally derived funds to make rental payments on stocks and bonds, but government presented no evidence that the rental payments were proceeds of criminal activity).

In interpreting the language of section 1957, the term "criminally derived property" in section 1957(f)(2) is equivalent to the term "proceeds" under section 1956(a); in other words, they both mean funds obtained from prior, separate criminal activity. United States v. Savage, 67 F.3d 1435, 1441-42 (9th Cir. 1995).

The AUSA will have to prove that the following elements are met in a prosecution of a section 1957 violation:

  1. the defendant engaged or attempted to engage
  2. in a monetary transaction
  3. in criminally derived property that is of a value greater than $10,000
  4. knowing that the property is derived from unlawful activity and
  5. the property is, in fact, derived from "specified unlawful activity. United States v. Sokolow, 91 F.3d 396, 408 (3d Cir. 1996) (citing United States v. Johnson, 971 F.2d 562, 567 n.3 (10th Cir. 1992)).

However, there is not a "willfulness" component to the money laundering statute. Sokolow at 408. "[T]he statutory requirement that the underlying acts be performed 'knowingly' requires only that the act be voluntary and intentional and not that a person knows that he is breaking the law." Id. (quoting United States v. Hilliard, 31 F.3d 1509, 1518 (10th Cir. 1994) in the context of bankruptcy fraud).

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