Money Laundering

Article excerpt

  I. INTRODUCTION
 II. OVERVIEW OF THE STATUTE
     A. Section 1956 891
        1. Transaction Money Laundering
        2. Transportation Money Laundering
        3. Sting Operations
     B. Section 1957
III. ELEMENTS OF THE OFFENSES
     A. Knowledge Requirement
        1. General Knowledge
        2. Willful Blindness
     B. Proceeds Derived From A Specified Unlawful Activity
        1. Proceeds
           a. Scope
           b. Tracing
        2. Specified Unlawful Activity
     C. Financial Transaction
        1. Interstate Commerce
        2. Multiple Transactions
     D. Intent
 IV. DEFENSES
     A. Constitutional Vagueness
     B. Double Jeopardy
     C. Constitutionally Impermissible
  V. PENALTIES

I. INTRODUCTION

Money laundering is "the process by which one conceals the existence, illegal source, or illegal application of income, and disguises that income to make it appear legitimate." (1) Laundering criminally-derived proceeds has become a lucra- and sophisticated business (2) and is an indispensable element of organized criminal activities. (3) Money laundering typically is effectuated through a three-step process: (i) the criminally derived money is "placed" into a legitimate enterprise; (ii) the funds are "layered" through various transactions to obscure the original source; and (iii) the newly laundered funds are integrated into the legitimate financial world "in the form of bank notes, loans, letters of credit," or other recognizable financial instruments. (4)

In recognition of this pervasive problem, Congress passed the Money Laundering Control Act of 1986 (the "Act"), (5) which created liability for any individual who conducts a monetary transaction knowing that the funds were derived through unlawful activity. (6) Unlike earlier unsuccessful efforts to curb the movement of illegal income by requiring financial institutions to comply with currency reporting requirements, (7) the Act targets "the lifeblood of organized crime": (8) the conversion of illegally-derived funds into a "clean" or useable form. (9)

The Act's expansive definition of "money laundering" allows it to reach the proceeds of a broad range of illicit activities. (10) For instance, the Act encompasses the proceeds of conduct that is characteristic of organized crime, such as narcotics trafficking, certain state offenses, and predicate offenses under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). (11) Moreover, the Act covers proceeds of a wide range of additional criminal offenses including copyright infringement, environmental offenses, espionage, trading with the enemy, and conducting financial transactions with intent to engage in violations of the Internal Revenue Code. (12)

One of the principal purposes of the Act, embodied in [section] 1957, is to bar all "monetary transactions" in "criminally derived property" which exceed $10,000. (13) In achieving this purpose, the Act targets transactions conducted through financial Institutions (14) and reaches a broad range of routine commercial transactions that affect commerce. (15) Although the seizure of criminal proceeds for use as evidence is nothing new, (16) the Act also makes the subsequent use of criminal proceeds in any transaction illegal in perpetuity, extending well beyond the statute of limitations on the original criminal conduct. (17)

Beyond the Act, the government also utilizes reporting laws, which forbid exporting more than $10,000 of undeclared cash, to prevent money laundering. (18) The Treasury Department has enacted rules requiring all businesses that wire money internationally to register with the government, file a report for all transactions exceeding $750, report suspicious activity, and furnish the names of both the transferor and the recipient. (19)

Finally, in the wake of the terrorist attacks of September 11, 2001, Congress acted with renewed focus on the detection, prevention, and prosecution of money laundering. …