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Money Laundering

In short, money laundering is the crime of taking money obtained illegally and trying to “wash” it by making it seem legal. This often involves elaborate schemes of concealing funds or failing to report funds when required.

Money laundering is a crime under federal and New York State law. Federal agencies such as the IRS, the Drug Enforcement Administration (DEA), the Department of the Treasury, U.S. Immigration and Customs Enforcement (ICE) and the FBI, as well as state and local law enforcement agencies investigate this crime. If money, real property, securities or investments result from a crime or are used to commit a crime, then they are considered dirty. Then, an individual, a bank, a corporation, or an entity (a terrorist network or drug cartel, for example) may try to use that “dirty” money and try to wash it so that it looks “clean.” If one is convicted of money laundering, then he or she may face large fines, imprisonment or both.

The washing process may involve transferring or wiring funds, depositing funds, withdrawing funds, extending credit or loans, purchasing or selling safe deposit boxes or exchanging currency. (18 USC 1956, NY Penal Law Article 470). In some cases, transactions involving  over $10,000, where cash is involved, must be properly reported to agencies like the IRS or ICE.

If a drug dealer sells large quantities of drugs abroad and is compensated in cash or by any other monetary instrument, then he or she has committed a drug crime. If the dealer tries to bring those funds into the United States and conceals them by failing to report, or declare, them, as he or she should have, then this drug dealer is trying to wash dirty money—make illegal money legal. In that example, a federal agency, like the FBI or ICE might investigate the drug dealer, and if a prosecutor feels there is evidence to support a criminal conviction for the crime of money laundering, then the prosecutor may charge the drug dealer with money laundering.

When is money laundering a federal crime? When is it a New York State crime?

If a crime involves actions across state lines, then federal courts may have jurisdiction over the crime. If the crime occurs within New York State, then it is possible that a state court will exercise jurisdiction over the crime. For example, if someone transfers money obtained illegally from Queens County to someone in New York County (Manhattan), who then deposits the funds in a bank, then New York State courts may exercise jurisdiction over this act. Had the transfer been made between individuals or entities in New York and New Jersey, then federal authorities may investigate and prosecute.

Congress has passed several laws that address money laundering. For example, the Bank Secrecy Act stipulates reporting requirements for financial institutions. The Bulk Cash Statute (31 USC 5332), which resulted from the USA Patriot Act, requires reporting of certain currency or monetary instruments transported across U.S. borders.

What constitutes money laundering?

Federal laws separate money laundering into three means of conduct: (i) domestic conduct, (ii) international conduct or (iii) conduct related to an undercover operation with a law enforcement agency.

In the first case, money laundering involves a financial transaction that results from or promotes a specific illegal activity. Money laundering is also the crime of knowingly concealing or disguising such a financial transaction or knowingly failing to report the financial transaction  when required by law.

The second case of money laundering, international conduct, involves an action listed above when funds are transported, transferred or attempted to be transported or transferred from the United States to a place abroad or from a place abroad to the United States.

Finally, a law enforcement agency may conduct an undercover “sting” operation. In this type of operation, any money laundering actions or intentions carried out by an individual while interacting with the undercover law enforcement agents can be considered money laundering.

Under New York State law, money laundering and money laundering in the support of terrorism are serious crimes—class B, C or D felonies. Money laundering in the third, second and first degrees deal with crimes committed with the proceeds from or money used for the illegal sale of a controlled substance. The value of the money or monetary instrument involved in the crime is one factor in determining the exact crime (money laundering in the first degree or money laundering in the second degree, for example).

If someone conceals or disguises, transports, transfers or transmits money or a monetary instrument when its reporting is required by law or when it is illegal to transport, transfer or transmit money with the intent of using the money to carry out an act of terror or utilizing money from the proceeds of an act of terror, then money laundering in support of terrorism in the fourth, third, second, or first degree may have been committed. Money laundering in the first degree is a Class B felony. Any type of money laundering is a serious crime which can result in large fines, imprisonment for years or both. If you have been accused of this crime, or if you are concerned that you are under investigation for this crime, then you should contact an experienced criminal defense lawyer immediately. The attorney will advise you of your rights and can help draw up a defense, representing you throughout the criminal justice process.

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