Money laundering

Money laundering

Background
Congress has enacted several statutes to deal with money laundering. It would be difficult for an illegal Internet gambling business to avoid either of two of the more prominent &mdash; 18 U.S.C. §§1956 and 1957 &mdash; both of which involve financial disposition of the proceeds of various state and federal crimes, including violation of 18 U.S.C. §1084 (Wire Act), 18 U.S.C. §1955 (Illegal Gambling Business Act), 18 U.S.C. §1952 (Travel Act), or any state gambling law (if punishable by imprisonment for more than one year). In fact, the courts have frequently upheld money laundering convictions predicated upon various gambling offenses. The crimes under Section 1956 are punishable by imprisonment for not more than twenty (20) years or a fine of the greater of not more than twice value of the property involved in the transaction or not more than $500,000 ; those under Section 1957 carry a prison term of not more than ten (10) years or a fine of the greater of twice the amount involved in the offense or not more than $250,000 (not more than $500,000 for an organization). Any property involved in a violation of either section is subject to the civil and criminal forfeiture provisions of 18 U.S.C. §§981, 982.

Laundering the Proceeds
Section 1956 is really several distinct crimes: (1) laundering with intent to promote an illicit activity such as an unlawful gambling business; (2) laundering to evade taxes; (3) laundering to conceal or disguise; (4) structuring financial transactions (smurfing) to avoid reporting requirements; (5) international laundering; and (5) “laundering” conduct by those caught in a law enforcement sting.

Promotion
In its most basic form the “promotion” offense essentially involves plowing the proceeds of crime back into an illegal enterprise. Like most of the crimes under Section 1956, the elements of the promotion offense begin with a financial transaction and the knowledge that the proceeds involved flow from a predicate offense like illegal gambling:


 * 1. knowing
 * A. that the property involved in a financial transaction,
 * B. represents the proceeds of some form of unlawful activity,
 * 2. A. conducts or
 * B. attempts to conduct such a financial transaction
 * 3. which in fact involves the proceeds of specified unlawful activity (A)(i)
 * 4. with the intent to promote the carrying on of specified unlawful activity.

The “knowledge” element is the subject to special definition which allows a conviction without the necessity of proving that the defendant know the exact particulars of the underlying offense or even its nature. The “proceeds” may be tangible or intangible, e.g., cash or debt, things of value or things with no intrinsic value, e.g., checks written on depleted accounts.

“Financial transaction” for purposes of section 1956 make take virtually any shape that involves the disposition of something represent the proceeds of an underlying crime, including disposition as informal has handing cash over to someone else.

The jurisdictional requirements of the section may be satisfied in two ways &mdash; with a transaction which affects commerce or with a financial institution whose activities affect commerce. In either case, the effect on interstate or foreign commerce need be no more than de minimis to satisfy the jurisdictional requirement.

The “promotion” element of the offense can be satisfied by proof that the defendant used the proceeds to continue a pattern of criminal activity or to enhance the prospect of future criminal activity.

Concealment
The “concealment” offense shares several common elements with the other offenses in Section 1956. Concealment occurs when anyone:


 * 1. knowing
 * A. that the property involved in a financial transaction
 * B. represents the proceeds of some form of unlawful activity,
 * 2. A. conducts or
 * B. attempts to conduct

such a financial transaction
 * 3. which in fact involves the proceeds of specified unlawful activity (A)(i)
 * 4. knowing that the transaction is designed in whole or in part to conceal or disguise the nature, location, the source, the ownership, or the control of the proceed of specified unlawful activity.

The courts have made it clear that conviction for the concealment offense requires proof of something more than simply spending the proceedings of a predicate offense. That having been said, the line between innocent spending and criminal laundering is not always easily discerned.
 * Evidence that may be considered when determining whether a transaction was designed to conceal includes: [deceptive] statements by a defendant probative of intent to conceal; unusual secrecy surrounding the transactions; structuring the transaction to avoid attention; depositing illegal profits in the bank account of a legitimate business; highly irregular features of the transaction; using third parties to conceal the real owner; a series of unusual financial moves cumulating in the transaction; and expert testimony on practices of criminals.