Money Laundering: An Overview of 18 U.S.C. 1956 and Related Criminal Law

Money Laundering: An Overview of 18 U.S.C. 1956 and Related Criminal Law
Money Laundering: An Overview
of 18 U.S.C. 1956 and Related
Federal Criminal Law
Charles Doyle
Senior Specialist in American Public Law
February 8, 2012
Congressional Research Service
7-5700
www.crs.gov
RL33315
CRS Report for Congress
Prepared for Members and Committees of Congress
Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
Summary
This is an overview of the elements of federal criminal money laundering statutes and the
sanctions imposed for their violation. The most prominent is 18 U.S.C. 1956. Section 1956
outlaws four kinds of money laundering—promotional, concealment, structuring, and tax evasion
laundering of the proceeds generated by designated federal, state, and foreign underlying crimes
(predicate offenses)—committed or attempted under one or more of three jurisdictional
conditions (i.e., laundering involving certain financial transactions, laundering involving
international transfers, and stings). Its companion, 18 U.S.C. 1957, prohibits depositing or
spending more than $10,000 of the proceeds from a Section 1956 predicate offense. Violations of
Section 1956 are punishable by imprisonment for not more than 20 years; Section 1957 carries a
maximum penalty of imprisonment for 10 years. Property involved in either case is subject to
confiscation. Misconduct which implicates Sections 1956 and 1957 may implicate other federal
criminal statutes as well. Federal racketeer influenced and corrupt organization (RICO)
provisions outlaw acquiring or conducting the affairs of an enterprise (whose activities affect
interstate or foreign commerce) through the patterned commission of a series of underlying
federal or state crimes. RICO violations are also 20-year felonies. Every RICO predicate offense,
including each “federal crime of terrorism,” is automatically a Section 1956 money laundering
predicate offense. A second related statute, the Travel Act (18 U.S.C. 1952), punishes interstate or
foreign travel, or the use of interstate or foreign facilities, conducted with the intent to distribute
the proceeds of a more modest list of predicate offenses or to promote or carry on such offenses
when an overt act is committed in furtherance of that intent. Such misconduct is punishable by
imprisonment for not more than five years. Other federal statutes proscribe, with varying
sanctions, bulk cash smuggling, layering bank deposits to avoid reporting requirements, failure to
comply with federal anti-money laundering provisions, or conducting an unlawful money
transmission business.
The Supreme Court has held that the Section 1956 ban on attempted international transportation
of tainted proceeds for the purpose of concealing their ownership, source, nature, or ultimate
location is limited to instances where concealment is a purpose rather than an attribute of the
transportation (simple smuggling is not proscribed as such), United States v. Cuellar, 553 U.S.
550 (2008). In a second case, the Court indicated that for purposes of Section 1956 the
“proceeds” of a predicate offense often referred to the profits rather than the gross receipts
realized from the offense, United States v. Santos, 553 U.S. 507 (2008). Congress responded by
defining “proceeds” for purposes of Sections 1956 and 1957 as the property obtained or retained
as a consequence of a predicate offense, including gross receipts, P.L. 111-21, 123 Stat. 1618
(2009)(S. 386)(111th Cong.).
The text of the statutes discussed, citations of state money laundering and money transmission
statutes, a list of Section 1956 federal predicate offenses and their accompanying maximum terms
of imprisonment, and a bibliography appear at the end of the report. This report appears in
abridged form, without footnotes, full citations, or appendices, as CRS Report RS22401, Money
Laundering: An Abridged Overview of 18 U.S.C. 1956 and Related Federal Criminal Law, by
Charles Doyle. Related CRS Reports include CRS Report RL33020, Terrorist Financing: U.S.
Agency Efforts and Inter-Agency Coordination, by Martin A. Weiss et al., and CRS Report
RS21547, Financial Institution Customer Identification Programs Mandated by the USA
PATRIOT Act, by M. Maureen Murphy.
Congressional Research Service
Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
Contents
Introduction...................................................................................................................................... 1
18 U.S.C. 1956 .......................................................................................................................... 2
Promotion............................................................................................................................ 3
Concealment...................................................................................................................... 11
Evading Reporting Requirements (Smurfing)................................................................... 16
Tax Evasion ....................................................................................................................... 18
Conspiracy, Attempt, Aiding and Abetting........................................................................ 18
Consequences.................................................................................................................... 20
Venue................................................................................................................................. 22
18 U.S.C. 1957 ........................................................................................................................ 23
Elements............................................................................................................................ 23
Attempt, Conspiracy, Aiding and Abetting ....................................................................... 26
Consequences.................................................................................................................... 27
18 U.S.C. 1952: Travel Act ..................................................................................................... 27
Distribution, Facilitation, and Violence............................................................................. 29
Travel ................................................................................................................................ 30
Unlawful Activity.............................................................................................................. 31
Conspiracy, Aiding and Abetting....................................................................................... 31
Consequences.................................................................................................................... 32
31 U.S.C. 5322: Reporting Requirements ............................................................................... 32
31 U.S.C. 5324: Anti-Structuring ............................................................................................ 34
31 U.S.C. 5332: Bulk Cash Smuggling ................................................................................... 36
18 U.S.C. 1960: Money Transmitters ...................................................................................... 38
Racketeer Influenced and Corrupt Organizations (RICO) ...................................................... 39
Specified Unlawful Activities (Citations to Predicate Offenses: 18 U.S.C. 1956,
1957)(Maximum Terms of Imprisonment Noted) ................................................................ 43
State Money Laundering Laws (Citations).............................................................................. 47
State Money Transmission Laws (Citations)........................................................................... 48
Selected Federal Money Laundering Laws (Text)................................................................... 48
18 U.S.C. 1956. Laundering of monetary instruments...................................................... 48
18 U.S.C. 1956 note. [P.L. 111-21, Sec. 2(g)]. Sense of the Congress and report
concerning required approval for merger cases. ............................................................ 53
18 U.S.C. 1957. Engaging in monetary transactions in property derived from
specified unlawful activity ............................................................................................. 53
Travel Act: 18 U.S.C. 1952. Interstate and foreign travel or transportation in aid
of racketeering enterprises ............................................................................................. 54
31 U.S.C. 5322: Reporting Requirements......................................................................... 54
31 U.S.C. 5324. Structuring transactions to evade reporting requirement
prohibited ....................................................................................................................... 55
31 U.S.C. 5332. Bulk cash smuggling .............................................................................. 56
18 U.S.C. 1960. Prohibition of unlicensed money transmitting businesses...................... 57
RICO: 18 U.S.C. 1962. Prohibited activities .................................................................... 57
18 U.S.C. 1961. Definitions .............................................................................................. 58
18 U.S.C. 1963. Criminal penalties................................................................................... 59
18 U.S.C. 1964. Civil remedies......................................................................................... 63
Bibliography............................................................................................................................ 63
CRS Reports...................................................................................................................... 63
Congressional Research Service
Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
ALR Fed............................................................................................................................ 63
Books, Articles, and Notes ................................................................................................ 64
Contacts
Author Contact Information........................................................................................................... 65
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
Introduction
Money laundering is commonly understood as the process of cleansing the taint from the
proceeds of crime.1 In federal criminal law, however, it is more. In the principal federal criminal
money laundering statutes, 18 U.S.C. 1956 and 1957, and to varying degrees in several other
federal criminal statutes, money laundering involves the flow of resources to and from several
hundred other federal, state, and foreign crimes.2 It consists of:
•
engaging in a financial transaction involving the proceeds of certain crimes in
order to conceal the nature, source, or ownership of proceeds they produced;3
•
engaging in a financial transaction involving the proceeds of certain crimes in
order to promote further offenses;4
•
transporting funds generated by certain criminal activities into, out of, or through
the United States in order to promote further criminal activities, or to conceal the
nature, source, or ownership of the criminal proceeds, or to evade reporting
requirements;5
•
engaging in a financial transaction involving criminal proceeds in order to evade
taxes on the income produced by the illicit activity;6
•
structuring financial transactions in order to evade reporting requirements;7
•
spending more than $10,000 of the proceeds of certain criminal activities;8
•
traveling in, or use of the facilities of, interstate or foreign commerce in order to
distribute the proceeds of certain criminal activities;9
•
traveling in, or use of the facilities of, interstate or foreign commerce in order to
promote certain criminal activities;10
1
Money laundering is “the act of transferring illegally obtained money through legitimate people or accounts so that its
original source cannot be traced,” BLACK’S LAW DICTIONARY 1097 (9th ed. 2009).
2
A few years and several amendments ago, one commentator estimated the number of section 1956 predicate offenses
at “250 or so,” Cassella, The Forfeiture of Property Involved in Money Laundering Offenses, 7 BUFFALO CRIMINAL
LAW REVIEW 583, 612 (2004). The estimate appears exceptionally conservative. Each of the 50 states outlaws (1)
murder, (2) kidnapping, (3) gambling, (4) arson, (5) robbery, (6) bribery, (7) extortion, (8) dealing in obscene material,
and (9) drug dealing. A felony violation of any one of these is a section 1956 predicate offense, 18 U.S.C. 1956(c)(7)
(A), 1961(1)(A). Each of the close to 200 countries of the world outlaws many if not most of the same types of
misconduct (murder, kidnapping, robbery, and the like) and when they do, these too are section 1956 predicate offenses
if they involve a financial transaction in the U.S., 18 U.S.C. 1956(c)(7)(B). Yet however daunting the absolute number
of section 1956 predicate offenses may be, the reported cases suggest that a handful of predicate offenses (like mail
fraud, wire fraud, and drug dealing) account for the vast majority of section 1956 prosecutions.
3
18 U.S.C. 1956(a)(1)(B)(ii).
4
18 U.S.C. 1956(a)(1)(A)(i).
5
18 U.S.C. 1956(a)(2).
6
18 U.S.C. 1956(a)(1)(A)(ii).
7
18 U.S.C. 1956(a)(1)(B)(ii); 31 U.S.C. 5324.
8
18 U.S.C. 1957.
9
18 U.S.C. 1952(a)(1).
10
18 U.S.C. 1952(a)(3).
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
•
transmitting the proceeds of, or funds to promote, criminal activity in the course
of a money transmitting business;11
•
transmitting funds in the course of an unlawful money transmitting business;12
•
smuggling unreported cash across a U.S. border;13 or
•
failing to comply with the Treasury Department’s anti-money laundering
provisions.14
Money laundering in some forms is severely punished, sometimes more severely than the
underlying crime with which it is associated. The penalties frequently include not only long
prison terms, but the confiscation of the property laundered, involved in the laundering, or
traceable to the laundering. This is an overview of the elements and other legal attributes and
consequences of a violation of Sections 1956 and 1957, as well as selected related federal
criminal statutes.
18 U.S.C. 1956
Section 1956 outlaws four kinds of laundering—promotional, concealment, structuring, and tax
evasion—committed or attempted under one or more of three jurisdictional conditions (i.e.,
laundering involving certain financial transactions, laundering involving international transfers,
and stings). More precisely, Section 1956(a)(1)15 outlaws financial transactions involving the
proceeds of other certain crimes—predicate offenses referred to as “specified unlawful activities”
(sometimes known as SUA)—committed or attempted (1) with the intent to promote further
predicate offenses; (2) with the intent to evade taxation; (3) knowing the transaction is designed
to conceal laundering of the proceeds; or (4) knowing the transaction is designed to avoid antilaundering reporting requirements.
Section 1956(a)(2) outlaws the international transportation or transmission (or attempted
transportation or transmission) of funds (1) with the intent to promote a predicate offense; (2)
knowing that the purpose is to conceal laundering of the funds and knowing that the funds are the
proceeds of a predicate offense; or (3) knowing that the purpose is to avoid reporting
requirements and knowing that the funds are the proceeds of a predicate offense.
Section 1956(a)(3) is a sting section that covers undercover investigations. It outlaws financial
transactions (or attempted transactions) that the defendant believes involve the proceeds of a
predicate offense and that are intended to (1) promote a predicate offense, (2) conceal the source
or ownership of the proceeds, or (3) avoid reporting requirements.
11
18 U.S.C. 1960(a), (b)(1)(C).
18 U.S.C. 1960(a), (b)(1)(A), (B).
13
31 U.S.C. 5332.
14
31 U.S.C. 5322. Federal law features a wide array of administrative, regulatory, and diplomatic anti-money
laundering provisions that are beyond the scope of this report.
15
As a matter of convenience, this report refers to subsections (18 U.S.C. 1956(a)), paragraphs (18 U.S.C. 1956(a)(1)),
subparagraphs (18 U.S.C. 1956(a)(1)(A)), clauses (18 U.S.C. 1956(a)(1)(A)(i)), and subclauses as sections.
12
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
Promotion
Financial Transactions
Of the three promotional offenses, only the Section 1956(a)(1)(A)(i) financial transaction offense
requires use of the proceeds of a predicate offense to promote a predicate offense; the Section
1956 international and sting offenses require only a purpose to promote a predicate offense
regardless of the source of the proceeds. Section 1956(a)(1)(A)(i) applies to anyone who:
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
4. with the intent to promote the carrying on of specified unlawful activity.16
The knowledge element is the subject of a specific definition which allows a conviction without
the necessity of proving that the defendant knew the exact particulars of the underlying offense or
even its nature; it is enough that he knew that the property came from some sort of criminal
activity and that the property in fact constitutes the proceeds of a predicate offense.17 The
knowledge element cannot be negated by turning a blind eye to reality. Here and throughout
Section 1956, knowledge may be inferred from facts indicating that criminal activity is
particularly likely.18
Throughout Section 1956, a defendant “conducts” a financial transaction when he initiates,
concludes, or participates in initiating, or concluding a transaction.19 The “financial transaction”
16
18 U.S.C. 1956(a)(1)(A)(i); United States v. White, 492 F.3d 380, 397 (6th Cir. 2007); United States v. Singh, 518
F.3d 236, 246 (4th Cir. 2008); United States v. Hudspeth, 525 F.3d 667, 677 (8th Cir. 2008); United States v. Brown, 553
F.3d 768, 782 (5th Cir. 2008); United States v. Lee, 558 F.3d 638, 641 (7th Cir. 2009); United States v. Wilkes, 662 F.3d
524, 548 (9th Cir. 2011).
17
“The term ‘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 paragraph (7),” 18 U.S.C. 1956(c)(1); United States v. CedenoPerez, 579 F.3d 54. 59 (1st Cir. 2009); United States v Flores, 454 F.3d 149, 155 (3d Cir. 2006); United States v. Hill,
167 F.3d 1055, 1065-68 (6th Cir. 1999).
18
United States v. Quinones, 635 F.3d 590, 594 (2d Cir. 2011)(“A conscious avoidance instruction permits a jury to
find that a defendant had culpable knowledge of a fact when the evidence shows that the defendant intentionally
avoided confirming the fact”); United States v. Lewis, 558 F.3d 601, 613 (8th Cir. 2008)(“A willful blindness
instruction allows the jury to impute knowledge to a defendant of what should be obvious to him, if it found, beyond a
reasonable doubt, a conscious purpose to avoid enlightenment”); United States v. Nektalov, 461 F.3d 309, 314-15 (2d
Cir. 2006); United States v. Flores, 454 F.3d 149, 155 (3d Cir. 2006); cf., United States v. Antzoulatos, 962 F.2d 720,
725 (7th Cir. 1992) (“It is well settled that wilful blindness or conscious avoidance is the legal equivalent to
knowledge....We therefore examine the constitutionality of section 1956(a)(1)(B) as applied to a merchant who actually
knew that he was dealing with drug dealers and their money, or deliberately turned a blind eye regarding this fact.... We
conclude that Antzoulatos’ right to liberty under the Fifth Amendment was not violated”).
19
18 U.S.C. 1956(c)(2). United States v. Gotti, 459 F.3d 296, 335 (2d Cir. 2006)(mere receipt of funds constitutes
“conducting a financial transaction”). In spite of the breadth of the definition, an individual must be in control at some
point, and in some sense, of the property involved in the transaction, United States v. Huber, 404 F.3d 1047, 1060 (8th
Cir. 2005)(a defendant does not conduct the financial transfers of third parties which he does not initiate and in which
(continued...)
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
element has two obvious components. It must be a transaction and it must be financial. Both
components are defined by statute. Qualifying “transactions” may take virtually any shape that
involves the disposition of something constituting the proceeds of an underlying crime,20
including disposition as informal as handing cash over to someone else.21 The “financial”
component supplies the jurisdiction foundation for a Section 1956(a)(1)(A)(ii) crime and each of
the other crimes in Section 1956(a)(1). Qualifying transactions must either involve the movement
of funds in a manner that affects interstate or foreign commerce or involve a financial institution
engaged in, or whose activities affect, interstate or foreign commerce.22 In either case, the effect
on interstate or foreign commerce need be no more than de minimis to satisfy the jurisdictional
requirement.23
The “proceeds” involved in the transaction may consist of “any property derived from or obtained
or retained, directly or indirectly, through some form of unlawful activity, including the gross
receipts of such activity,”24 be the property tangible or intangible (e.g., cash or debt), things of
value, or things with no intrinsic value (e.g., checks written on depleted accounts).25
All but 2 of the 10 Section 1956 crimes are related in one way or another to the commission or
purported commission of at least one of a list of predicate offenses, “specified unlawful
activities.”26 In the case of the financial institution promotional offense, one of these predicate
offenses must be the source of the proceeds used to promote a predicate offense.27 The predicate
offenses come in three varieties: state crimes, foreign crimes, and federal crimes. The list of state
(...continued)
he does not participate).
20
“The term ‘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,” 18 U.S.C. 1956(c)(3); e.g., United States v. Dvorak, 617 F.3d 1017, 1023 (8th Cir. 2010); United
States v. Garcia, 587 F.3d 509, 516 (2d Cir. 2009).
21
United States v. Gough, 152 F.3d 1172, 1173 (9th Cir. 1998); United States v. Garcia Abrego, 141 F.3d 142, 160 (5th
Cir. 1998); United States v. Roy, 375 F.3d 21, 23-4 (1st Cir. 2004)(exchange between individuals of $100 bills for
currency of smaller denominations to facilitate drug trafficking); United States v. Blair, 661 F.3d 755, 764 (4th Cir.
2011)(“Almost any exchange of money between two parties qualifies as a financial transaction subject to criminal
prosecution under §1956, provided that the transaction has at least a minimal effect or on interstate commerce and
satisfies at least one of the four intent requirements”).
22
“The term ‘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,” 18 U.S.C. 1956(c)(4).
23
United States v. Ables, 167 F.3d 1021, 1029 (6th Cir. 1999); United States v. Owens, 167 F.3d 739, 755 (1st Cir.
1999); United States v. Bollin, 264 F.3d 391, 408 (4th Cir. 2001); United States v. Gotti, 459 F.3d 296, 336 (2d Cir.
2006); United States v. Blair, 661 F.3d 755, 764 (4th Cir. 2011); e.g., United States v. Hudspeth, 525 F.3d 667, 680-81
(8th Cir. 2008) (transactions involved checks written on out-of-state banks).
24
18 U.S.C. 1956(c)(9).
25
United States v. Akintonbi, 159 F.3d 401, 403 (9th Cir. 1998).
26
Conducting or attempting to conduct an international transfer to avoid state or federal reporting requirements must
involve the proceeds of a crime but the property-generating offense need not be a money laundering predicate, 18
U.S.C. 1956(a)(2)(B)(ii).
27
18 U.S.C. 1956(a)(1)(A)(i).
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
crimes is relatively short and consists of any state crime that is a RICO predicate offense,28 that is,
“any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion,
dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in
section 102 of the Controlled Substances Act), which is chargeable under state law and
punishable by imprisonment for more than one year.”29
The list of foreign crimes recognized as Section 1956 predicate offenses is very much the same—
violations of the laws of another country involving murder, kidnapping, bribery, drug trafficking,
and the like—but it only applies in cases involving a financial transaction occurring in whole or
in part in this country.30
The list of federal predicate offenses is considerably longer if for no other reason than it is both
specific and generic.31 For instance, instead of listing “kidnapping in violation of federal law,” it
lists several of the federal statutes that outlaw kidnapping—interstate kidnapping, kidnapping a
Member of Congress, kidnapping the President, and so forth.32 On the other hand, it also lists
“any act or activity constituting an offense involving a federal health care offense.”33 Moreover, it
encompasses not only the RICO state predicate offenses but also the RICO federal predicate
offenses.34 The inventory of RICO predicates contains a substantial number of specifically
identified federal crimes and any of the federal crimes of terrorism cataloged in 18 U.S.C.
2333b(g)(5)(B).35
The courts have struggled with the precise meaning of the interwoven “proceeds” and
“promotional “ elements of the promotional transaction offense. Under some circumstances, it is
difficult to say when the fruits of a crime have been used for further criminal purposes or when
the activity is merely part and parcel of the predicate offense. In the Supreme Court’s Santos case,
28
18 U.S.C. 1956(c)(7)(A).
18 U.S.C. 1961(1)(A).
30
“[T]he term ‘specified unlawful activity’ means ... (B) with respect to a financial transaction occurring in whole or in
part in the United States, an offense against a foreign nation involving – (i) the manufacture, importation, sale, or
distribution of a controlled substance (as such term is defined for the purposes of the Controlled Substances Act); (ii)
murder, kidnapping, robbery, extortion, destruction of property by means of explosive or fire, or a crime of violence (as
defined in section 16); (iii) fraud, or any scheme or attempt to defraud, by or against a foreign bank (as defined in
paragraph 7 of section 1(b) of the International Banking Act of 1978)); (iv) bribery of a public official, or the
misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official; (v) smuggling or
export control violations involving – (I) an item controlled on the United States Munitions List established under
section 38 of the Arms Export Control Act (22 U.S.C. 2778); or (II) an item controlled under regulations under the
Export Administration Regulations (15 C.F.R. Parts 730-774); or (vi) 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); United
States v. Lazarenko, 564 F.3d 1026, 1038 (9th Cir. 2009)(“The statute clearly lists ‘extortion’ as a foreign offense that
may be a predicate offense for money laundering”); United States v. One 1997 E35 Ford Van, 50 F.Supp.2d 789, 797
(N.D.Ill. 1999)(“offense against a foreign nation” means an offense in violation of the laws of a foreign nation), cf.,
United States v. Magluta, 418 F.3d 1166, 1173 (11th Cir. 2005).
31
One Supreme Court Justice referred, tongue-in-cheek, to the RICO predicate offense list as “a laundry list of nearly
every federal crime under the sun,” James v. United States, 550 U.S. 192, 223 (2007)(Scalia, J., dissenting). The more
extensive list of federal money laundering predicate offenses appears at the end of this report.
32
18 U.S.C. 1956(c)(7)(D)(“the term ‘specified unlawful activity’ means ... an offense under section 351 [offenses
against Members of Congress]... 1201 [interstate kidnapping]... 1751 [offenses against the President]...”).
33
18 U.S.C. 1956(c)(7)(F).
34
18 U.S.C. 1956(c)(7)(A).
35
18 U.S.C. 1961(1).
29
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for instance, the defendant was convicted of running an illegal gambling business in violation of
18 U.S.C. 1955. Section 1955 requires the government to prove that the defendant has conducted
a gambling operation either conducted over a 30-day period or one which produced gross
revenues of at least $2,000 on any given day. Santos was also convicted of promotional money
laundering under Section 1956, based upon evidence that during the course of operations he had
paid off his winning customers and paid his employees from the revenue generated by the
enterprise.36 The Court of Appeals decided that these were expenses associated with the
commission of the gambling offense, not profits. Proceeds, they reasoned based on their earlier
decisions, meant profits, net revenues, not gross revenues (profits and expenses).37
Complicating the issue before the Supreme Court was the sentencing disparity between operating
a gambling business (a maximum of 5 years imprisonment) and for money laundering (a
maximum of 20 years imprisonment). The issue splintered the Court. Four Justices agreed that
“proceeds” meant “profits”; four concluded that it meant “gross receipts.” The ninth Justice sided
with the four “gross receipt” Justices for purposes of the result, but suggested that sometimes
proceeds means profits and sometimes it means gross receipts.
Justice Scalia, in the plurality opinion for the Court, noted that the Congress had not at the time
explicitly define “proceeds” as the term was used in the money laundering statute.38 In the
absence of a statutory definition, words are thought to have their ordinary meaning. In common
parlance, proceeds can mean either profits or gross receipts.39 When the words of a criminal
statute can be read in either of two ways, the rule of lenity requires them to be construed in the
manner most favorable to the accused.40 Recourse to the rule avoids the so-called merger
problem:
Since few lotteries, if any, will not pay their winners, the statute criminalizing illegal
lotteries, 18 U.S.C. 1955, would “merge” with the money laundering statute. Congress
evidently decided that lottery operators ordinarily deserve up to 5 years of imprisonment,
§1955(a), but as a result of merger they would face an additional 20 years [under the money
laundering statute], §1956(a)(1).... The merger problem is not limited to lottery operators…
Generally speaking, any specified unlawful activity, an episode of which includes
transactions which are not elements of the offense and in which the participant passes
receipts on to someone else, would merge with money laundering.41
Justice Stevens concurred in the result, but not the rationale, of the plurality opinion.42 He agreed
with the dissent at least to the extent that “the legislative history of §1956 makes it clear that
Congress intended the term ‘proceeds’ to include gross revenues from the sale of contraband and
the operation of organized crime syndicates involved in such sales.”43 Yet, he found the results of
inevitable merger too extraordinary to believe Congress intended them in all instances:
36
United States v. Santos, 461 F.3d 886, 889 (7th Cir. 2006).
Id. at 891.
38
553 U.S. 507, 511 (2008).
39
Id.
40
Id. at 514.
41
Id. at 515-16.
42
Id. at 524 (Stevens, J. concurring in the judgment).
43
Id. at 525-26 (emphasizing that he could not “agree with the plurality that the rule of lenity must apply to the
definition of ‘proceeds’ for these types of unlawful activities”).
37
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
The revenue generated by a gambling business that is used to pay the essential expenses of
operating that business is not “proceeds” within the meaning of the money laundering
statute. As the plurality notes, there is “no explanation for why Congress would have wanted
a transaction that is a normal part of a crime it had duly considered and appropriately
punished elsewhere in the Criminal Code, to radically increase the sentence for that crime.”...
Congress could not have intended the perverse result that would obtain in this case under
Justice Alito’s opinion.44
Consequently, he would presume that Congress intended the word “proceeds” to mean “gross
receipts,” except in those cases, like Santos, where the results would be too “perverse” to support
such a presumption.45
Speaking for the four dissenters, Justice Alito argued that treating proceeds to mean profits
contradicted what Congress probably understood the term to mean.46 Moreover, since the term
applies to both the promotional and concealment offenses, the plurality’s result would make it
more difficult to prosecute professional money launderers who ordinarily could not be shown to
know whether they were laundering gross receipts or only profits.47 Justice Breyer agreed and
added separate dissent contending that the merger problem might better be addressed through the
sentencing guidelines or through interpretation of the “promotional” element of the offense.48
So what did Santos mean? Some courts concluded that its “proceeds means profits” assessment
only applied in gambling cases.49 Others held that it did not apply to cases involving the sale of
contraband.50 Most reasoned that it only applied when there was a risk of merger, a risk that a
transaction that was part of the predicate offense would be charged additionally as a money
laundering offense.51
44
Id. at 531 (quoting the plurality opinion at 517).
Id. n.7. The appended list of federal money predicate offenses notes the maximum term of imprisonment that may be
imposed for each of the predicates.
46
Id. at 529 (Alito, J., dissenting).
47
Id. at 538.
48
Id. at 530 (Breyer, J., dissenting)(emphasis in the original)(“Thus, like the plurality, I see a ‘merger’ problem. But,
unlike the plurality, I do not believe that we should look to the word ‘proceeds’ for the solution ... [T]here are other,
more legally felicitous places to look for a solution. The Tenth Circuit, for example, has simply held that the money
laundering offense and the underlying offense that generated the money to be laundered must be distinct in order to be
separately punishable [United States v. Edgmon, 952 F.2d 1206, 1214 (10th Cir. 1991)]. Alternatively, the money
laundering statute’s phrase ‘with the intent to promote the carrying on of specified unlawful activity’ may not apply
where, for example, only one instance of that underlying activity is at issue. (The Seventh Circuit on a prior appeal in
this case rejected that argument... See United States v. Febus, 218 F.3d 784, 789 (2000))”).
49
United States v. Irvin, 656 F.3d 1151, 1165 (10th Cir. 2011)(“This court has since clarified that Santos’s holding
must be confined to its factual setting, and that ‘proceeds’ means ‘profits’ for the purposes of the money laundering
statute only where an illegal gambling operation is involved”); United States v. Demarest, 570 F.3d 1232, 1242 (11th
Cir. 2009).
50
United States v. Quinones, 635 F.3d 590, 600 (2d Cir. 2011)(“‘[P]roceeds’ under 18 U.S.C. §1956 is not limited to
‘profits’ at least where, as here, the predicate offense involves the sale of contraband”).
51
United States v. Richardson, 658 F.3d 333, 340 (3d Cir. 2011)(“We believe that ‘proceeds’ means gross receipts in
the circumstances of this case. For starters, the merger problem that impelled a majority of the Supreme Court to throw
out Santos’ conviction is not present here.... Moreover, five justices agreed in Santos that ‘proceeds’ means gross
receipts in cases involving the sale of drugs and other contraband.... Finally, out sister circuits uniformly agree that
‘proceeds’ means receipts in the drug trafficking context – at least where (as here) there is no merger problem”); United
States v. Crosgrove, 637 F.3d 646, 654-55 (6th Cir. 2011)(“‘Proceeds’ ... means profits only when the §1956 predicate
offense creates a merger problem that lead to a radical increase in the statutory maximum sentence and only when
(continued...)
45
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Congress resolved the issue by adding an explicit definition of proceeds to Section 1956: “the
term ‘proceeds’ means any property derived from or obtained or retained, directly or indirectly,
through some form of unlawful activity, including the gross receipts of such activities.”52 The
definition answers both the profits v. gross receipts question and several others as well. It makes
it clear, for example, that the term includes proceeds from a lawful source, retained through the
commission of a predicate offense.53 It does not necessarily invalidate, however, that line of lower
court decisions which holds that proceeds must be “derived from an already competed offense, or
a completed phase of an ongoing offense, before they can be laundered.”54
As for the promotional element, some of the lower courts have concluded that it “may be met by
transactions that promote the continued prosperity of the underlying offense.”55 One circuit has
declared, however, that “the ‘promotion’ element of money laundering promotion cannot be met
simply by demonstrating that the unlawfully earned monies were used to promote the continued
functioning of an ‘otherwise legitimate business enterprise.’ For instance, paying the bills
(payroll, rent, taxes) of a health care provider or a car dealership, even one engaged in frequent
acts of fraud, may not suffice to support the promotion element.”56
(...continued)
nothing in the legislative history suggests that Congress intended such an increase”); United States v. Rubashkin, 655
F.3d 849, 866 (8th Cir. 2011)(“The narrowest holding in Santos was Justice Stevens’s concurrence stating that
‘proceeds’ must mean ‘profits whenever a broader definition would ‘pervese[ly] result in a ‘merger problem.’ It
follows that the government’s argument that proceeds only means profits in the illegal gambling context can therefore
not be correct”); United States v. Wilkes, 662 F.3d 524, 549 (9th Cir. 2011)(internal citations omitted)(“In United States
v. Van Alstyne, this court construed Santos as a decision ‘with less than clear results, but concluded that ‘proceeds’
means ‘profits’ where viewing ‘proceeds’ as ‘receipts’ would present a ‘merger’ problem of the kind that troubled the
plurality and concurrence in Santos. In other words, under Santos ‘proceeds’ as used in 18 U.S.C. §1956 means ‘gross
receipts’ except where the money transfers are ‘inherent in the scheme’”).
52
18 U.S.C. 1956(c)(9) (emphasis added). Congress added the definition in section 2(f) of P.L. 111-21, 123 Stat. 1618
(2009)(S. 386).
53
United States v. Yusuf, 536 F.3d 178, 185 (3d Cir. 2008)(emphasis in the original; some internal citations
omitted)(“The narrow issue in this appeal is whether unpaid taxes unlawfully disguised and retained by means of the
filing of false tax returns through the U.S. mails are ‘proceeds’ of mail fraud for purposes of sufficiently stating an
offense for money laundering....[T]he federal money laundering statute specifically identifies which criminal offenses
constitute ‘specified unlawful activities. The term ‘specified unlawful activities’ covers a broad array of offenses. For
example, the fraudulent concealment of a bankruptcy estate’s assets is categorized as a ‘specified unlawful activity.’
Thus, property which is required to be included in a bankruptcy debtor’s estate but is instead undeclared and thus
retained, is ‘proceeds’ of a bankruptcy fraud offense....Moreover, simply because funds are originally procured through
lawful activity does not mean that one cannot thereafter convert those same funds into the ‘proceeds’ of an unlawful
activity. United States v. Levine, 970 F.2d 681, 686 (10th Cir. 1992)(sustaining money laundering conviction where the
defendant concealed corporate tax refund checks deposited in a hidden bank account). Accordingly, we reject the
suggestion that to qualify as ‘proceeds’ under the federal money laundering statute, funds must have been directly
produced by or through a specified unlawful activity, and we agree that funds retained as a result of the unlawful
activity can be treated as the ‘proceeds’ of such crime”).
54
United States v. Yusuf, 536 F.3d at 186; United States v. Singh, 518 F.3d 236, 247 (4th Cir. 2008); United States v.
Szur, 289 F.3d 200, 213-14 (2d Cir. 2002); United States v. Richard, 234 F.3d 763, 770 (1st Cir. 2000).
55
United States v. Lee, 558 F.3d 638, 642 (7th Cir. 2009)(payment of the advertising expenses of a prostitution
enterprise); United States v. Lawrence, 405 F.3d 888, 901 (10th Cir. 2005)(payment of clinic rent in connection with an
ongoing Medicare fraud scheme); United States v. Iacaboni, 363 F.3d 1, 5, 6 n.9 (1st Cir. 2004)(gambler’s pay off of
winning bettors, “nothing makes an illegal gambling operation flourish more than the prompt payment of winners,” and
observing that the “payment of salaries of employees is a common example of promotion within the meaning of the
statute”); United States v. King, 169 F.3d 1035, 1040 (6th Cir. 1999)(drug dealer’s payment for past shipments
preserved the defendant’s opportunity to acquire additional shipments).
56
United States v. Brown, 533 F.3d 768, 786 (5th Cir. 2008)(“In examining the question of intent necessary for a money
laundering promotion conviction, this court has held that the Government must present either direct proof of an intent
(continued...)
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International Transmission or Transportation
The international promotional offense, Section 1956(a)(2)(A), applies to anyone who:
1. A. transports, transmits, or transfers, or
B. attempts to transport, transmit, or transfer
2. a monetary instrument or funds
3. A. from a place in the U.S. to or through a place outside the U.S. or
B. to a place in the U.S. from or through a place outside the U.S.
4. with the intent to promote the carrying on of specified unlawful activity.57
“Monetary instruments” is a term defined broadly to include cash, checks, securities, and the
like.58 Since Section 1952(a)(2)(A) proscribes both transportation and attempted transportation,
prosecution may be had even though no funds were in fact transported internationally, as long as
the government proves a substantial step towards international transportation.59 The section does
not demand that the transported funds flow from a predicate offense or from any other unlawful
source; all that is required is that the offender intends to use them to promote a predicate
offense.60 Where the international promotional offense shares common elements with other
Section 1956 offenses, they are comparably construed.61 Thus, similar “intent to promote”
elements impose the same requirements of proof upon the government regardless of whether the
offense charged is a Section 1956(a)(1)(A)(i) financial transaction promotional offense or a
Section 1956(a)(2)(A) international transfer promotional offense.62 The statutory list of state,
federal, and foreign predicate offenses (specified unlawful activities) applies to a Section
1956(a)(2)(A) offense as it does for all but one of the Section 1956 offenses.63
(...continued)
to promote such illegal activity, or proof that a given type of transaction on its face, indicates an intent to promote such
illegal activity”), quoting, United States v. Miles, 360 F.3d 472, 477 (5th Cir. 2004) and United States v. Brown, 186
F.3d 661, 670 (5th Cir. 1999).
57
18 U.S.C. 1956(a)(2)(A); United States v. Caplinger, 339 F.3d 226, 232 (4th Cir. 2003); United States v. NarvizGuerra, 148 F.3d 530, 539 (5th Cir. 1998); United States v. Anvari-Hamedani, 378 F.Supp.2d 821, 832 (N.D. Ohio
2005).
58
“[T]he term ‘monetary instruments’ means (i) coin or currency of the United States or of any other country, travelers'
checks, personal checks, bank checks, and money orders, or (ii) investment securities or negotiable instruments, in
bearer form or otherwise in such form that title thereto passes upon delivery,” 18 U.S.C. 1956(c)(5).
59
United States v. Garcia Abrego, 141 F.3d 142, 162 n.8 (5th Cir. 1998).
60
18 U.S.C. 1956(a)(2)(A); United States v. Moreland, 622 F.3d 1147, 1167 (9th Cir. 2010); United States v. Krasinski,
545 F.3d 546, 550-51 (7th Cir. 2008).
61
United States v. Trejo, 610 F.3d 308, 315 (5th Cir. 2010)(“ Section 1956(a)(2)(A) contains an identical specific intent
requirement for transportation cases as its §1956(a)(1)(A)(i) transaction counterpart. While the definitive case
authority on specific intent derives from the transaction provision, it is safe to assume the requirement is no less
rigorous under 1956(a)(2)(A). See United States v. Guezo, 546 F.3d 174, 179 (2d Cir. 2008) (noting the use of identical
language in the transportation and transaction provisions of §1956 is a strong indicator that they should be interpreted
in the same manner). We conclude that the same stringent specific intent requirement applies in §1956(a)(2)(A)
cases”).
62
Id.; United States v. Caplinger, 339 F.3d 226, 233 (4th Cir. 2003).
63
Section 1956(a)(2)(B)(ii)(international transfers to avoid state or federal reporting requirements) has no predicate
offense element.
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Stings
The final promotional money laundering offense, Section 1956(a)(3)(A), is a variation of the
financial transaction offense, created to cover situations in which law enforcement officials acting
undercover have duped the offender into believing the agent is using the proceeds from a criminal
source to promote a predicate offense when in fact he is not.64 The offense occurs when an
offender:
1. with the intent to promote the carrying on of specific unlawful activity
2. A. conducts or
B. attempts to conduct
3. a financial transaction
4. involving property represented to be
A. the proceeds of specific unlawful activity or
B. property used to conduct or facilitate specified unlawful activity.65
The generous statutory definition of “financial transactions,” which embodies a “sale.... transfer,
delivery, or other disposition” involving a monetary instrument or the use of a financial
institution, applies with equal force here and throughout Section 1956.66 The “representations”
alluded to are confined to those “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.”67 In sting prosecutions under other 1956 sections, the courts have held
that the representation need not be explicit; it is enough that a reasonable person would infer from
the circumstances that funds to be laundered were the proceeds of a predicate offense.68 The same
construction holds true for representations under the financial transaction sting.69 By definition,
the qualifying state, federal, and foreign predicate offenses are the same for Section 1956(a)(3)
(A)’s promotional offense stings as for the other Section 1956 offenses.70
Prosecution of Section 1956(a)(3) sting offenses might seem to invite entrapment defense claims.
As a general rule, “[w]here the government has induced an individual to break the law and the
defense of entrapment is at issue ... the prosecution must prove beyond reasonable doubt that the
defendant was predisposed to commit the criminal act prior to first being approached by
64
“This amendment to the money laundering statute, 18 U.S.C. 1956, would permit undercover law enforcement
officers to pose as drug traffickers in order to obtain evidence necessary to convict money launderers. The present
statute does not provide for such operations because it permits a conviction only where the laundered money ‘in fact
involves the proceeds of specified unlawful activity.’” 134 CONG.REC. 27,420 (1988)(Department of Justice section-bysection analysis inserted by the bill’s sponsors).
65
18 U.S.C. 1956(a)(3)(A). The terminology used in the section permits an alternative construction of the fourth
element. The phrase in question reads “conducts or attempts 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,” 18 U.S.C. 1956(a)(3)(emphasis added). It is possible to read the portion in italics as referring to
property represented to be property used to conduct a predicate offense or alternatively as referring to property that in
fact constitutes property used to conduct a predicate offense. The first construction seems more consistent with the
purpose for adding the section, Williams & Whitney, FEDERAL MONEY LAUNDERING: CRIMES AND FORFEITURE 196-97
(1999 and 2004 Supp.).
66
18 U.S.C. 1956(c)(3),(4).
67
18 U.S.C. 1956(a)(3).
68
United States v. Starke, 62 F.3d 1374, 1382 (11th Cir. 1995); United States v. Wydermyer, 51 F.3d 319, 327-28 (2d
Cir. 1995); United States v. Kaufman, 985 F.2d 884, 892-93 (7th Cir. 1993).
69
United States v. Portalla, 496 F.3d 23, 28-29 (5th Cir. 2007).
70
18 U.S.C. 1956(c)(7).
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government agents.”71 Evidence of a defendant’s predisposition may include “(1) the character or
reputation of the defendant; (2) whether the government made the initial suggestion of criminal
activity; (3) whether the defendant engaged in the activity for profit; (4) whether the defendant
showed any reluctance; and (5) the nature of the government’s inducement.”72 The defense,
however, does not appear to have enjoyed a great deal of success in Section 1956(a)(3) cases.73
Concealment
Like promotional money laundering, concealment money laundering comes in three varieties;
concealment associated with a financial transaction, concealment associated with foreign
transportation or transmission, and concealment associated with a sting.
Financial Transactions
Concealment in violation of Section 1956(a)(1)(B)(i) 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
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 proceeds of specified unlawful
activity.74
The concealment offense shares several common elements with the other offenses in Section
1956. Thus, the defendant must have known that the transaction, designed to conceal, involved
crime-tainted proceeds, but need not have known the precise offense or its specifics.75 Gross
receipts of a predicate offense may serve as qualifying “proceeds,” for concealment as well as for
promotional offenses.76 The actions that amount to “conduct[ing] or attempt[ing] to conduct” a
proscribed transaction—for either concealment or promotional purposes—“include[] initiating,
71
Jacobson v. United States, 503 U.S. 540, 548-49 (1992).
E.g., United States v. Gurolla, 333 F.3d 944, 955 (9th Cir. 2003).
73
Examples of unsuccessful claims appear in United States v. Ogle, 328 F.3d 182, 185 (5th Cir. 2003); United States v.
Bala, 236 F.3d 87, 93-4 (2d Cir. 2000); United States v. Spriggs, 102 F.3d 1245, 1260-262 (D.C. Cir. 1996).
74
18 U.S.C. 1956(a)(1)(B)(i); United States v. Wilkes, 662 F.3d 524, 545 (9th Cir. 2011)(“To convict a person of money
laundering under 18 U.S.C. §1956(a)(1)(B)(i), the government must prove that (1) the defendant conducted or attempt
to conduct a financial transaction; (2) the transaction involved the proceeds of unlawful activity; (3) the defendant
knew that the proceeds were from unlawful activity; and (4) the defendant knew that the transaction was 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”); see also United States v. Richardson, 658 F.3d 333, 337-38 (3d Cir. 2011);
United States v. Heid, 651 F.3d 850, 855 (8th Cir. 2011); United States v. Fishman, 645 F.3d 1175, 1187 (10th Cir.
2011); United States v. Adefehinti, 510 F.3d 319, 322 (D.C. Cir. 2008)).
75
18 U.S.C. 1956(c)(1)(“[T]he term ‘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 the 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 paragraph (7)”)
76
18 U.S.C. 1956(c)(9).
72
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
concluding, participating in initiating, or concluding a transaction.”77 The broad definition of
“financial transaction” found in Section 1956(c)(4)(“sale.... transfer, delivery, or other
disposition” involving a monetary instrument or a financial institution) applies throughout the
section.78 As with the promotion offenses, the government must show more than a financial
transaction; proof that the defendant spent tainted funds, without more will not do.79
In the case of illicit purpose element, the concealment offenses and promotional offenses part
company. The promotion offenses speak of the defendant’s intent to promote.80 The concealment
offenses speak of the defendant’s knowledge of scheme to disguise.81 The promotion offenses
look to the commission of further predicate offenses; the concealment offenses do not.
The concealment offenses require “a design” to conceal. It is the purpose of scheme and not its
effect that the element condemns.82 A financial transaction that offers neither the accused nor the
property involved any apparent enhanced secrecy protection cannot be said to satisfy the intention
to conceal element of the offense.83 The fact the defendant made no effort to conceal his identity
is no defense, however, when the transactions were intended to conceal the nature, location, or
origin of the property involved.84
As a general matter, “[e]vidence 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.”85
Although government need not always prove that a transaction was designed to create the
77
18 U.S.C. 1956(c)(2)
E.g., United States v. Jenkins, 633 F.3d 788, 804 (9th Cir. 2011).
79
United States v. Slagg, 651 F.3d 832, 845 (8th Cir. 2011); United States v. Naranjo, 634 F.3d 1198, 1208 (11th Cir.
2011); United States v. Warshak, 631 F.3d 266, 323 (6th Cir. 2010); United States v. Adefehinti, 510 F.3d 319, 322
(D.C. Cir. 2008); United States v. Shepard, 396 F.3d 1116, 1120 (10th Cir. 2005); United States v. Stephenson, 183 F.3d
110, 121 (2d Cir. 1999).
80
18 U.S.C. 1956(a)(1)(A)(i), 1956(a)(2)(A).
81
18 U.S.C. 1956(a)(1)(B)(i), 1956(a)(2)(B)(i). The split is not complete. Both sting promotion and the sting
concealment prohibitions require no more than an intent to either promote or conceal, 18 U.S.C. 1956(a)(3)(A), (B).
82
United States v. Heid, 651 F.3d 850, 855 (8th Cir. 2011).
83
United States v. Blankenship, 382 F.3d 1110, 1128-131 (11th Cir. 2004); cf., United States v. Adefehinti, 510 F.3d
319, 323-24 (D.C. Cir. 2008).
84
United States v. Delgado, 653 F.3d 729, 737 (8th Cir. 2011); see also United States v. Terkle, 329 F.3d 1108, 1113114 (9th Cir. 2003); cf., United States v. Dvorak, 617 F.3d 1017, 1022 (8th Cir. 2010)(emphasis in the original)(“The
financial transactions identified in the indictment were Dvorak’s ‘withdrawals of cash from his Wells Fargo Bank
account.’ The provision of §1956(a)(1)(B)(i) with which we are principally concerned there is whether Dvorak’s
withdrawals were ‘designed in whole or in part to conceal or disguise ... the location of the illegal proceeds.... Although
cases addressing §1956(a)(1)(B)(i)often focus upon whether the transaction was intended to conceal the ‘nature’ or
‘source’ of the funds, a transaction intended to conceal the location of the funds is also a violation of the money
laundering statute”).
85
United States v. Magluta, 418 F.3d 1166, 1176 (11th Cir. 2005); see also United States v. Baldridge, 559 F.3d 1126,
1141 (10th Cir. 2009); United States v. Delgado, 653 F.3d 729, 738 (8th Cir. 2011)(use or third parties or commingling
with legitimate funds); United States v. Naranjo, 634 F.3d 1198, (11th Cir. 2011); United States v. Adefehinti, 510 F.3d
319, 323 (D.C. Cir. 2008)(listing cases illustrating various deceptive devices).
78
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appearance of legitimate wealth, efforts to create such an appearance often signal a money
laundering violation.86
International Transportation or Transmission
The international concealment offense of Section 1956(a)(2)(B)(i) penalizes anyone who:
1. A. transports, transmits, or transfers, or
B. attempts to transport, transmit, or transfer
2. a monetary instrument or funds
3. A. from a place in the U.S. to or through a place outside the U.S. or
B. to a place in the U.S. from or through a place outside the U.S.
4. knowing they came from some form of unlawful activity, and
5. knowing the transportation, transmission, or transfer is designed to conceal or disguise
A. the nature,
B. location,
C. source,
D. ownership, or
E. control of
6. the proceeds of a specified unlawful activity.87
The standard definitions and construction apply to several of the elements of Section
1956(a)(2)(B)’s international concealment offense. It is the deceptive laundering of the proceeds
of state, federal, and foreign predicate offenses that the section proscribes,88 but only when the
proceeds come in the form of “a monetary instrument or funds.”89 There is no consensus over
whether the international money laundering proscriptions of Section 1956(a)(2)(B) reach
international transactions that are part of a series of related transactions when the deceptive or
evasive transfer in the series is committed entirely either before or after the international
transfer.90
86
United States v. Law, 528 F.3d 888, 896 (D.C.Cir. 2008)(“Cuellar v. United States, [553 U.S. 550] (2008), held that
§1956(a)(2)(B)(i), which prohibits transportation designed to conceal certain attributes of illegally obtained funds, does
not require proof that [the] defendant attempted to create [the] appearance of legitimate wealth, but recogniz[ed] [that]
such attempt may signal [a] violation of [the] money laundering statute and indeed is [a] manner in which ‘classic
money laundering’ occurs”).
87
18 U.S.C. 1956(a)(2)(B)(i); United States v. Bieganowski, 313 F.3d 264, 279 (5th Cir. 2002); United States v. Ness,
565 F.3d 73, 77 (2d Cir. 2009); United States v. Jenkins, 633 F.3d 788, 806 (9th Cir. 2011).
88
18 U.S.C. 1956(c)(7).
89
18 U.S.C. 1956(a)(2)(B).
90
Compare, United States v. Kramer, 73 F.3d 1067, 1072 (11th Cir. 1996)(“the jury ... found that Gilbert intended to
further the laundering scheme by causing the transfer of $9.5 million from Switzerland to Luxembourg. The jury,
however, also found that Gilbert did not cause the transfer of this same money from the United States to Switzerland...
the statute does not make money laundering a continuing offense... The jury found that Gilbert was involved in only
one transaction and the transaction was totally outside this country. Because this transaction is separate from the one
originating in the United States and because money laundering is not a continuing offense, Gilbert’s conviction cannot
be upheld”); with, United States v. Harris, 79 F.3d 223, 231 (2d Cir. 1996)(“Harris argues that each time that funds
were sent to Switzerland, two transfers took place – one from New York to Connecticut and the other from Connecticut
to Switzerland. Harris maintains that it was the transfers of funds from ... New York to ... Connecticut that were
designed to conceal the nature ... of the funds ... and not the transfers from Connecticut to Switzerland. Therefore,
Harris argues that he should not have been convicted of violating §1956(a)(2). We disagree because we do not interpret
the movements of funds from New York to Connecticut and then from Connecticut to Switzerland as two separate
events. While the scheme was implemented in two stages, each stage was an integral part of single plan to transfer
(continued...)
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The Supreme Court, however, has made it clear that the concealment proscribed refers to the
purpose for the transportation, not its method.91 The Court in Cuellar held that evidence that the
defendant attempted to smuggle cash out of the United States was insufficient to support a
prosecution for violation of Section 1956(a)(2)(B)(i), absent evidence of a design to conceal the
ownership, source, nature, or ultimate location of the funds.92 It made it equally clear, however,
that violations are not limited to those instances where the government can establish that the
transportation was intended to create the appearance of legitimate wealth.93
A drafting quirk casts something of a cloud over the first knowledge element of the Section
1956(a)(2)(B) international transfer offenses (“knowing that the ... funds involved in the ...
transfer represent the proceeds of some form of unlawful activity”).94 The statute provides a
specific definition for a similar but slightly different phrase used in the financial transaction
offenses. The comparable element in the financial transaction offenses of Section 1956(a)(1)
refers to property in a financial transaction rather than funds.95 The property phrase (“knowing
that the property in a financial transaction”) is specifically defined so that the defendant need not
know that “unlawful activity” which generates the laundered proceeds constitutes a money
laundering predicate offense, that is, a “specified unlawful activity”; it is enough that he knows
that it is a state, federal, or foreign felony.96 At least one court has held that the same definition
applies to Section 1956(a)(2)(B) international offenses notwithstanding the differences in
terminology.97
(...continued)
funds ‘from a place in the United States to or through a place outside the United States’”); United States v. Dinero
Express, Inc., 313 F.3d 803, 807 (2d Cir. 2002)(“a course of conduct that begins with a sum of money located in one
country and ends with a related sum of money located in another may constitute a ‘transfer’ for purposes of
§1956(a)(2). This is true whether or not the particular transaction vehicle for effecting the transfer is comprised of a
single step or a series, and whether or not the funds move directly between an account in the United States and one
abroad”).
91
United States v. Cuellar, 553 U.S. 550, 563, 566 (2008)(emphasis in the original and some internal citations omitted)
(“We agree with petitioner that merely hiding funds during transportation is not sufficient to violate the statute, even if
substantial efforts have been expended to conceal the money. Our conclusion turns on the text of §1956(a)(2)(B)(i),
and particularly on the term ‘design.’ In this context, ‘design’ means purpose or plan; i.e., the intended aim of the
transportation....There is a difference between concealing something to transport it and transporting something to
conceal it; that is, how one moves the money is distinct from why one moves the money. Evidence of the former,
standing alone, is not sufficient to prove the latter”).
92
Id.; United States v. Slagg, 651 F.3d 832, 845 (8th Cir. 2011)(“[T]he Supreme Court held in Cuellar v. United States
that the statute’s ‘design’ element ‘requires proof that the purpose – not merely effect – of the transportation was to
conceal or disguise a listed attribute’ of the funds.... Thus, the Government must show that concealment is an ‘intended
aim’ of the transaction [or transportation]”); United States v. Faulkenberry, 614 F.3d 573, 584-86 (6th Cir. 2010).
93
Cuellar v. United States, 553 U.S. at 557-61 (and noting earlier that several “Courts of Appeals have considered this
requirement as relevant or even necessary in the context of 18 U.S.C. 1956(a)(1)(B)(i),” id. at 555 n.1).
94
18 U.S.C. 1956(a)(2)(B)(emphasis added)).
95
“[K]nowing that the property involved in a financial transaction represent the proceeds of some form of unlawful
activity,” 18 U.S.C. 1956(a)(1)(emphasis added)).
96
“[T]he term ‘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 paragraph (7),” 18 U.S.C. 1956(c)(1).
97
United States v. Carr, 25 F.3d 1194, 1204 (3d Cir. 1994).
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Stings
The sting concealment offense in Section 1956(a)(3)(B) is much like the promotional sting
offense and occurs when an offender:
1. with the intent to conceal or disguise
A. the nature,
B. location,
C. source,
D. ownership, or
E. control of
2. property believed to be the proceeds of a specified unlawful activity
3. A. conducts or
B. attempts to conduct
3. a financial transaction
4. involving property represented to be
A. the proceeds of specific unlawful activity or
B. property used to conduct or facilitate specified unlawful activity.98
For purposes of the concealment element of Section 1956(a)(3)(B), exchanging small bills for
larger ones may evidence an intent to conceal the location of the proceeds of a predicate offense
since a large bill is more easily concealed than the small bills representing an equal amount.99
Other indicia of an intent to conceal include (1) “unusual secrecy surrounding the transaction,”
(2) “structuring the transactions to avoid attention,” (3) “depositing illegal funds with a legitimate
enterprise,” (4) “highly irregular features of the transaction,” (5) “using third parties to conceal
the real owner of the funds,” and (6) “unusual financial moves.”100
The sting proscriptions are found on a belief rather than knowledge that the proceeds involved
have been tainted by their involvement in a predicate offense.101 Nevertheless, a defendant is still
not free to turn a blind eye to the fact that the proceeds are represented to have a predicate offense
taint.102
The “financial transaction” element of the offense demands either a transaction that affects
interstate or foreign commerce or a transaction involving the use of a financial institution engaged
in or whose activities affect interstate or foreign commerce.103 To satisfy the “financial
institution” prong of the “financial transaction” element of the offense, the government need only
establish that the transaction involved “the use of a financial institution” with an interstate or
foreign commerce nexus, not that the institution was itself an integral or essential part of the
transaction.104 To satisfy the “transaction” prong, the government need only establish a de
minimis effect on interstate commerce.105
98
18 U.S.C. 1956(a)(3)(B).
United States v. Farese, 248 F.3d 1056, 1060 (11th Cir. 2001).
100
United States v. Wolny, 133 F.3d 758, 760-61 (10th Cir. 1998).
101
United States v. Nektalov, 461 F.3d 309, 314 (2d Cir. 2006).
102
Id. at 314-16.
103
18 U.S.C. 1956(c)(4).
104
United States v. Oliveros, 275 F.3d 1299, 1303-304 (11th Cir. 2001).
105
United States v. Leslie, 103 F.3d 1093, 1100 (2d Cir. 1997).
99
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The representational element does not require undercover agents to have told the defendant in so
many words that the transaction involves the proceeds of a predicate offense; it is enough that
they “made the defendant aware of circumstances from which a reasonable person would infer
that the property was [the proceeds of a predicate offense].”106
Evading Reporting Requirements (Smurfing)
Early anti-money laundering efforts sought to enlist the assistance of financial institutions. They
were to report large cash transactions to the government.107 To avoid disclosure of their activities,
money launderers sent forth a swarm of subordinates who scurried from bank to bank where they
engaged in layered or structured transactions so that no single transaction exceeded the threshold
amount of the financial institution’s reporting requirements.108 There are three anti-structuring
Section 1956 offenses (sometimes referred to as “smurfing”): one involving financial institutions,
one involving international transactions, and one involving stings.109 The volume of case law,
however, suggests that structuring prosecutions are more often brought under 31 U.S.C. 5324,
discussed infra.
Financial Transactions
The most common of the structuring offenses is that which involves a financial transaction,
Section 1956(a)(1)(B)(ii), which forbids:
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
4. with the intent to avoid a state or federal transaction reporting requirement.110
Implicit in the intent element is the obligation of the government to establish that the defendant
knew of the reporting requirements.111 The structuring offense described in 31 U.S.C. 5324
requires the government to show that the accused knew that his layering of transactions was
unlawful;112 Section 1956(a)(1)(B)(ii) does not.113
106
United States v. Starke, 62 F.3d 1374, 1382 (11th Cir. 1995); United States v. Wydermyer, 51 F.3d 319, 327-28 (2d
Cir. 1995); United States v. Kaufman, 985 F.2d 884, 892-93 (7th Cir. 1993).
107
P.L. 91-508, 84 Stat. 1122 (1970), 31 U.S.C. 1051-1122 (1970 ed.).
108
Welling, Smurfs, Money Laundering, and the Federal Criminal Law: The Crime of Structuring Transactions, 41
FLORIDA LAW REVIEW 287, 288 (1989)(“[T]he government’s opening salvo against laundering [was] a statute requiring
financial institutions to report cash transactions over $10,000 to the government. To skirt this law, launderers began to
conduct multiple cash transactions just below the $10,000 reporting threshold. The army of persons who scurried from
bank to bank to accomplish these transactions became known as ‘smurfs’ because, like their little blue cartoon
namesakes, they were pandemic”).
109
18 U.S.C. 1956(a)(1)(B)(ii), 1956(a)(2)(B)(ii), and 1956(a)(3)(C), respectively.
110
18 U.S.C. 1956(a)(1)(B)(ii); United States v. Bowman, 235 F.3d 1113, 1117 (8th Cir. 2000); United States v.
Morales, 108 F.3d 1213, 1221 (10th Cir. 1997).
111
United States v. Bowman, 235 F.3d at 1118.
112
Ratzlaf v. United States, 510 U.S. 135, 137 (1994).
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The statutory definitions apply equally to the elements of the Section 1956(a)(1)(B)(ii) structuring
offense. The phrase “knowing that the property involved in a financial transaction represents the
proceeds of some form of unlawful activity” means that the offender must know that the proceeds
are derived from some violation of state, federal, or foreign law, but need not know they come
from a predicate offense.114 “Conducts” includes the initiation or participation in a transaction.115
The required “financial transaction” is any disposition that either affects interstate or foreign
commerce or involves either a financial institution engaged in, or whose activities affect,
interstate or foreign commerce.116 The “specified unlawful activities” that must in fact have
produced the proceeds involved in the transaction are the same state, federal, and foreign
predicate offenses that trigger liability for other offenses in Section 1956.117
International Transportation or Transmission
The international smurfing offense of Section 1956(a)(2)(B)(ii) is unusual in that it does not
require the presence of proceeds of a predicate offense, as long as the funds are proceeds of some
criminal offense. It penalizes anyone who:
1. A. transports, transmits, or transfers, or
B. attempts to transport, transmit, or transfer
2. a monetary instrument or funds
3. A. from a place in the U.S. to or through a place outside the U.S. or
B. to a place in the U.S. from or through a place outside the U.S.
4. knowing they represent the proceeds from some form of unlawful activity, and
5. knowing the transportation, transmission, or transfer is designed to avoid a state or federal
transaction reporting requirement.118
The unlawful activity that generates the proceeds that are the subject of the offense apparently is
any felonious violation of state, federal, or foreign law and need not be a predicate offense.119
Stings
The sting structuring provision, in contrast, has a predicate offense element:
1. with the intent to avoid a state of federal transaction reporting requirement
2. A. conducts or
B. attempts to conduct
3. a financial transaction
4. involving property represented to be
A. the proceeds of specific unlawful activity or
(...continued)
113
United States v. Santos, 20 F.3d 280, 283 n.2 (7th Cir. 1994).
114
18 U.S.C. 1956(c)(1).
115
18 U.S.C. 1956(c)(2).
116
18 U.S.C. 1956(c)(3),(4).
117
18 U.S.C. 1956(c)(7).
118
18 U.S.C. 1956(a)(2)(B)(ii); United States v. Morales, 108 F.3d 1213, 1221(10th Cir. 1997).
119
18 U.S.C. 1956(c)(1); United States v. Ortiz, 738 F.Supp. 1394, 1399 (S.D.Fla. 1990) (“This definition [18 U.S.C.
1956(c)(1)] suggests that the statute is applicable to the transportation of the proceeds of any felonious activity where
the defendant has knowledge that the proceeds are derived from felonious activity”).
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B. property used to conduct or facilitate specified unlawful activity.120
The representation element may be satisfied by “hints” from undercover officers that the property
involved in the transaction comes from a predicate offense; the officers need not have said so in
so many words.121
Tax Evasion
The tax evasion money laundering offense must be tethered to a financial transaction, 18 U.S.C.
1956(a)(1)(A)(ii); there is no international or undercover counterpart.
Financial Transactions
Money laundering for tax evasion purposes occurs whenever a person:
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
4. with the intent to engage in conduct in violation of 26 U.S.C. 7201 (attempt to evade or
defeat tax) or 7206 (tax fraud or false tax statements).122
A tax evasion, laundering prosecution requires the government to show that the defendant acted
intentionally rather than inadvertently, but not that the defendant knew that his conduct violated
the tax laws.123
Conspiracy, Attempt, Aiding and Abetting
Each of the 10 criminal proscriptions found in Section 1956 outlaws both the completed offense
and the attempt to commit it.124 Attempt adds an additional feature to the underlying offense, the
government must establish that the defendant’s action constituted a “substantial step” towards the
commission of a completed offense.125
120
18 U.S.C. 1956(a)(3)(C); United States v. Nelson, 66 F.3d 1036, 1040 (9th Cir. 1995)(“To prove a violation of this
section, the government must prove (1) that the defendant conducted or attempted to conduct a financial transaction, (2)
with the intent to avoid a transaction reporting requirement, and (3) that the property involved in the transaction was
represented by a law enforcement officer to be the proceeds of specified unlawful activity”); United States v. Breque,
964 F.2d 381, 386-87 (5th Cir. 1992).
121
United States v. Nelson, 66 F.3d at 1041 (citing other representation cases to the same effect).
122
18 U.S.C. 1956(a)(1)(A)(ii); United States v. Zanghi, 189 F.3d 71, 77 (1st Cir. 1999).
123
Id. at 77-8.
124
“Whoever, conducts or attempts to conduct such a financial transaction ...” 18 U.S.C. 1956(a)(1); “Whoever ...
transfers or attempts to ... transfer a monetary instrument ...” 18 U.S.C. 1956(a)(2); “Whoever ... conducts or attempts
to conduct a financial transaction involving property represented to be ...” 18 U.S.C. 1956(a)(3).
125
United States v. Choy, 309 F.3d 602, 605 (9th Cir. 2002)(attempt to commit promotional money laundering in
violation of section 1956(a)(1)(A)(i)); United States v. Barnes, 230 F.3d 311, 314-15 (7th Cir. 2000)(attempt to commit
concealment money laundering with an undercover officer in violation of section 1956(a)(3)(B)); United States v.
(continued...)
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Conspiracy to commit a federal crime is a separate federal offense punishable by imprisonment
for not more than five years.126 In addition, Section 1956(h) declares that “[a]ny person who
conspires to commit any offense defined in this section or section 1957 shall be subject to the
same penalties as those prescribed for the offense the commission of which was the object of the
conspiracy.”127 Although a casual reading might indicate that Section 1956(h) simply changes the
penalty for a Section 371 conspiracy to violate Section 1956 to match the other penalties for
violation Section 1956, Section 1956(h) in fact creates a separate crime.128 The distinction matters
because violation of Section 371 is not complete until one of the conspirators commits an overt
act in furtherance of the scheme;129 Section 1956(h) has no such overt act requirement.130
Conspiracy to violate Section 1956 carries with it the prospect of liability for any foreseeable
offenses committed by co-conspirators in furtherance of the scheme.131
The confluence of the language of Section 1956(h) and that of the substantive offenses in Section
1956, each of which contains an attempt component, raises the curious possibility of a
prosecution of conspiracy to attempt a violation of one of the substantive offenses. Although the
case law is sparse, the courts appear to have acknowledged that “conspiracy to attempt” may
constitute an indictable offense both as a general matter and in the case of Section 1956.132 The
cases, however, do not discuss the offense’s precise elements. Attempt ordinarily requires proof of
a substantial step towards the completion of the underlying offense; conspiracy to attempt,
whether in the absence of an overt act requirement or not, presumably requires something less.
As a general matter, anyone who commands, counsels, or aids and abets the commission of a
federal crime by another is equally culpable and equally punishable.133 “In order to aid and abet
another to commit a crime it is necessary that a defendant in some sort associated himself with
(...continued)
Nelson, 66 F.3d 1036, 1042-44 (9th Cir. 1995)(attempt to commit the offense of avoiding reporting requirements with
an undercover officer in violation of section 1956(a)(3)(C)).
126
18 U.S.C. 371.
127
“To prove a conspiracy to launder money, the government must demonstrate that the defendant was knowingly
involved with two or more people for the purpose of money laundering and that the defendant knew the proceeds used
to further the scheme were derived from an illegal activity,” United States v. Turner, 400 F.3d 491, 496 (7th Cir. 2005);
United States v. Greenidge, 495 F.3d 85, 100 (4th Cir. 2007).
128
Whitfield v. United States, 543 U.S. 209, 214-18 (2005).
129
“If two or more persons conspire either to commit any offense against the United States, or to defraud the United
States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect
the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both....” 18
U.S.C. 371 (emphasis added).
130
Whitfield v. United States, 543 U.S. at 219 (2005); United States v. Fishman, 645 F.3d 1175, 1191 (10th Cir. 2011),
citing in accord Whitfield and United States v. Green, 599 F.3d 360, 372 (4th Cir. 2010); United States v. Prince, 618
F.3d 551, 553 (6th Cir. 2010).
131
United States v. Moreland, 622 F.3d 1147, 1169 (9th Cir. 2010), citing Pinkerton v. United States, 328 U.S. 640,
645-48 (1946).
132
United States v. Mowad, 641 F.2d 1067, 1074-75 (2d Cir. 1981)(conspiracy to attempt to export a firearm illegally
in violation of 18 U.S.C. 371 and 22 U.S.C. 2778); United States v. Clay, 495 F.2d 700, 710 (7th Cir. 1974)(conspiracy
to attempt to burglarize a federally insured bank in violation of 18 U.S.C. 371 and 2113); United States v. SierraGarcia, 760 F.Supp. 252, 258 (E.D.N.Y. 1991)(conspiracy to attempt money laundering in violation of 18 U.S.C. 371
and 1956).
133
18 U.S.C. 2 (“(a) Whoever commits an offense against the United States or aids, abets, counsels, commands,
induces or procures its commission, is punishable as a principal. (b) Whoever willfully causes an act to be done which
if directly performed by him or another would be an offense against the United States, is punishable as a principal”).
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the venture, that he participated in it as in something that he wishes to bring about, that he seek by
his action to make it succeed.”134
Consequences
Prison terms, fines, restitution, confiscation, and civil penalties may follow as a consequence of
conviction of a money laundering offense.
Imprisonment
Any violation of Section 1956 is punishable by imprisonment for not more than 20 years.135 The
first sentencing guidelines reflected the fact that Section 1956 was a 20-year felony and the
anticipation that the section would apply primarily in cases in which drug trafficking and
organized crime offenses were the predicate offenses.136 Thereafter, the Sentencing Commission
became concerned about the application of the initial guidelines in cases involving less severely
punished predicate offenses such as mail fraud.137 Subsequent amendments to the guidelines138
and penalty increases in some of the predicate offenses139 address that concern. Defendants
sentenced to a term of imprisonment may also be subject a term of supervised released of up to
three years to be served upon their release from prison.140
Fines and Civil Penalties
Violations of Section 1956(a)(1) and (a)(2), the financial institution and interstate or foreign
transmission offenses, are punishable by a fine of no more than the greater of $500,000 or twice
134
Nye & Nissen v. United States, 336 U.S. 613, 619 (1949); see also United States v. Huezo, 546 F.3d 174, 179-80 (2d
Cir. 2008)(“To prove that the defendant acted with specific intent, the government need not establish that he knew all
of the details of the crime, only that he joined the venture, that he shared in it, and that his efforts contributed towards
its success”); United States v. Quiles, 618 F.3d 383, 396 (3d Cir. 2010).
135
18 U.S.C. 1956(a).
136
U.S.S.G. §2S1.1, 52 FED. REG. 44714 (Nov. 20, 1987). The sentencing guidelines were originally considered
binding, 18 U.S.C. 3553(b)(1), but now only guide the court’s sentencing discretion, United States v. Booker, 543 U.S.
220, 258-59 (2005); Gall v. United States, 552 U.S. 38, 49 (2007)(“[A] district court should begin all sentencing
proceedings by correctly calculating the applicable Guidelines range.... [T]he appellate court must review under an
abuse-of-discretion standard. It must first ensure that the district court committed no significant procedural error, such
as failing to calculate (or improperly calculating) the Guidelines...”). For a discussion of the role the guidelines now
play and related policy questions, see CRS Report RL32766, Federal Sentencing Guidelines: Background, Legal
Analysis, and Policy Options, by Lisa M. Seghetti and Alison M. Smith; for a discussion of the operation of the
guidelines, see CRS Report RL32846, How the Federal Sentencing Guidelines Work: Two Examples, by Charles
Doyle.
137
United States Sentencing Commission, Report to the Congress: Sentencing Policy for Money Laundering Offenses,
Including Comments on Department of Justice Report (September 18, 1997), available at http://www.ussc.gov/
Legislative_and_Public_Affairs/Congressional_Testimony_and_Reports/Money_Laundering_Topics/19970918_RtC_
Money_Laundering.PDF.
138
U.S.S.G. §2S1.1.
139
E.g., Mail fraud, once a five-year felony, 18 U.S.C. 1341 (2000 ed.), is now punishable by imprisonment for not
more than 20 years, 18 U.S.C. 1341; see also 18 U.S.C. 641 (theft of more than $1000 in federal property, maximum
term of imprisonment: 10 years); 201 (bribery of federal officials, maximum term of imprisonment: 15 years). A list of
the maximum terms of imprisonment for each of the money laundering predicate offenses appears at the end of this
report.
140
18 U.S.C. 3583.
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the value of the property involved in the offense.141 Sting violations are punishable by a fine of
not more than the greater of $250,000 ($500,000 for an organization) or twice the amount
involved in the offense.142 Violators of any provisions of Section 1956 are subject to a civil
penalty of no more than the greater of $10,000 or the value of the property involved in the
offense.143
Forfeiture
Forfeiture is the confiscation of property to the government as a consequence of the property’s
proximity to some form of criminal activity.144 The government’s claim to the property can be
secured by default or through judicial proceedings conducted either civilly and ordinarily in rem
(against the property itself) or as part of the criminal proceedings against the property owner.145
The proceeds of a confiscation are generally shared among the law enforcement agencies that
participate in the investigation and prosecution of the forfeiture.146
Section 1956 provides a vehicle for civil or criminal confiscation in two very distinct ways. First,
the “proceeds” of any Section 1956 predicate offense (and any property traceable to such
proceeds) are subject to confiscation without the necessity of any actual violation of Section
1956.147 This permits the confiscation of property derived from crimes that might form the basis
for a money laundering offense without having to prove that a money laundering offense
occurred.148 Second, property “involved” in a Section 1956 money laundering offense (or
property traceable to such involved property) may be confiscated.149 Involved property obviously
141
18 U.S.C. 1956(a)(1), (a)(2).
18 U.S.C. 1956(a)(3), 3571, 3581.
143
18 U.S.C. 1956(b)(1).
144
See generally CRS Report 97-139, Crime and Forfeiture, by Charles Doyle.
145
E.g., 21 U.S.C. 881, 853 (relating to the civil and criminal confiscation of certain property associated with violations
of the Controlled Substances Act).
146
18 U.S.C. 981(e), 982(b); 21 U.S.C. 881(e), 853(i)(4); 19 U.S.C. 1616a.
147
“The following property is subject to forfeiture to the United States... (C) Any property, real or personal which
constitutes or is derived from proceeds traceable to ... any offense constituting ‘specified unlawful activity’ (as defined
in section 1956(c)(7) of this title), or conspiracy to commit such an offense,” 18 U.S.C. 981(a)(1)(C).
“If a forfeiture of property is authorized in connection with a violation of an Act of Congress, and any person is
charged in an indictment or information with such violation but no specific statutory provision is made for criminal
forfeiture upon conviction, the government may include the forfeiture in the indictment or information ... and upon
conviction, the court shall order the forfeiture of the property ....” 28 U.S.C. 2461(c).
148
See e.g., United States v. Newman, 659 F.3d 1235, 1239-240 (9th Cir. 2011)(“18 U.S.C. §981(a)(1) states: The
following property is subject to forfeiture to the United States .... (C) Any property, real or personal, which constitutes
or is derived from proceeds traceable to ... any offense constituting ‘specified unlawful activity (as defined in section
1956(c)(7) of this title).... In turn 18 U.S.C. §1956(c)(7) provides that ‘the term ‘specified unlawful activity’ means –
(D) an offense under ... section 2113 or 2114 (relating to bank and postal robbery and theft).’ Because Newman
pleaded guilty to violating 18 U.S.C. §2113, criminal forfeiture is available pursuant to §981(a)(1) (C) and 28 U.S.C.
§2461(c)”); United States v. Gregoire, 638 F.3d 962, 971 (8th Cir. 2011)(“The United States is authorized to seek civil
forfeiture of ‘[a]ny property, real or person, which constitutes or is derived from proceeds traceable to a violation of ‘
of the offenses specified in 18 U.S.C. §981(a)(1)(C), which include mail fraud and interstate transportation of stolen
property. See 18 U.S.C. §§1956(a)(7)(A)”).
149
“The following property is subject to forfeiture to the United States: (A) Any property, real or personal, involved in
a transaction or attempted transaction in violation of section 1956... of this title or any property traceable to such
property which constitutes or is derived from proceeds traceable to ... any offense,” 18 U.S.C. 981(a)(1)(A).
“The court, in imposing sentence on a person convicted of an offense in violation of section 1956 ... of this title, shall
(continued...)
142
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includes more than the proceeds of the predicate offense, since the proceeds are separately
forfeitable already. “Property eligible for forfeiture under 18 U.S.C. §982(a)(1) includes that
money or property which was actually laundered ... , along with any commissions or fees paid to
the launderer and any property used to facilitate the laundering offense.”150
In theory, confiscation might dip into both sides of a tainted transaction, the proceeds from the
predicate offense and the cashier’s check, real estate, jewelry, or sports car purchased with the
proceeds in a laundering transaction. In practice, however, involved property has been construed
to mean untainted property joined with the proceeds of a predicate offense as part of the
laundering transaction.151 Property acquired in exchange for the proceeds or for the proceeds and
other involved property is forfeitable as traceable property. The government may confiscate the
property on either side of the transaction, but not the property on both sides.152
The Eighth Amendment prohibits excessive fines. Fines are excessive if they are grossly
disproportionate to the gravity of the offender’s misconduct.153 While the excessive fines clause
may impose limits upon the permissible extent of the confiscation for failure to comply with antimoney laundering reporting statutes,154 forfeitures under Section 1956 are not ordinarily
considered excessive because of the gravity of the offense and its predicate offenses.155
Venue
The Constitution guarantees the accused the right to trial in the state in which the crime charged
was committed and before a jury from the state and district in which the crime was committed.156
In United States v. Cabrales,157 the defendant was tried in Missouri for laundering, in Florida, the
proceeds of a Missouri drug dealing ring. The Supreme Court held the Constitution precludes trial
of a money laundering charge in the district in which the predicate offense occurred unless the
(...continued)
order that the person forfeit to the United States any property, real or personal involved in such offense, or any property
traceable to such property,” 18 U.S.C. 982(a)(1).
150
United States v. Seher, 562 F.3d 1344, 1368 (11th Cir. 2009)(internal quotation marks and citations omitted).
151
United States v. Huber, 404 F.3d 1047, 1058 (8th Cir. 2005); United States v. Baker, 227 F.3d 955, 970 (7th Cir.
2000); United States v. Tencer, 107 F.3d 1120, 1134 (5th Cir. 1997). The term also includes “any commissions or fees
paid to the launderer, and any property used to facilitate the laundering offense,” United States v. Bornfield, 145 F.3d
1123, 1135 (10th Cir. 1998).
152
Cassella, The Forfeiture of Property Involved in Money Laundering Offenses, 7 BUFFALO CRIMINAL LAW REVIEW
583, 627 (2004)(the “government may get a money judgment for the amount involved in the conversion of [tainted]
proceeds to consumer goods, or it may forfeit the converted property itself, but it cannot forfeit both”), citing United
States v. Hawley, 148 F.3d 920, 928 (8th Cir. 1998).
153
United States v. Bajakajian, 524 U.S. 321, 334 (1998).
154
Bajakajian found an attempted forfeiture, based on anti-money laundering reporting statute, excessive, Id.
155
E.g., United States v. Wyly, 193 F.3d 289, 303 (5th Cir. 1999); United States v. Bollin, 264 F.3d 391, 417-19 (4th Cir.
2001); United States v. Misla-Aldarondo, 478 F.3d 52, 72 (1st Cir. 2007); United States v. Seher, 562 F.3d 1344, 1371
(11th Cir. 2009)(“A forfeiture order violates the Excessive Fines Clause if it ‘is grossly disproportional to the gravity of
a defendant’s offense.’ To make this determination, we principally look at three factors: (1) whether the defendant falls
into the class of persons at whom the criminal statute was principally directed; (2) other penalties authorized by the
legislature (or the Sentencing Commission); and (3) the harm caused by the defendant”), quoting United States v.
Bajakajian, 524 U.S. 321, 327 (1998).
156
U.S.Const. Art.III, §2, cl.3; Amend. VI.
157
United States v. Cabrales, 524 U.S.1 (1998).
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laundering and the predicate offense occurred in the same district or perhaps unless the launderer
was a co-conspirator in the commission of the predicate offense or participated in the transfer of
the laundered property from the place where the predicate offense occurred (e.g., Missouri) to the
place where the laundering occurred (e.g., Florida).158 The Section 1956 money laundering venue
provision was amended with an eye to the Court’s decision.159
18 U.S.C. 1957
Elements
Unless there is some element of promotion, concealment, or evasion, Section 1956 does not make
a separate crime of simply spending or depositing tainted money. Section 1957 does.160 It outlaws
otherwise innocent transactions contaminated by the origin of the property involved in the
transaction.161 Using most of the same definitions as Section 1956, the elements of 1957 cover
anyone who:
1. A. in the United States,
B. in the special maritime or territorial jurisdiction of the United States,
or
C. outside the United States if the defendant is an American,
2. knowingly
3. A. engages or
B. attempts to engage in
4. a monetary transaction
5. [in or affecting U.S. interstate or foreign commerce]
6. in criminally derived property that
A. is of a greater value than $10,000 and
B. is derived from specified unlawful activity.162
158
United States v. Cabrales, 524 U.S. at 3-4.
18 U S.C. 1956(i)(“(1) Except as provided in paragraph (2), a prosecution for an offense under this section or
section 1957 may be brought in – (A) any district in which the financial or monetary transaction is conducted; or (B)
any district where a prosecution for the underlying specified unlawful activity could be brought, if the defendant
participated in the transfer of the proceeds of the specified unlawful activity from that district to the district where the
financial or monetary transaction is conducted. (2) A prosecution for an attempt or conspiracy offense under this
section or section 1957 may be brought in the district where venue would lie for the completed offense under paragraph
(1), or in any other district where an act in furtherance of the attempt or conspiracy took place”).
160
Section “1957 is often called the ‘money spending statute.’ Its purpose is to make the criminal’s money worthless,
by making it a felony for him to spend it, or for anyone else to take it, if he knows of its illegal source,” Cassella, The
Forfeiture of Property Involved in Money Laundering Offenses, 7 BUFFALO CRIMINAL LAW REVIEW 583, 614 (2004).
161
United States v. Rutgard, 116 F.3d 1270, 1291 (9th Cir. 1997)(“The description of the crime [under section 1957]
does not speak to the attempt to cleanse dirty money by putting it in a clean form and so disguising it. This statute
applies to the most open, above-board transaction”); United States v. Gabriele, 63 F.3d 61, 65(1st Cir. 1995)(“The crux
of the argument is that section 1957 is a rather novel statute, in that it criminalizes conduct by a person once removed
from that of the person who generated the criminally derived property. Thus, he argues, the proscribed conduct is not
likely to appear unlawful to an ordinary citizen... Section 1957 is but another in a substantial line of federal criminal
statutes whose only mens rea requirement is knowledge of the prior criminal conduct that tainted the property involved
in the proscribed activity”).
159
162
“(a) Whoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts 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, shall be punished as provided in subsection (b).
(continued...)
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The courts often supply an abbreviated statement of the crime’s elements. To prove money
laundering under §1957, the government must prove: “(1) that the defendant engaged in or
attempted to engage in a monetary transaction, (2) in criminally derived property worth at least
$10,000; (3) with knowledge that the property was derived from unlawful activity, and (4) the
property is, in fact, derived from specified unlawful activity.”163
At the heart of any Section 1957 offense lies a monetary transaction. A monetary transaction for
purposes of Section 1957 is a financial transaction as understood under Section 1956164 or any
other deposit or transfer of cash or check or the like, in or affecting interstate or foreign
commerce and involving a financial institution.165 Section 1957 only applies to transactions
involving $10,000 or more at the time of the transaction.166 Numbered among the qualifying
financial institutions are banks and credit unions, but also car dealerships, jewelers, casinos,
stockbrokers, travel agents, and pawnbrokers, to mention a few.167 The government’s
(...continued)
***
“(d) The circumstances referred to in subsection (a) are – (1) that the offense under this section takes place in the
United States or in the special maritime and territorial jurisdiction of the United States; or (2) 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 section 3077 of this title, but excluding the class described in paragraph (2)(D) of such section).
***
“(f) As used in this section– (1) the term ‘monetary transaction’ means the deposit, withdrawal, transfer, or exchange,
in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined in section 1956(c)(5) of
this title) by, through, or to a financial institution (as defined in section 1956 of this title), including any transaction that
would be a financial transaction under section 1956(c)(4)(B) of this title, 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; (2)
the term ‘criminally derived property’ means any property constituting, or derived from, proceeds obtained from a
criminal offense; and (3) the term ‘specified unlawful activity’ has the meaning given that term in section 1956 of this
title,” 18 U.S.C. 1957(a), (d), (f).
163
United States v. Irvin, 656 F.3d 1151, 1165-166 (10th Cir. 2011); see also United States v. Wetherald, 636 F.3d
1315, 1325 n.2 (11th Cir. 2011); United States v. Shafer, 608 F.3d 1056, 1067 (8th Cir. 2010); United States v.
Greenidge, 497 F.3d 85, 100 (3d Cir. 2007).
164
“(4) [T]he term ‘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,” 18 U.S.C. 1956(c)(4).
“(3) [T]he term ‘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,” 18 U.S.C. 1956(c)(3).
165
“(f) As used in this section – (1) the term ‘monetary transaction’ means the deposit, withdrawal, transfer, or
exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined in section
1956(c)(5) of this title) by, through, or to a financial institution (as defined in section 1956 of this title), including any
transaction that would be a financial transaction under section 1956(c)(4)(B) of this title, 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).
166
United States v. Wright, 651 F.3d 764, 771-72 (7th Cir. 2011).
167
“[T]he term ‘financial institution’ includes – (A) any financial institution, as defined in section 5312(a)(2) of title 31,
United States Code, or the regulations promulgated thereunder; and (B) 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).
“‘[F]inancial institution’ means – (A) an insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act
(continued...)
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jurisdictional burden is comparable to the one it must bear for Section 1956 (a transaction in or
affecting interstate or foreign commerce or one involving a financial institution) and demands
evidence of only a slight impact on commerce.168
The government must prove that the defendant knew the property in the transaction was the
product of some criminal activity,169 but it need not show that he knew that it was the product of a
“specified unlawful activity.”170 Section 1957(f)(2) describes “criminally derived property” as
“any property derived from or obtained or retained, directly or indirectly, through some form of
unlawful activity, including the gross receipts of such activity.” Of course, the property must in
fact be derived from a specified unlawful activity (predicate offense),171 and Section 1957 uses
the definition of specified unlawful activities from Section 1956.172
Section 1957 contains an attorney’s fee exception. It excludes from the “monetary transaction”
element of the offense “any transaction necessary to preserve a person’s right to representation as
(...continued)
(12 U.S.C. 1813(h))); (B) a commercial bank or trust company; (C) a private banker; (D) an agency or branch of a
foreign bank in the United States; (E) any credit union; (F) a thrift institution; (G) a broker or dealer registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); (H) a broker
or dealer in securities or commodities; (I) an investment banker or investment company; (J) a currency exchange; (K)
an issuer, redeemer, or cashier of travelers’ checks, checks, money orders, or similar instruments; (L) an operator of a
credit card system; (M) an insurance company; (N) a dealer in precious metals, stones, or jewels; (O) a pawnbroker; (P)
a loan or finance company; (Q) a travel agency; (R) a licensed sender of money or any other person who engages as a
business in the transmission of funds, including any person who engages as a business in an informal money transfer
system or any network of people who engage as a business in facilitating the transfer of money domestically or
internationally outside of the conventional financial institutions system; (S) a telegraph company; (T) a business
engaged in vehicle sales, including automobile, airplane, and boat sales; (U) persons involved in real estate closings
and settlements; (V) the United States Postal Service; (W) an agency of the United States Government or of a State or
local government carrying out a duty or power of a business described in this paragraph; (X) a casino, gambling casino,
or gaming establishment with an annual gaming revenue of more than $1,000,000 which – (i) is licensed as a casino,
gambling casino, or gaming establishment under the laws of any State or any political subdivision of any State; or (ii) is
an Indian gaming operation conducted under or pursuant to the Indian Gaming Regulatory Act other than an operation
which is limited to class I gaming (as defined in section 4(6) of such Act); (Y) any business or agency which engages in
any activity which the Secretary of the Treasury determines, by regulation, to be an activity which is similar to, related
to, or a substitute for any activity in which any business described in this paragraph is authorized to engage; or (Z) any
other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or
regulatory matters,” 31 U.S.C. 5312(a)(2).
168
United States v. Benjamine, 252 F.3d 1, 9 (1st Cir. 2001)(“Section 1957(f) only requires that the transactions have a
de minimis effect on commerce”); United States v. Ables, 167 F.3d 1021, 1030-31 (6th Cir. 1999); United States v.
Aramony, 88 F.3d 1369, 1386 (4th Cir. 1995).
169
18 U.S.C. 1957(a); United States v. Irvin, 656 F.3d 1151, 1164 (10th Cir. 2011); United States v. Gamory, 635 F.3d
480, 496 (11th Cir. 2011); United States v. Gallardo, 497 F.3d 727, 737 (7th Cir. 2007).
170
“In a prosecution for an offense under this section, the Government is not required to prove the defendant knew that
the offense from which the criminally derived property was derived was specified unlawful activity,” 18 U.S.C.
1957(c); United States v. Flores, 454 F.3d 149, 155 (3d Cir. 2006); United States v. Carucci, 364 F.3d 339, 343 (1st Cir.
2004); United States v. Foreman, 323 F.3d 498, 506 (6th Cir. 2003). Nor need the defendant be charged with or
convicted of the predicate offense, United States v. Cherry, 330 F.3d 658, 667 (4th Cir. 2003); United States v. Richard,
234 F.3d 763, 768 (1st Cir. 2000). Moreover, “[k]nowledge may be demonstrated by showing that the defendant either
had actual knowledge or deliberately closed his eyes to what otherwise would have been obvious to him concerning the
fact in question,” United States v. Flores, 454 F.3d at 155.
171
18 U.S.C. 1957(a); United States v. Diamond, 378 F.3d 720, 728 (7th Cir. 2004)(“In order to find Diamond guilty of
this offense [under section 1957], the government needed to prove that she derived property from a specified unlawful
activity and that she engaged in a monetary transaction”).
172
18 U.S.C. 1957(f)(3); 18 U.S.C. 1956(c)(9)(“[T]he term ‘proceeds’ means any property derived from or obtained or
retained, directly or indirectly, thorough some form of unlawful activity, including the gross receipts of such activity”).
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guaranteed by the sixth amendment to the Constitution.”173 The exception, however, reach no
more than an individual’s payment of services covered by the Sixth Amendment.174 It creates a
safe harbor against prosecutions under Section 1957, but is no defense to a charge of promotional,
concealment, or evasive money laundering under Section 1956.175
Attempt, Conspiracy, Aiding and Abetting
Section 1957 proscribes attempts to violate its provisions.176 As a general rule, attempt requires
proof of an intent to commit the underlying offense and the commission of a substantial step
towards its completion.177 The general rules apply with respect to attempts to commit the
offenses under Section 1956,178 and there is every reason to believe they apply to attempts to
commit a violation of Section 1957.
Section 1956(h) outlaws conspiracy to violate Section 1957. A conviction for conspiracy to
violate the section requires the government to prove: “(1) there was an agreement between two or
more persons to commit money laundering and (2) that the defendant joined the agreement
knowing its purpose and with the intent to further the illegal purpose.”179 Section 1956(h) creates
a crime which requires no proof of an overt act in furtherance of the conspiracy.180 In addition to
the conspiracy offense, conspirators are liable for the foreseeable offenses committed by coconspirators in furtherance of the scheme.181 Those who aid or abet the money laundering of
another are likewise liable as though they had committed the offense themselves.182
173
18 U.S.C. 1957(f)(1).
United States v. Blair, 661 F.3d 755, 771 (4th Cir. 2011)(“[T]he scope of the safe harbor provision is shaped by the
Sixth Amendment. Thus, anyone seeking to befit from §1957(f) must tie his conduct to the Sixth Amendment right to
counsel”); United States v. Velez, 586 F.3d 875, 877 (11th Cir. 2009)(“Accordingly, the exemption is limited to
attorneys’ fees paid for representation guaranteed by the Sixth Amendment in a criminal proceeding and does not
extend to attorneys’ fees paid for other purposes”); United States v. Hoogenboom, 209 F.3d 665, 669 (7th Cir.
2000)(“Correctly read, the statute offers a defense where a defendant engages in a transaction underlying a money
laundering charge with the present intent of exercising Sixth Amendment rights. This allows a defendant to preserve
her rights without undermining the prosecution of those the statute seeks to punish. Since Hoogenboom did not clear
her accounts to pay her attorney – the evidence is that she engaged in the transaction to prevent the FBI from seizing
the money – she cannot squeeze within the slim Sixth Amendment exception to the statute’s broad definition of what
constitutes a monetary transaction”).
175
United States v. Elso, 422 F.3d 1305, 1309 (11th Cir. 2005).
176
18 U.S.C. 1957(a)(“Whoever ... engages or attempts to engage ...”).
177
E.g., United States v. Resendez-Ponce, 549 U.S. 102, 107 (2007); see also, United States v. Pires, 642 F.3d 1, 9 (1st
Cir. 2011); United States v. Manzo, 636 F.3d 56, 66 (3d Cir. 2011); United Stats v. Farhane, 634 F.3d 127, 145 (2d Cir.
2011); United States v. Sanchez, 615 F.3d 836, 843 (7th Cir. 2010); United States v. Robertson, 606 F.3d 943, 953 (8th
Cir. 2010).
178
E.g., United States v. Choy, 309 F.3d 602, 605 (9th Cir. 2002); United States v. Barnes, 230 F.3d 311, 314 (7th Cir.
2000).
179
United States v. Wittig, 575 F3d 1085, 1103 (10th Cir. 2009).
180
Whitfield v. United States, 543 U.S. 209, 211 (2005).
181
United States v. Silvestri, 409 F.3d 1311, 1335-336 (11th Cir. 2005).
182
18 U.S.C. 2; United States v. Dadi, 235 F.3d 945, 951 (5th Cir. 2000)(internal citations and quotation marks
omitted)(“Dadi also disputes the sufficiency of the evidence to support the aiding and abetting charges. To convict
under 18 U.S.C. 1957, the government must prove that the defendant knowingly engaged or attempted 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. To prove that a defendant aided and abetted the commission of a criminal offense, the government
must show that the defendant intentionally associated with, and participated in, the criminal venture and acted to make
(continued...)
174
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Consequences
Imprisonment
Violation of Section 1957 and conspiracy to violate Section 1957 are each punishable by
imprisonment for not more than 10 years. Under the sentencing guidelines, many offenders will
be ineligible for a sentence of probation even as part of a split sentence.183 Where probation is
available and imposed, the term must be not less than one nor more than five years.184 If
imprisoned, offenders may also be subject to a term of supervised release of up to three years to
be served upon their release from prison.185
Fines
Violation of Section 1957 and conspiracy to violate Section 1957 are each punishable by a fine of
not more than the greater of $250,000 ($500,000 for an organization) or twice the amount
involved in the transaction.186 Violators of Section 1957 are subject to a civil penalty of no more
than the greater of $10,000 or the value of the property involved in the offense.187
Forfeiture
Any property involved in a violation of Section 1957 or traceable to property involved in a
violation of Section 1957 is subject to confiscation under either civil or criminal procedures, and
the applicable law is essentially the same as in the case of Section 1956.188
18 U.S.C. 1952: Travel Act
The Travel Act, 18 U.S.C. 1952, is one of the older members of the family of money laundering
related criminal statutes. While Sections 1956 and 1957 punish transactions involving promoting,
concealing, spending, and depositing tainted funds, the Travel Act punishes interstate or foreign
travel (or use of the facilities of interstate or foreign commerce) conducted with the intent to (1)
(...continued)
the venture succeed”).
183
Offenders convicted of an offense carrying a maximum penalty of 25 years or more are ineligible for probation by
statute, 18 U.S.C. 3561(a)(1), 3581(b). Under the guidelines, even a first time offender whose offense level is more
than 10 is ineligible for probation and a first time offender whose offense level is 9 or 10 is only eligible as part of a
split sentence, U.S.S.G. §5B1.1, Sentencing Table. The money laundering sentencing guideline calls for a base offense
level equal to that of the predicate offense if ascertainable or otherwise a base offense level of 8; the base offense level
is increased by 1 level for a violation of section 1957 and another 2 levels if offense involved sophisticated laundering,
U.S.S.G. §2S1.1. Most five-year felonies carry a base offense level of 8 or more, e.g., U.S.S.G. §2b5.3 (base offense
level of 8) (criminal copyright infringement), §2H3.1 (base offense level of 9) (wiretapping). Many section 1956
predicate offenses carry a maximum penalty of at least five years, e.g., 18 U.S.C. 1343 (wire fraud: 20 years), 641
(theft of more than $1000 in federal property: 10 years); 201 (bribery of federal officials: 15 years).
184
18 U.S.C. 3561(c)(1).
185
18 U.S.C. 3583.
186
18 U.S.C. 1957(b), 1956(h), 3571, 3559.
187
18 U.S.C. 1956(b)(1).
188
18 U.S.C. 981(a)(1)(A), 982(a)(1)(A).
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distribute the proceeds of a more modest list of predicate offenses (“unlawful activity”), or (2) to
promote or carry on such offenses when there is overt act in furtherance of that intent, or (3) to
commit some violent act in their furtherance. The first two variants bear some resemblance to the
concealment and promotion offenses of Section 1956 and somewhat more remotely to the
deposit/spending proscriptions of Section 1957. The violent crime component of the Travel Act is
only coincidentally related to money laundering and consequently will be mentioned only in
passing.
The Travel Act’s elements cover anyone who:
1. A. travels in interstate or foreign commerce, or
B. uses any facility in interstate or foreign commerce, or
C. uses the mail
2. with intent
A. to distribute the proceeds of an unlawful activity, i.e.,
i. any business enterprise involving unlawful activities gambling, moonshining, drug
dealing, or prostitution; or
ii. extortion, bribery, or arson; or
iii. any act which is indictable as money laundering; or
B. commit an act of violence to further an unlawful activity; or
C. to otherwise
i. promote,
ii. manage,
iii. establish,
iv. carry on, or
v. facilitate the promotion, management, establishment, or carrying on
any unlawful activity; and
3. thereafter
A. distributes or attempts to distribute such proceeds, or
B. commits or attempts to commit such act of violence, or
C. promotes, manages, establishes, carries on, or facilitates the promotion, management,
establishment, or carrying on such unlawful activities or attempts to do so.189
189
The Act in its entirety reads: “(a) Whoever travels in interstate or foreign commerce or uses the mail or any facility
in interstate or foreign commerce, with intent to – (1) distribute the proceeds of any unlawful activity; or (2) commit
any crime of violence to further any unlawful activity; or (3) otherwise promote, manage, establish, carry on, or
facilitate the promotion, management, establishment, or carrying on, of any unlawful activity, and thereafter performs
or attempts to perform– (A) an act described in paragraph (1) or (3) shall be fined under this title, imprisoned not more
than five years, or both; or (B) an act described in paragraph (2) shall be fined under this title, imprisoned for not more
than 20 years, or both, and if death results shall be imprisoned for any term of years or for life.
“(b) As used in this section (i) “unlawful activity” means (1) any business enterprise involving gambling, liquor on
which the Federal excise tax has not been paid, narcotics or controlled substances (as defined in section 102(6) of the
Controlled Substances Act), or prostitution offenses in violation of the laws of the State in which they are committed or
of the United States, (2) extortion, bribery, or arson in violation of the laws of the State in which committed or of the
United States, or (3) any act which is indictable under subchapter II of chapter 53 of title 31, United States Code, or
under section 1956 or 1957 of this title and (ii) the term “State” includes a State of the United States, the District of
Columbia, and any commonwealth, territory, or possession of the United States.
“(c) Investigations of violations under this section involving liquor shall be conducted under the supervision of the
Attorney General,” 18 U.S.C. 1952.
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Distribution, Facilitation, and Violence
The courts often abbreviate their statement of the elements to encompass only whichever of the
three versions is at issue:
Distribution—The essential elements of a violation under section 1952(a) are: “(1) travel in
interstate or foreign commerce; (2) with the specific intent to distribute the proceeds of an
unlawful activity; and (3) knowing and willful commission of an act in furtherance of that
intent.”190
Facilitation—The government must prove that the defendant “(1) travels in interstate or
foreign commerce [or uses an interstate facility] (2) with intent to ... promote ... any unlawful
activity and (3) that the defendant thereafter performs or attempts to perform an act of
promotion ... of any unlawful activity.”191
Violence—“To prove a violation of the Travel Act, the government was required to establish
that Ajaj: (1) used a facility of interstate or foreign commerce; (2) with intent to commit any
unlawful activity (including arson...); and (3) thereafter performed an additional act to further
the unlawful activity.192
The accused need not have been guilty of the unlawful activities that generated the distributed
proceeds.193 “Distribution” in Section 1952(a)(1) “carries a connotation of distribution of illegal
proceeds to persons in organized crime conspiracies. Certainly the person receiving them must be
entitled to them for reasons other than normal and otherwise lawful purchase and sale of goods at
market prices.”194 Distribution, however, does include distribution to “pay off” criminal
associates,195 as well as the interstate transfer of criminal proceeds to a confederate for the
purchase of controlling interest in a bank in order to facilitate subsequent laundering.196 Actual
distribution is not necessary for conviction; the offense simply involves interstate commerce; an
190
United States v. Hinojosa, 958 F.2d 624, 629 (5th Cir. 1992).
United States v. Driver, 535 F.3d 424, 430 (6th Cir. 2008); United States v. Nishnianidze, 342 F.3d 6, 15 (1st Cir.
2003); United States v. Welch, 327 F.3d 1081, 1090 (10th Cir. 2003); United States v. Burns, 298 F.3d 523, 537 (6th Cir.
2002); United States v. Xiong, 262 F.3d 672, 676 (7th Cir. 2001); United States v. James, 210 F.3d 1342, 1345 (11th Cir.
2000); United States v. Bankston, 182 F.3d 296, 315 (5th Cir. 1999).
192
United States v. Salameh, 152 F.3d 88, 152 (2d Cir. 1998); see also United States v. Dinwiddie, 618 F.3d 821, 832
(8th Cir. 2010)(The government was required to prove: (1) Dinwiddie and Meador traveled, or caused and aided and
abetted another to travel in interstate commerce: (2) Dinwiddie and Meador did so with the intent to commit a crime of
violence in the furtherance of unlawful activity; (3) Dinwiddie and Meador knowingly and willfully committed a crime
of violence; or caused and aided and abetted another to do so, in furtherance of the unlawful activity; and (4) [in capital
case] the death of Burgos resulted”).
193
United States v. Corona, 885 F.2d 766, 773 (11th Cir. 1989).
194
United States v. Lightfoot, 506 F.2d 238, 242 (D.C. Cir. 1974); United States v. Cole, 704 F.2d 554, 558 (11th Cir.
1983).
195
United States v. Lignarolo, 770 F.2d 971, 980 (11th Cir. 1985).
196
United States v. Corona, 885 F.2d at 774 (“Ray Corona helped Fernandez buy controlling interest in a bank under
extremely dishonest circumstances with laundered drug money. Such a purchase is in reality part of the laundering
process. For his role in the purchase and in running the bank for Fernandez, Ray received a percentage ownership
without paying any of the purchase price. In essence, Fernandez bought the bank with drug proceeds and gave a portion
of it to Ray.... Although Ray Corona was the recipient, he nonetheless was responsible under 18 U.S.C. 2 as principal in
the distribution of the proceeds”).
191
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intent to distribute; and a subsequent attempt to distribute, some action—perhaps incomplete or
unsuccessful—in furtherance of the intent to distribute.197
The dimensions of the facilitation offense are comparable. In addition to interstate travel or the
use of interstate facilities with the requisite intent, it requires the performance or attempted
performance of some subsequent overt act in furtherance of the intent to “promote, manage,
establish, carry on, or facilitate the promotion, management, establishment or carrying on” of a
predicate offense such as a business enterprise involving drug dealing.198 Since the statute
condemns attempt and promotion rather than commission of a predicate act, the overt act need not
constitute a completed predicate offense.199
Travel
Common to each of the three offenses is the jurisdictional element: interstate or foreign travel or
the use of the mail or some other facility of interstate or foreign travel. When the Travel Act’s
jurisdictional element involves mail or facilities in interstate or foreign commerce, rather than
interstate travel, evidence that a telephone was used,200 or an ATM,201 or the facilitates of an
interstate banking chain202 will do.203 The government is not required to show that the defendant
used the facilities himself or that the use was critical to the success of the criminal venture. It is
enough that he caused them to be used204 and that their employment was useful for his
purposes.205
197
United States v. Welch, 327 F.3d 1081, 1091 (10th Cir. 2003); United States v. Jones, 909 F.2d 533, 539 (D.C. Cir.
1990).
198
United States v. Burns, 298 F.3d 523, 538 (6th Cir. 2002)(“By associating with Green in Kentucky and by remaining
in the car that Green intended to use to leave the scene of the drug sale at the Newport bar [following their trip from
Ohio], Jordon placed himself in the position to (1) receive immediate payment from Green after the sale in Kentucky,
(2) provide surveillance support, and (3) physically aid Green should any danger arise. Thus, Jordon acted, while in
Kentucky, in furtherance of the intended unlawful act there”); United States v. Harris, 903 F.2d 770, 773 (10th Cir.
1990)(“the illegal activity charged was possession of marijuana with intent to distribute. Defendant traveled into
Oklahoma from Maryland, Virginia, and Tennessee. He performed various overt acts in furtherance of the crime
charged after arriving in Oklahoma, including possessing and transporting a quantity of marijuana with the intent to
distribute it”).
199
United States v. Welch, 327 F.3d 1081, 1092 (10th Cir. 2003) (“an individual may violate the Travel Act simply by
attempting to perform a specified ‘unlawful act’ so long as that individual has the requisite intent”); United States v.
Burns, 298 F.3d 523, 537-38 (6th Cir. 2002)(internal citations and quotation marks omitted)(“the Zolicoffer court made
clear that its holding should not be interpreted to say that the government must prove that the defendant committed an
illegal act after the travel, but only that a plain reading of the statute shows that it must prove some conduct after the
travel in furtherance of the unlawful activity”).
200
United States v. Nader, 542 F.3d 713, 717-22 (9th Cir. 2008)(Travel Act reaches intrastate use of the telephone); see
also United States v. Nishnianidze, 342 F.3d 6, 15 (1st Cir. 2003); United States v. Baker, 227 F.3d 955, 962 (7th Cir.
2000); United States v. Jenkins, 943 F.2d 167, 172 (2d Cir. 1991); United States v. Graham, 856 F.2d 756, 760-61 &
n.1 (6th Cir. 1988).
201
United States v. Baker, 82 F.3d 273, 275 (8th Cir. 1996).
202
United States v. Rogers, 387 F.3d 925, 935 (7th Cir. 2004); United States v. Auerbach, 913 F.2d 407, 410 (7th Cir.
1990).
203
Of course, interstate travel and interstate shipment will do as well, United States v. Xiong, 262 F.3d 672, 676 (7th
Cir. 2001); cf., Erlenbaugh v. United States, 409 U.S. 239, 240-42 (1972).
204
United States v. Baker, 82 F.3d at 275; United States v. Auerbach, 913 F.2d at 410.
205
United States v. Baker, 82 F.3d at 275-76; United States v. McNeal, 77 F.3d 938, 944 (7th Cir. 1996); United States
v. Houlihan, 92 F.3d 1271, 1292 (1st Cir. 1996).
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Unlawful Activity
Predicate offenses (unlawful activity) are likewise common to the Travel Act’s proceeds
distribution, violence in furtherance, and promotional offenses. The Travel Act’s predicate
offenses come in three stripes—money laundering offenses; extortion-bribery-arson offenses; and
offenses of the gambling, prostitution, drug dealing, and bootlegging “businesses.” The money
laundering predicate offenses include Sections 1956 and 1957 as well as the currency transaction
reporting offenses.206
The second class of Travel Act predicate offenses consists simply of the crimes of extortion,
bribery, or arson committed in violation of state or federal law, 18 U.S.C. 1952(b)(2). The terms
“extortion,” “bribery,” and “arson” as they appear in the Travel Act are generic; they mean what
they were commonly understood to mean when the Travel Act was enacted, even if the common
law definition is more restrictive or if the state law which proscribes them uses a different
name.207
The final class of Travel Act predicates is more restrictive. It encompasses gambling, prostitution,
drug dealing, and certain forms of tax evasion only when committed in conjunction with a
“business enterprise.”208 A criminal business enterprise, as understood in the Travel Act,
“contemplates a continuous course of business—one that already exists at the time of the overt
act or is intended thereafter. Evidence of an isolated criminal act, or even sporadic acts, will not
suffice,”209 and it must be shown to be involved in an unlawful activity outlawed by a specifically
identified state or federal statute.210
Conspiracy, Aiding and Abetting
Attempt is not a separate Travel Act offense, but accomplice and co-conspirator liability,
discussed earlier, apply with equal force to the Travel Act.211
206
18 U.S.C. 1952(b)(3)(“any act which is indictable under subchapter II of chapter 53 of title 31, United States Code,
or under section 1956 or 1957 of this title”); United States v. Jenkins, 943 F.2d 167, 173 (2d Cir. 1991); United States
v. Al-Arian, 308 F.Supp.2d 1322, 1353 (M.D.Fla. 2004).
207
United States v. Nardello, 393 U.S. 286, 294-96 (1969); Perrin v. United States, 444 U.S. 37, 49 (1979); Scheidler
v. NOW, 537 U.S. 393, 409-10 (2003).
208
18 U.S.C. 1952(b)(1); United States v. Dailey, 24 F.3d 1323, 1328 (11th Cir. 1994) (“Congress chose to attack
organized crime through selectively defining the term ‘unlawful activity.’ Congress made certain offenses in areas
typically associated with organized crime, i.e., gambling, liquor, narcotics, and prostitution, ‘unlawful activities’ only if
engaged in by a ‘business enterprise’”).
209
United States v. Roberson 6 F.3d 1088, 1094 (5th Cir. 1993); see also United States v. James, 210 F.3d 1342, 1345
(11th Cir. 2000); United States v. Saget, 991 F.2d 702, 712 (11th Cir. 1993)(“If the defendant engages in a continuous
course of cocaine distribution rather than a sporadic or casual course of conduct, then the statutory requirement of a
business enterprise involving narcotics is satisfied”); United States v. Iennaco, 893 F.2d 394, 398 (D.C. Cir. 1990).
210
United States v. Griffin, 85 F.3d 284, 287-88 (7th Cir. 1996); United States v. Campione, 942 F.2d 429, 433-36 (7th
Cir. 1991); United States v. Jones, 909 F.2d 533, 536-39 (D.C.Cir. 1990).
211
United States v. Childress, 58 F.3d 693, 721 (D.C.Cir. 1995)(citing the Pinkerton principle of coconspirator
liability); see also United States v. Auerbach, 913 F.2d 407, 410 (7th Cir. 1990) (co-conspirator liability); United States
v. Dinwiddie, 618 F.3d 821, 832 (8th Cir. 2010); United States v. Rogers, 387 F.3d 925, 935 (7th Cir. 2004)(“To meet its
burden on the alleged violations of 18 U.S.C. 2 and 1952, the government had to show that Mr. Owens knowingly
aided and abetted another person’s interstate travel with the intent of promoting the [drug trafficking] offense”); United
States v. Lee, 359 F.3d 194, 209 (3d Cir. 2004)(aiding and abetting); United States v. Stott, 245 F.3d 890, 909 (7th Cir.
2001)(aiding and abetting); United States v. Pardue, 983 F.2d 943, 945-46 (8th Cir. 1993)(aiding and abetting); United
(continued...)
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Consequences
The distribution and facilitation offenses of the Travel Act, 18 U.S.C. 1952(a)(1) and 18 U.S.C.
1952(a)(3), are punishable by imprisonment for not more than five years.212 The crime of violence
offense is punishable by imprisonment for not more than 20 years, or by imprisonment for life or
any term of years if death results.213 Offenders of any of the three offenses are subject to a fine of
the greater of not more than $250,000 ($500,000 for organizations) or twice the gain or loss
associated with the offense.214 If imprisoned, offenders may also be subject to a term of
supervised release of up to three years to be served upon their release from prison.215 Property
associated with a violation of Section 1952 is not subject to confiscation solely by virtue of that
fact,216 although the property may be confiscated by operation of the laws governing Section 1952
predicate offense or by operation of RICO or the money laundering provisions. For example,
interstate travel conducted with the intent to distribute drug trafficking proceeds involving an act
in furtherance of that intent is a violation of Section 1952. The proceeds are not subject to
forfeiture as a consequence, but they are subject to confiscation by operation of the forfeiture
provisions of the Controlled Substances Act.217 Moreover, Travel Act violations have been
designated RICO predicate offenses and consequently qualify as money laundering predicates
under Sections 1956 and 1957.218 Thus, to the extent that Travel Act proceeds are involved in a
financial transaction or monetary transaction in violation of Section 1956 or 1957, they are
subject to confiscation.219
31 U.S.C. 5322: Reporting Requirements
Section 5322 penalizes willful violation of several monetary transaction reporting requirements
found primarily in Subtitle 53-II of title 31 of the United States Code.220 The section’s coverage
extends to violations of:
-31 U.S.C. 5313—financial institution reports of cash transactions involving $10,000 or
more (31 C.F.R. §103.22);
(...continued)
States v. Dischner, 974 F.2d 1502, 1521 (9th Cir. 1992)(aiding and abetting).
212
18 U.S.C. 1952(a)(A).
213
18 U.S.C. 1952(a)(B).
214
18 U.S.C. 3571, 3559.
215
18 U.S.C. 3583.
216
18 U.S.C. 1952, 981, 982.
21 U.S.C. 853, 881.
218
18 U.S.C. 1961(1)(B), 1956(c)(7)(A), 1957(f)(3).
219
18 U.S.C. 981((a)(1)(A), 982(a)(1); see e.g., United States v. Reiner, 500 F.3d 10, 13, 18-9 (1st Cir. 2007)(upholding
a forfeiture incurred as a consequence of conviction for “interstate travel to promote prostitution, 18 U.S.C. 1952 (the
Travel Act); inducement to instate travel to engage in prostitution, 18 U.S.C. 2422(a)(the Mann Act); conspiracy to
violate the Travel Act and the Mann Act, 18 U.S.C. 371; and conspiracy to launder money, 18 U.S.C. 1956(h) and
1957”); United States v. Saccoccia, 433 F.3d 19, 23 (1st Cir. 2005)(noting confiscation as a consequence of a
conviction of “one count of RICO conspiracy, as well as numerous substantive ... counts of money laundering and
related offenses under 18 U.S.C. 1952, 1956, and 1957”).
220
The text of 31 U.S.C. 5322 appears at the end of this report.
217
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-31 U.S.C. 5314—reports by persons in the U.S. of foreign financial agency transactions (31
C.F.R. §103.24);
-31 U.S.C. 5316—reports by any person taking $10,000 in cash out of the U.S. or bring it in;
-31 U.S.C. 5318—suspicious transaction reports by financial institutions;
-31 U.S.C. 5318A—special measures record keeping and reports by financial institutions
relating to foreign counter-money laundering concerns;
-31 U.S.C. 5325—reports by financial institutions issuing cashier’s checks in amounts of
$3000 or more (31 C.F.R. §103.29);
-31 U.S.C. 5326—cash transaction reports by financial institutions and/or various trades or
businesses pursuant to Treasury Department geographical orders (31 C.F.R. §103.26);
-31 U.S.C. 5331—reports of trades and businesses other than financial institutions of cash
transactions involving $10,000 or more (31 C.F.R. §103.30);
-12 U.S.C. 1829b—record keeping requirements of federally insured depository institutions;
-12 U.S.C. 1953—record keeping by uninsured banks or similar institutions.
Section 5322 does not cover violations of Section 5315 (relating to foreign currency transaction
reports) which are subject to the civil penalty provisions of 31 U.S.C. 5321 or of Section 5324
(relating to structuring financial transactions) which carries its own criminal penalties.
Simple violations of Section 5322 are punishable by imprisonment for not more than five years, a
fine of not more than $250,000, or both.221 Violations committed during the commission of
another federal crime or as part of a pattern of illegal activity involving more than $100,000 over
the course of a year are punishable by imprisonment for not more than 10 years; a fine of not
more than $500,000 (not more than $1 million for a special measures violation (31 U.S.C.
5318A) or a violation involving a breach of due diligence with respect to private banking for
foreign customers or foreign shell banks (31 U.S.C. 5318(i), (j)); or both.222
In order to establish “willful” violation of Section 5322, the government must prove that the
accused knew that his breach of the statute was unlawful.223
Section 5322 is a Travel Act predicate offense. It is also RICO predicate offense,224 consequently
a Section 1956 or 1957 money laundering predicate offense.225 Property associated with
violations of two of the sections within its coverage is subject to confiscation.226 Under Section
5317(c), property becomes forfeitable when it is involved in, or traceable to, a violation of 31
U.S.C. 5313 (reports relating to cash transactions involving $10,000 or more) or of 31 U.S.C.
221
31 U.S.C. 5322(a).
31 U.S.C. 5322(b), (d).
223
Ratzlaf v. United States, 510 U.S. 135, 137 (1994); United States v. Tatoyan, 474 F.3d 1174, 1177 (9th Cir. 2007).
224
18 U.S.C. 1952(b)(3), 1961(1)(E).
225
18 U.S.C. 1956(c)(7)(A), 1957(f)(3).
226
31 U.S.C. 5317(c).
222
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5316 (reports relating to taking $10,000 or more out of the U.S. or to bring it into the U.S.). The
confiscation, however, may be subject to a constitutional excessive fine limitation.227 In United
States v. Bajakajian,228 the Supreme Court held that the confiscation of $357,144 for a violation
of 31 U.S.C. 5322 occasioned by a failure to comply with the reporting requirements of 31 U.S.C.
5316 would constitute an unconstitutionally excessive fine—in the absence of evidence that the
money was derived from, or destined to facilitate, some other criminal activity. In later cases
involving the failure to report transported cash, the courts have occasionally ordered confiscation
of less than all of the unreported cash if the total was substantial and the cash was otherwise
untainted.229 In most instances, however, Bajakajian appears to pose little obstacle to complete or
near complete forfeiture.230
31 U.S.C. 5324: Anti-Structuring
When Congress established the general anti-structuring provisions of Section 1956 in 1986,231 it
also created a more specific anti-structuring offense, 31 U.S.C. 5324.232 Prior to that time, it was a
crime for a financial institution to fail to report a cash transaction involving more than $10,000.233
Yet there was no explicit prohibition against an individual breaking a transaction into several
smaller transactions in order to avoid triggering the bank’s reporting requirement, although such
structuring could sometimes be prosecuted as a conspiracy to defraud the federal government.234
From the beginning, Section 5324 condemned causing the failure to file a required report, causing
the submission of a false report, structuring transactions to evade a reporting requirement, or
attempting to do so.235 Its growth over the years has been the product primarily of protecting a
wider range of reporting systems than was originally the case. Its proscriptions are now divided
into three sections according to the type of reporting or record keeping involved: one is devoted
to transactions involving banks, credit unions, car dealerships, jewelers, casinos, and the other
227
United States v. Bajakajian, 524 U.S. 321, 324 (1998).
524 U.S. 321, 324 (1998).
229
United States v. $100,348.00, 354 F.3d 1110, 1123-124 (9th Cir. 2003)(affirming the confiscation of $10,000 of the
$100,348 originally seized); United States v. Beras, 183 F.3d 22, 28 (1st Cir. 1999)(overturning as an excessive fine the
forfeiture order for $138,794 in unreported cash); United States v. One Hundred and Twenty Thousand Eight Hundred
and Fifty Six Dollars, 394 F.Supp.2d 687, 692-96 (D.V.I. 2005)(holding that confiscation of more than $7500 of the
unreported $120,856 would constitute an excessive fine); United States v. $293,316, 349 F.Supp.2d 638, 650 (E.D.N.Y.
2004)(ordering the confiscation of $48,000 of the $490,000 of unreported cash seized).
230
United States v. $293,316, 349 F.Supp.2d at 648-49 (listing 168 instances where unreported cash was forfeited and
noting that in a vast majority of cases, at least 90% of the cash was confiscated).
231
18 U.S.C. 1956(a)(1)(B)(ii), (a)(2)(B)(ii), (a)(3)(C), discussed supra, outlaw certain financial transactions and
international monetary transfers designed to avoid state or federal reporting requirements.
232
Both sections were enacted as part of Subtitle I-H (the Money Laundering Control Act of 1986) of the Anti-Drug
Abuse Act of 1986, 100 Stat. 3207-18, 3207-22 (1986).
233
31 U.S.C. 5322, 5313 (1982 ed.).
234
United States v. Winfield, 997 F.2d 1076, 1082-83 (4th Cir. 1993); United States v. Nersesian, 824 F.2d 1294, 1313
(2d Cir. 1987). The federal conspiracy statute outlaws two types of conspiracy – conspiracy to violate another federal
criminal law and conspiracy to defraud the United States. Conspiracy to defraud the United States is the agreement to
take some action, which might otherwise be lawful, that interferes with or obstructs some governmental function by
trickery or deceit, Hammerschmidt v. United States, 265 U.S. 182, 188 (1924).
235
31 U.S.C. 5324 (1988 ed.). The criminal penalties for willful violation of section 5324 were then found in section
5322, 18 U.S.C. 5322 (1988 ed.).
228
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similar entities classified as financial institutions;236 another to cash transactions of $10,000 or
more involving nonfinancial institutions;237 and a third to bringing $10,000 or more in cash into
the country or taking it out of the country.238 But the prohibitions remain the same. No person
may cause the failure to submit a required report, or cause the submission of a false report, or
structure their transactions to evade a reporting requirement, or attempt to do so.239 The
prohibitions extend to instances of breaking a single transaction in several smaller transactions,
but also reach instances of breaking a cash transaction into a mix of cash, check, and/or credit
payments.240
Violations are punishable by imprisonment for not more than five years (not more than 10 years if
committed in conjunction with another federal offense or if committed as part of a pattern of
activity involving $100,000 or more) and a fine of not more than $250,000 (not more than
$500,000 for organizations), with the fine maximum doubled if the offense is committed in
conjunction with another federal crime or as part of a pattern of activity involving $100,000.241
236
“No person shall, for the purpose of evading the reporting requirements of section 5313(a)[cash transactions
involving $10,000 or more] or 5325 [issuing cashiers’ checks of $3,000 or more] or any regulation prescribed under
any such section, the reporting or recordkeeping requirements imposed by any order issued under section 5326
[geographic anti-money laundering requirements], or the recordkeeping requirements imposed by any regulation
prescribed under section 21 of the Federal Deposit Insurance Act [12 U.S.C. 1829b (record keeping by federally
insured depository institutions)]or section 123 of Public Law 91-508 [12 U.S.C. 1953 (record keeping by uninsured
institutions)] – (1) cause or attempt to cause a domestic financial institution to fail to file a report required under section
5313(a) or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record required by
an order issued under section 5326, or to maintain a record required pursuant to any regulation prescribed under section
21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508;
“(2) cause or attempt to cause a domestic financial institution to file a report required under section 5313(a) or 5325 or
any regulation prescribed under any such section, to file a report or to maintain a record required by any order issued
under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 5326, or to
maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act
or section 123 of Public Law 91-508, that contains a material omission or misstatement of fact; or
“(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more
domestic financial institutions,” 31 U.S.C. 5324(a).
237
“(b) No person shall, for the purpose of evading the report requirements of section 5331 [cash transactions involving
$10,000 or more] or any regulation prescribed under such section – (1) cause or attempt to cause a nonfinancial trade or
business to fail to file a report required under section 5331 or any regulation prescribed under such section;
“(2) cause or attempt to cause a nonfinancial trade or business to file a report required under section 5331 or any regulation
prescribed under such section that contains a material omission or misstatement of fact; or
“(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with 1 or more
nonfinancial trades or businesses,” 31 U.S.C. 5324(b).
238
“No person shall, for the purpose of evading the reporting requirements of section 5316 [importing or exporting $10,000
or more in cash] – (1) fail to file a report required by section 5316, or cause or attempt to cause a person to fail to file such a
report;
“(2) file or cause or attempt to cause a person to file a report required under section 5316 that contains a material omission
or misstatement of fact; or
“(3) structure or assist in structuring, or attempt to structure or assist in structuring, any importation or exportation of
monetary instruments,” 31 U.S.C. 5324(c).
239
31 U.S.C. 5324(a)-(c).
240
United States v. Sweeney, 611 F.3d 459, 471-73(8th Cir. 2009); United States v. Van Allen, 524 F.3d 814, 820-21
th
(7 Cir. 2008).
241
31 U.S.C. 5324(d).
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Any property involved in a structuring violation of the section is subject to confiscation.242 Such
forfeitures do not offend the Eighth Amendment’s excessive fines clause unless they are grossly
disproportionate to the gravity of the offense.243
For some time, Section 5324 simply housed prohibitions and Congress relied upon Section 5322
to provide the criminal sanctions for violations of the Section 5324 prohibitions, as well as for the
other prohibitions in subchapter 53 II of title 31 of the U.S. Code. Then as now, Section 5322
condemned only willful violations.244 Congress removed Section 5324 from the coverage of
Section 5322 and provided criminal penalties within Section 5324 in 1994245 after the Supreme
Court held that “willful” violation required a showing that the defendant knew that his structuring
actions were unlawful.246 Thus for a prosecution under Section 5324, it is no longer necessary to
prove that the accused knew that his conduct was criminal; it is enough to show that he knew of
the reporting requirement and acted with an intent to avoid compliance or accurate compliance.247
31 U.S.C. 5332: Bulk Cash Smuggling
After the Supreme Court held in Bajakajian that the excessive fines clause of the Eighth
Amendment precluded confiscation of $300,000 of unreported, but otherwise untainted, cash,248
242
31 U.S.C. 5317(c)(2); United States v. $79,650.00 (Afework), 650 F.3d 381, 383 n.3 (4th Cir. 2011).
United States v. Chaplin’s, Inc., 646 F.3d 846, 851-55(11th Cir. 2011)(forfeiture order in the amount of almost $1.9
million was not excessive considering, among other factors, that the Sentencing Guidelines would permit a fine of $1.3
million).
243
244
Section 5322 now reads, “(a) A person willfully violating this subchapter or a regulation prescribed or order issued
under this subchapter (except section 5315 or 5324 of this title or a regulation prescribed under section 5315 or 5324),
or willfully violating a regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of
Public Law 91-508, shall be fined not more than $250,000, or imprisoned for not more than five years, or both.
“(b) A person willfully violating this subchapter or a regulation prescribed or order issued under this subchapter
(except section 5315 or 5324 of this title or a regulation prescribed under section 5315 or 5324), or willfully violating a
regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508, while
violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in
a 12-month period, shall be fined not more than $500,000, imprisoned for not more than 10 years, or both.
“(c) For a violation of section 5318(a)(2) of this title or a regulation prescribed under section 5318(a)(2), a separate
violation occurs for each day the violation continues and at each office, branch, or place of business at which a
violation occurs or continues.
“(d) A financial institution or agency that violates any provision of subsection (i) or (j) of section 5318, or any special
measures imposed under section 5318A, or any regulation prescribed under subsection (i) or (j) of section 5318 or
section 5318A, shall be fined in an amount equal to not less than 2 times the amount of the transaction, but not more
than $1,000,000.”
245
P.L. 103-325, 108 Stat. 2253 (1994), 31 U.S.C. 5324(c)(2000 ed.), now 31 U.S.C. 5324(d).
246
Ratzlaf v. United States, 510 U.S. 135, 137 (1994).
247
United States v. Sweeney, 611 F.3d 459, 470 (8th Cir. 2010)(The crime of currency structuring ... has three elements,
which are: One, the defendant conducted or attempted to conduct a financial transaction; Two, at the time the defendant
conducted or attempted to conduct the financial transaction, the defendant knew of the domestic financial institution’s
obligation to report currency transactions in excess of $10,000; and Three, the defendant purposefully structured the
transaction with the intent to evade that reporting requirement”); United States v. Van Allen, 524 F.3d 814, 820 (7th Cir.
2008); United States v. MacPherson, 424 F.3d 183, 189 (2d Cir. 2005); United States v. Bringier, 405 F.3d 310, 314-15
(5th Cir. 2005); United States v. Boyd, 180 F.3d 967, 981 (8th Cir. 1999)(supplying a casino with false identification
with the knowledge that the misinformation would be included in the casino’s currency transaction report constitutes a
material misstatement in violation of section 5324(a)(2)).
248
524 U.S. 321, 324 (1998).
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Congress enacted the bulk cash smuggling provisions of 31 U.S.C. 5332. The section outlaws
carrying or attempting to transport more than $10,000 in unreported, “concealed” cash across a
U.S. border with the intent to evade 31 U.S.C. 5316 reporting requirements.249 The section has
been used to prosecute those who attempted to bring unreported cash into the United States, as
well as those who attempted to smuggle cash out of the country.250 The fact that the money was
neither derived from criminal activity nor intended for criminal purposes may be relevant for
Eighth Amendment purposes, but it is no defense to the underlying offense.251 The proscribed
methods of concealment seem to envelope any method short of public display.252 The offense
carries a prison term of not more than five years, but also calls for confiscation of the cash and
related property in lieu of a fine.253 The section was apparently enacted to overcome the
consequences of Bajakajian.254 There may be some question whether the effort will succeed.255
249
“Whoever, with the intent to evade a currency reporting requirement under section 5316, knowingly conceals more
than $10,000 in currency or other monetary instruments on the person of such individual or in any conveyance, article
of luggage, merchandise, or other container, and transports or transfers or attempts to transport or transfer such
currency or monetary instruments from a place within the United States to a place outside of the United States, or from
a place outside the United States to a place within the United States, shall be guilty of a currency smuggling offense
and subject to punishment pursuant to subsection (b),” 31 U.S.C. 5332(a).
250
E.g., United States v. Ely, 468 F.3d 399, 400 (6th Cir. 2006); United States v. Peleti, 576 F.3d 377, 380 (7th Cir.
2009).
251
United States v. Tatoyan, 474 F.3d 1174, 1179-179 (9th Cir. 2007).
252
“For purposes of this section, the concealment of currency on the person of any individual includes concealment in
any article of clothing worn by the individual or in any luggage, backpack, or other container worn or carried by such
individual,” 31 U.S.C. 5332(b). In fact, the Money Laundering Threat Assessment Working Group report noted in 2005
that the largest bulk cash smuggling seizures, both in terms of numbers of seizures and amount seized, involve cash that
was “unconcealed,” U.S. Money Laundering Threat Assessment, 39 (561 seizures ($243 million) of unconcealed cash
versus the next highest category (515 seizures ($83.8) from luggage)), available at http://www.ustreas.gov/offices/
enforcement/pdf/mlta.pdf.
253
“In addition, the court, in imposing sentence under paragraph (1), shall order that the defendant forfeit to the United
States, any property, real or personal, involved in the offense, and any property traceable to such property. The seizure,
restraint, and forfeiture of property under this section shall be governed by section 413 of the Controlled Substances Act. If
the property subject to forfeiture under paragraph (2) is unavailable, and the defendant has insufficient substitute property
that may be forfeited pursuant to section 413(p) of the Controlled Substances Act, the court shall enter a personal money
judgment against the defendant for the amount that would be subject to forfeiture,” 31 U.S.C. 5332(b)(2)(caption omitted.).
“Any property involved in a violation of subsection (a), or a conspiracy to commit such violation, and any property
traceable to such violation or conspiracy, may be seized and forfeited to the United States. The seizure and forfeiture
shall be governed by the procedures governing civil forfeitures in money laundering cases pursuant to section
981(a)(1)(A) of title 18, United States Code. For purposes of this subsection and subsection (b), any currency or other
monetary instrument that is concealed or intended to be concealed in violation of subsection (a) or a conspiracy to
commit such violation, any article, container, or conveyance used, or intended to be used, to conceal or transport the
currency or other monetary instrument, and any other property used, or intended to be used, to facilitate the offense,
shall be considered property involved in the offense,” 31 U.S.C. 5332(c)(caption omitted).
254
H.Rept. 107-250, at 37 (2001)(“[I]n response to the Bajakajian decision, the Department of Justice proposed making
the act of bulk cash smuggling itself a criminal offense, and to authorize the imposition of the full range of civil and
criminal sanctions when the offense is discovered. Because the act of concealing currency for the purpose of smuggling
it out of the United States is inherently more serious than simply failing to file a Customs report, strong and meaningful
sanctions, such as confiscation of the smuggled currency, are likely to withstand Eighth Amendment challenges to the
new statute”); see also United States v. $293,316, 349 F.Supp.2d 638, 643 (E.D.N.Y. 2004); Cassella, Bulk Cash
Smuggling and the Globalization of Crime: Overcoming Constitutional Challenges to Forfeiture Under 31 U.S.C.
5332, 22 BERKELEY JOURNAL OF INTERNATIONAL LAW 98, 106 (2004)(“In 2001, Congress expressed its displeasure
with the Bajakajian decision and created a new ‘bulk cash smuggling’ offense, 31 U.S.C. 5332, that is designed to
permit forfeiture of one hundred percent of the smuggled currency in most circumstances, whether or not the
government can establish a nexus between the smuggled money and another criminal offense. Enacted as part of the
post-September 11 effort to address terrorist financing specifically, and intentional money laundering generally, in Title
(continued...)
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
18 U.S.C. 1960: Money Transmitters
Section 1960 outlaws conducting or owning an unlicensed money transmitting business.256
“Money transmitting” is defined broadly by way of a nonexclusive list of examples, such as
checks and wire transfers.257 The term the term “business” restricts the offense to an enterprise
conducted for profit and one engaged in more than a single qualifying transmission.258
The section recognizes three categories of transmitting business.259 One consists of any
transmission business operating in a state that requires it to be licensed and criminalizes the
failure to do so.260 Here, the government must prove that the defendant knew that he was
conducting a money transmitting business and that it was unlicensed.261 It need not prove the
defendant knew that state require him to seek a license or of the state criminal penalty for
transmission without a license.262
(...continued)
II of the USA PATRIOT Act, the new law recognizes the central role that bulk cash smuggling plays in the
globalization of crime”).
255
United States v. Ely, 468 F.3d 399, 402 n.2 (6th Cir. 2006)(“This statute included a forfeiture provision that was a
precursor of the present version of 31 U.S.C. 5332. The statutory language was modified as part of the USA PATRIOT
Act in 2001, by moving the forfeiture provisions from 18 U.S.C. 982 (the statute authorizing the forfeiture in
Bajakajian”) to 31 U.S.C. 5332 (the statute authorizing Ely’s forfeiture). The government advances this modification as
a basis for us to find Bajakajian inapplicable. However, the forfeiture language of the two provisions is virtually
identical, and even if Congress could circumvent the Eighth Amendment’s limitations on excessive fines by modifying
a statute, which would make little sense, cutting and pasting a provision of the United States Code from one chapter to
another cannot be viewed as a meaningful change”); but see United States v. Jose, 499 F.3d 105, 110-11(1st Cir. 2007)
(“Congress, in enacting section 5332, responded to Bajakajian in a way that it believed would, in most circumstances,
constitutionally permit the full forfeiture of currency not reported to authorities as required by section 5316 ... Section
5332 makes clear that Congress has now prohibited what it calls ‘bulk cash smuggling,’ and that it considers this to be
a very serious offense. Congress has thus tipped the forfeiture equation in favor of the prosecution in bulk cash
smuggling cases. Bajakajian itself stated that ‘judgments about the appropriate punishment for an offense belong in the
first instance to the legislature’”).
256
18 U.S.C. 1960(a)(“Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an
unlicensed money transmitting business shall be fined in accordance with this title and imprisoned for not more than 5
years, or both”).
257
“‘[M]oney transmitting’ includes transferring funds on behalf of the public by any and all means including but not
limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier,” 18 U.S.C.
1960(b)(2).
258
United States v. Banki, 660 F.3d 665, 679 (2d Cir. 2011)(internal quotation marks and citations omitted)(“[T]o find
a defendant liable for operating an unlicensed money transmitting business, a jury must find that he participated in
more than a single, isolated transmission of money. Likewise, given the term ‘business’ its plain and unambiguous
meaning under §1960 a business is an enterprise that is carried on for profit or financial gain”).
259
18 U.S.C. 1960(b)(1).
260
18 U.S.C. 1960(b)(1)(A)(“‘[U]nlicensed money transmitting business’ means a money transmitting business which
affects interstate or foreign commerce in any manner or degree and – (A) is operated without an appropriate money
transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law,
whether or not the defendant knew that the operation was required to be licensed or that the operation was so
punishable”).
261
United States v. Elfgeeh, 515 F.3d 100, 133 (2d Cir. 2008); United States v. Talebnejad, 460 F.3d 563, 568 (4th Cir.
2006); United States v. Mazza-Alaluf, 607 F.Supp.2d 484, 489 (S.D.N.Y. 2009), aff’d, 621 F.3d 205 (2d Cir.
2010)(conviction requires proof beyond a reasonable doubt that “1.) Mazza knowingly conducted, controlled, managed,
supervised, directed, or owned 2.) a money-transmitting business that 3.) affected interstate or foreign commerce, and
4.) was not in compliance with applicable licensing requirements under either state or federal law”).
262
18 U.S.C. 1960(b)(1)(A)(quoted above).
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The second category of unlicensed money transmitting businesses consists of any transmitting
business operating in a manner that fails to comply with Treasury Department regulations
governing such enterprises.263 Here, the government need not show that the defendant knew of
federal regulatory requirements,264 but it must show that the defendant knew that he was
operating a transmitting business.265 The third category consists of any licensed business that
transmits of money known to be derived from or intended to finance criminal activity even if the
transmitter is duly licensed.266
Section 1960 offenses are punishable by imprisonment for not more than five years and/or a fine
of not more than $250,000 (not more than $500,000 for organizations).267 Property “involved in”
violation of the section is subject to civil and criminal forfeiture.268 The section has withstood
challenges arguing that it is unconstitutionally vague.269
Racketeer Influenced and Corrupt Organizations (RICO)
As noted earlier, all RICO predicate offenses are by definition money laundering predicate
offenses under Sections 1956 and 1957.270 The crimes that suggest the possibility of a RICO
offense also suggest the possibility of money laundering. In some money laundering cases,
although there is no separate RICO violation, prosecution is possible by virtue of the RICO
shared predicate offense list.271 In a number of other cases, either money laundering is one of
several predicate offenses of a larger RICO enterprise272 or the RICO enterprise is devoted
primarily to money laundering.273
263
18 U.S.C. 1960(b)(1)(B)(“‘[U]nlicensed money transmitting business’ means a money transmitting business which
affects interstate or foreign commerce in any manner or degree and ... (B) fails to comply with the money transmitting
business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under
such section”).
264
United States v. Talebnejad, 460 F.3d 563, 568 (4th Cir. 2006).
265
United States v. Uddin, 365 F.Supp.2d 825, 828-30 (E.D.Mich. 2005).
266
“‘[U]nlicensed money transmitting business’ means a money transmitting business which affects interstate or
foreign commerce in any manner or degree and ... (C) otherwise involves the transportation or transmission of funds
that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or
support unlawful activity,” 18 U.S.C. 1960(b)(1)(C).
267
18 U.S.C. 1960(a), 3571, 3553.
268
18 U.S.C. 981(a)(1)(A), 982(a)(1); see e.g., United States v. $715,031.27, 587 F.Supp.2d 1275, 1277-278 (N.D.Ga.
2008); cf., United States v. e-Gold, Ltd, 521 F.3d 411, 412-13 (D.C.Cir. 2008).
269
United States v. Dimitrov, 546 F.3d 406, 414-15 (7th Cir. 2008); United States v. Talenejad, 460 F.3d at 568.
270
18 U.S.C. 1956(c)(7)(A), 1957(f)(3).
271
Mail fraud and wire fraud, 18 U.S.C. 1341, 1343, are RICO predicates, 18 U.S.C. 1961(1)(B), but are not
individually listed as money laundering predicates under sections 1956 and 1957, 1956(c)(7)(B). Nevertheless, as
RICO predicates, they are by definition money laundering predicates and permit prosecution under sections 1956 and
1957, see e.g., United States v. Lazarenko, 564 F.3d 1026, 1032 (9th Cir. 2009); United States v. Freeman, 434 F.3d
369, 374 (5th Cir. 2005); United States v. Yousuf, 536 F.3d 178, 182 (9th Cir. 2008); United States v. Boscarino, 437
F.3d 634, 636 (7th Cir. 2006) (“Section 1956 makes it a crime to engage in financial transactions with the proceeds of
‘specified unlawful activity.’ That phrase, a defined term, includes ‘any act or activity constituting an offense listed in
section 1961(1) of this title’”).
272
E.g., United States v. Fiander, 547 F.3d 1036, 1037 (9th Cir. 2008); United States v. DeLaMata, 535 F.3d 1267,
1269 (11th Cir. 2008); United States v. Ghilarducci, 480 F.3d 542, 545 (7th Cir. 2007); United States v. Gotti, 459 F.3d
296, 301 (2d Cir. 2006); United States v. Edwards, 303 F.3d 606, 612 (5th Cir. 2002).
273
E.g., United States v. Rosse, 320 F.3d 170, 173 (2d Cir. 2003); United States v. Farese, 248 F.3d 1056, 1058 (11th
Cir. 2001).
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RICO makes it a federal crime for any person to:
1. conduct or participate, directly or indirectly, in the conduct of
2. the affairs of an enterprise
3. engaged in or the activities of which affect, interstate or foreign commerce
4. A. through the collection of an unlawful debt, or
B. through a pattern of racketeering activity (predicate offenses).274
In other words, “[f]or a defendant to convicted of a substantive RICO offense [under section
1962(c)], the government must prove the following elements beyond a reasonable doubt: (1) the
existence of an enterprise; (2) that affected interstate commerce; and (3) that the defendant
associated with the enterprise; (4) and conducted or participated in the conduct of the enterprise;
(5) through a pattern of racketeering activity.”275
This statement of the elements addresses the more common RICO prosecution involving a pattern
of racketeering activity (i.e., predicate offenses), but the government is under no obligation to
prove pattern if the underlying misconduct is “the collection of an unlawful debt.”276
The “person” who commits a RICO offense need not be a human being, but may be “any
individual or entity capable of holding a legal or beneficial interest in property.”277 The
“enterprise” element is defined with comparable breadth, embracing “any individual, partnership,
corporation, association, or other legal entity, and any union or group of individuals associated in
fact although not a legal entity.”278 In spite of their sweeping scope, the elements are distinct, and
a single defendant may not be simultaneously charged as both the “person” and the “enterprise”
under 18 U.S.C. 1962(c).279 Subject to this limitation, however, a RICO enterprise may be formal
or informal, legal or illegal. In order for a group associated in fact to constitute a RICO enterprise,
the group need not have obvious hierarchical or business-like structure; it need only be
characterized by “at least three structural features: a purpose, relationships among those
associated with the enterprise, and longevity sufficient to permit those associates to pursue the
enterprise’s purpose.”280
274
18 U.S.C. 1962(c). Other subsections of 18 U.S.C. 1962 outlaw acquiring, or maintaining control of, a commercial
enterprise through collection of an unlawful debt or a pattern of racketeering and proscribe conspiracy to commit a
RICO offense, 18 U.S.C. 1962(a), (b), (d).
275
United States v. Brandao, 539 F.3d 44, 50-1 (1st Cir. 2008); see also United States v. Knight, 659 F.3d 1285, 1288
(10th Cir. 2011); United States v. Bergrin, 650 F.3d 257, 265 (3d Cir. 2011); United States v. Fowler, 535 F.3d 408, 418
(6th Cir. 2008).
276
United States v. Tocco, 200 F.3d 401, 426 (6th Cir. 2000)(indictment based on the collection of illegal gambling
proceeds). Although the “collection of unlawful debts” may clearly include loan sharking (18 U.S.C. 891-896 (relating
to extortionate credit transactions)), the collection of an unlawful debt need not involve the violence or the threat of
violence required of extortionate credit transactions. The concept of “collection of an unlawful debt” embodies usury
and the collection of gambling debts with or without violence, 18 U.S.C. 1961(6); e.g., Cannarozzi v. Fiumara, 371
F.3d 1, 3-4 (1st Cir. 2004); Neild v. Wolpoff & Abramson, L.L.P., 453 F.Supp.2d 918, 926 (E.D.Va. 2006).
277
18 U.S.C. 1961(3).
278
18 U.S.C. 1961(4).
279
United States v. Bergrin, 650 F.3d 257, 266 (3d Cir. 2011); City of New York v. Smokes-Spirits.Com, Inc., 541 F.3d
425, 446-47 (2d Cir. 2008); Abraham v. Singh, 480 F.3d 351, 357 (5th Cir. 2007); Living Designs, Inc. v. E.I.Dupont de
Nemours and Co., 431 F.3d 353, 361 (9th Cir. 2005); Branon v. Boatmen’s First National Bank, 153 F.3d 1144, 1146
(10th Cir. 1998); United States v. London, 66 F.3d 1227, 1244 (1st Cir. 1995); Cedric Kushner Promotions, Ltd. v. King,
533 U.S. 158, 161 (2001)(holding, however, that the “person” and the individual through whom a corporate enterprise
acts may be the same and need not be distinct).
280
Boyle v. United States, 129 S.Ct. 2337, 2346 (2009); see also, United States v. Bingham, 653 F.3d 983, 992 (9th Cir.
(continued...)
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The interstate commerce element of the RICO offense may be established by evidence that the
enterprise either has conducted its affairs in interstate commerce or foreign commerce or has
engaged in activities that affect interstate commerce or foreign commerce.281
The “pattern of racketeering activity” element demands the commission of at least two predicate
offenses,282 which must be of sufficient relationship and continuity to be described as a
“pattern.”283 Related crimes, for pattern purposes, are marked by “the same or similar purposes,
results, participants, victims, or methods of commission, or otherwise are interrelated by
distinguishing characteristics and are not isolated events.”284
The “continuity” of predicate offenses may be shown in two ways, either by proof of the regular
occurrence of related misconduct over an extended period of time in the past (closed ended) or by
evidence of circumstances suggesting that if not stopped by authorities, they would have
continued in the future (open ended).285
The courts have been reluctant to find the continuity required for a RICO pattern for past, closed
ended enterprises (those with no threat of future predicate offenses) unless the enterprise’s
activities spanned a fairly long period of time.286 Open ended continuity (found where there is a
(...continued)
2011); United States v. Bergrin, 650 F.3d 257, 265-66 (3d Cir. 2011); United States v. Applins, 637 F.3d 59, 73 (2d Cir.
2011).
281
United States v. Robertson, 514 U.S. 669, 671 (1995); proof of even a de minimis effect on interstate commerce is
sufficient where the enterprise is engaged in economic activity, United States v. Nascimento, 491 F.3d 25, 37-45 (1st
Cir. 2007); United States v. Gardiner, 463 F.d 445, 458 (6th Cir. 2006); United States v. Smith, 413 F.3d 1253, 1274275 (10th Cir. 2005); United States v. Rodriguez, 360 F.3d 949, 955 (9th Cir. 2004); United States v. Gray, 137 F.3d
765, 773 (4th Cir. 1998).
282
18 U.S.C. 1961(5); United States v. Burden, 600 F.3d 204, 216 (2d Cir. 2010); Clark v. Time Warner Cable, 523
F.3d 1110, 1116 (9th Cir. 2008).
283
“A pattern is not formed by sporadic activity.... [A] person cannot be subjected to the sanctions [of RICO] simply
for committing two widely separate and isolated criminal offenses. Instead, the term ‘pattern’ itself requires the
showing of a relationship between the predicates and of the threat of continuing activity. It is this factor of continuity
plus relationship which combines to produce a pattern,” H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229,
239 (1989)(emphasis of the Court); United States v. Cianci, 378 F.3d 71, 88 (1st Cir. 2004); United States v. Delgado,
401 F.3d 290, 298 (5th Cir. 2005); United States v. Burden, 600 F.3d 204, 216 (2d Cir. 2010); United States v. Bradley,
644 F.3d 1213, 1238 (11th Cir. 2011); United States v. Knight, 659 F.3d 1285, 1288-289 (10th Cir. 2011). Prior
conviction of a predicate offense, however, is not required or even usual, BancOklahoma Mortgage Corp. v. Capital
Title Co., 194 F.3d 1089, 1102 (10th Cir. 1999); cf., Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 488-93 (1985)(a
private cause of action under RICO does not require the prior conviction of a defendant).
284
H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. at 240, quoting 18 U.S.C. 3575(e); see also United States v.
Knight, 659 F.3d 1285, 1289-292 (10th Cir. 2011); United States v. Bingham, 653 F.3d 983, 992 (9th Cir. 2011); United
States v. Eppolito, 543 F.3d 25, 51 (2d Cir. 2008); United States v. Brandao, 539 F.3d 44, 55 (1st Cir. 2008); United
States v. Browne, 505 F.3d 1229, 1257-258 (11th Cir. 2007).
285
H.J.,Inc. v. Northwestern Bell Tel.Co., 492 U.S. at 241(“‘continuity’ is both a closed- and open-ended concept,
referring either to a closed end period of repeated conduct, or to past conduct that by its nature projects into the future
with a threat of repetition”); United States v. Bergin, 650 F.3d 257, 267 (3dCir. 2011); United States v. Bradley, 644
F.3d 1213, 1238 (11th Cir. 2011); United States v. Wilson, 605 F.3d 985, 1021-22 (D.C.Cir. 2010).
286
Spool v. World Child International Adoption Agency, 520 F.3d at 184 (“we have never held a period of less than two
years to constitute a substantial period of time” sufficient to constitute a closed ended RICO pattern); Primary Care
Investors, Seven v. PHP Healthcare Corp., 986 F.2d 1208, 1215 (8th Cir. 1993)(holding predicate offenses over 10-11
months insufficient and citing cases finding several years sufficient but several periods of less than a year insufficient);
United States v. Browne, 505 F.3d at 1263 (holding predicate offenses over a five-year period sufficient to show a
closed ended RICO pattern).
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threat of future predicate offenses) is nowhere near as time sensitive and is often found where the
predicates consist of murder, drug dealing or the like, or are part of the enterprise’s regular way of
doing business.287
Section 1962(d) also outlaws conspiracy to violate any of Section 1962’s substantive prohibitions;
in the case of conspiracy to violate Section 1962(c), it outlaws any agreement of two or more to
conduct the affairs of an enterprise through a pattern of RICO predicate offenses.288 The RICO
conspiracy offense has no overt act requirement; the crime is complete upon the agreement to
commit a RICO offense.289
RICO violations are punishable by imprisonment for not more than 20 years (not more than life
imprisonment if any of the applicable predicate offenses carries a life sentence).290 Offenders also
face fines of up to $250,000 (up to $500,000 for organizations) as well as the confiscation of any
property associated with the offense.291 They may also be liable to their victims for triple damages
and reasonable attorneys fees.292 Depending upon the circuit, they may also be subject to
equitable remedies,293 and may be liable even if they only aided and abetted the underlying RICO
violation.294
287
United States v. Torres, 191 F.3d 799, 808 (7th Cir. 1999)(“As other courts of appeals have noted, in cases where the
acts of the defendant or the enterprise were inherently unlawful, such as murder or obstruction of justice, and where in
pursuit of inherently unlawful goals, such as narcotics trafficking or embezzlement, the courts generally have
concluded that the requisite threat of continuity was adequately established by the nature of the activity, even though
the period spanned by the racketeering activity was short”); Spool v. World Child International Adoption Agency, 520
F.3d at 184. Open ended continuity may also be found where the evidence suggests that only the intervention of law
enforcement authorities closed down the enterprise, United States v. Richardson, 167 F.3d 621, 626-27 (D.C.Cir.
1999); Jackson v. BellSouth Telecommunications, 372 F.3d 1250, 1267 (11th Cir. 2004); United States v. Connolly, 341
F.3d 16, 30 (1st Cir. 2003).
288
United States v. Yannotti, 541 F.3d 112, 121-22 (2d Cir. 2008); United States v. Browne, 505 F.3d at 1263-264;
United States v. Olson, 450 F.3d 655, 664 (7th Cir. 2006).
289
Salinas v. United States, 522 U.S. 52, 63 (1997); United States v. Smith, 413 F.3d 1253, 1265 (10th Cir. 2005);
United States v. Browne, 505 F.3d at 1263-264.
290
18 U.S.C. 1963(a).
291
18 U.S.C. 1963(a), (b).
292
18 U.S.C. 1964(c).
293
18 U.S.C. 1964(a). The question of whether injunctions and other forms of equitable relief are available to private
plaintiffs or only to the government has thus far divided the lower federal courts, Religious Tech. Center v.
Wollersheim, 796 F.2d 1076, 1082-86 (9th Cir. 1986)(private plaintiffs are not entitled to equitable relief under RICO);
Minter v. Wells Fargo Bank, 593 F.Supp.2d 788, 795-96 (D.Md. 2009)(same); American Medical Association v. United
Healthcare Corp., 588 F.Supp.2d 432, 444-46 (S.D.N.Y. 2008)(same); contra, National Organization for Women, Inc.
v. Scheidler, 267 F.3d 687, 695-700 (7th Cir. 2001)(private RICO plaintiffs are eligible for equitable relief), rev’d on
other grounds, 537 U.S. 393 (2003); In re Managed Care Litigation, 298 F.Supp.2d 1259, 1281-283 (S.D. Fla.
2003)(same); Chambers Development Co., Inc. v. Browning-Ferris Industries, 590 F.Supp. 1528, 1540-541 (W.D.Pa.
1984)(same); see also Scheidler v. National Organization for Women, Inc., 537 U.S. at 411 (finding it unnecessary to
resolve the issue in the case before it).
294
However, “[m]any courts have applied the logic of Central Bank [v. First Interstate Bank, 511 U.S. 164(1994)] to
RICO and concluded that §1962(c) does not provide for [civil] aiding and abetting liability, Cobbs v. Sheahan, 385
F.Supp.2d 731, 738 (N.D.Ill. 2005); accord, DeFalco v. Bernas, 244 F.3d 286, 330 (2d Cir. 2001); Pennsylvania
Association of Edwards Heirs v. Rightenour, 235 F.3d 839, 840 (3d Cir. 2000); In re Countrywide Financial Corp.
Mortgage Marketing and Sales Practice, 601 F.Supp.2d 1201, 1219 (S.D.Cal. 2009); Rolo v. City Investing Co.
Liquidating Trust, 155 F.3d 644, 656-68 (3d Cir. 1998); In re MasterCard International Inc., Internet Gambling
Litigation, 132 F.Supp.2d 468, 493-95 (E.D.La. 2001), aff’d, 313 F.3d 257 (5th Cir. 2002); contra, In re Managed Care
Litigation, 298 F.Supp.2d at 1272; see also First American Corp. v. Al-Nahyan, 17 F.Supp.2d 10, 23-4 (D.D.C.
1998)(preliminarily finding Central Bank distinguishable, but finding it unnecessary to resolve the issue in light of the
(continued...)
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Specified Unlawful Activities (Citations to Predicate Offenses: 18
U.S.C. 1956, 1957)(Maximum Terms of Imprisonment Noted)
-7 U.S.C. 2024 (Food Stamp Act of 1977 felony (violation involving a quantity of coupons having a value
of not less than $5,000)) (various from 1 to 20 years);
-8 U.S.C. 1324 (bringing in and harboring certain aliens (committed for the purpose of financial gain))
(various from 5 years to life);*295
-8 U.S.C. 1327 (aiding or assisting certain aliens to enter the United States (committed for the purpose of
financial gain)) (10 years);*
-8 U.S.C. 1328 (importation of alien for immoral purpose (committed for the purpose of financial gain))
(10 years);*
-15 U.S.C. 77a et seq. (fraud in the sale of securities) (5 years);*
-15 U.S.C. 78ff (Foreign Corrupt Practices Act felony) (various from 5 to 20 years);
-18 U.S.C. 32 (destruction of aircraft) (20 years);296
-18 U.S.C. 37 (violence at international airports) (20 years);
-18 U.S.C. 81 (arson within special maritime and territorial jurisdiction) (25 years);**297
-18 U.S.C. 115 (influencing, impeding, or retaliating against a Federal official by threatening or injuring a
family member) (various from 1 to 30 years);
-18 U.S.C. 152 (concealment of assets; false oaths and claims; bribery) (5 years);
-18 U.S.C. 175-178 (biological weapons) (various from 5 years to life);*
-18 U.S.C. 175c (variola virus) (various from 25 years to life);
-18 U.S.C. 201 (bribery) (various from 2 to 15 years);*
-18 U.S.C. 215 (commissions or gifts for procuring loans) (various 1 to 30 years);
-18 U.S.C. 224 (sports bribery) (5 years);*
-18 U.S.C. 229-229F (chemical weapons) (life);*
-18 U.S.C. 287 (federal health care offense relating to a benefit program) (5 years);
-18 U.S.C. 351 (violence against Members of Congress or Cabinet officers) (various from 1 year to life);
-18 U.S.C. 371 (conspiracy to commit a federal health care offense) (5 years);~298
-18 U.S.C. 471, 472, and 473 (counterfeiting) (20 years);*
(...continued)
prospect of the defendants’ possible direct RICO liability); American Automotive Accessories, Inc. v. Fishman, 991
F.Supp. 987, 993 (N.D.Ill. 1998)(“to be held liable as an aider and abettor, a person must in some sort associate himself
with the venture, participate in it as something he wishes to bring about, and seek by his action to make it
succeed”)(noting that the Seventh Circuit has yet to “comment on the possibility of aiding and abetting liability in civil
RICO actions”).
295
* RICO predicate offense.
296
Here and in several other instances, the death penalty is an alternative sanction when commission of the offense
results in a death.
297
**A federal crime of terrorism that as such constitutes a RICO predicate and therefore a money laundering predicate
and that is not otherwise listed on either RICO or money laundering predicate lists; crimes which are both money
laundering predicates and federal crimes of terrorism or RICO offenses e.g., 18 U.S.C. 32 (destruction of aircraft) are
not identified with **.
298
~ “Act or activity constituting an offense involving a federal health care offense” not otherwise listed as a money
laundering predicate offense, 18 U.S.C. 1956(c)(7)(F).
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-18 U.S.C. 500-503 (certain counterfeiting offenses) (5 years);
-18 U.S.C. 541 (goods falsely classified) (2 years);
-18 U.S.C. 542 (entry of goods by means of false statements) (2 years);
-18 U.S.C. 544 (smuggling goods from the United States) (2 years);
-18 U.S.C. 545 (smuggling goods into the United States) (20 years);
-18 U.S.C. 549 (removing goods from Customs custody) (10 years);
-18 U.S.C. 641 (public money, property, or records) (various from 1 to 10 years);
-18 U.S.C. 656 (theft, embezzlement, or misapplication by bank officer or employee) (various from 1 to 30
years);
-18 U.S.C. 657 (lending, credit, and insurance institutions) (various from 1 to 30 years);
-18 U.S.C. 658 (property mortgaged or pledged to farm credit agencies) (various from 1 to 5 years);
-18 U.S.C. 659 (felonious theft from interstate shipment) (various from 3 to 10 years);*
-18 U.S.C. 664 (embezzlement from pension and welfare funds) (various from 1 to 10 years);
-18 U.S.C. 666 (theft or bribery concerning programs receiving Federal funds) (10 years);
-18 U.S.C. 669 (federal health care offense) (various from 1 to 10 years);~
-18 U.S.C. 793, 794, 798 (espionage) (various from 1 year to life);
-18 U.S.C. 831 (prohibited transactions involving nuclear materials) (various from 10 years to life);
-18 U.S.C. 832 (participation in foreign nuclear weapons programs) (various from 20 years to life);**
-18 U.S.C. 842(m), (n) (plastic explosives) (10 years);**
-18 U.S.C. 844(f), (i) (destruction by explosives or fire of Government property or property affecting
interstate or foreign commerce) (various from 20 years to life);
-18 U.S.C. 875 (interstate communications) (various from 2 to 20 years);
-18 U.S.C. 891-894 (extortionate credit transactions) (20 years);*
-18 U.S.C. 922(1) (unlawful importation of firearms) (5 years);
-18 U.S.C. 924(n) (firearms trafficking) (10 years);
-18 U.S.C. 930(c) (killing or attempted killing during an attack on a Federal facility with a dangerous
weapon) (various from 7 years to life);**
-18 U.S.C. 956 (conspiracy to kill, kidnap, maim, or injure certain property in a foreign country) (various
from 35 years to life);
-18 U.S.C. 1001 (false statement relating federal health care) (5 years); ~
-18 U.S.C. 1005 (fraudulent bank entries) (30 years);
-18 U.S.C. 1006 (fraudulent Federal credit institution entries) (30 years);
-18 U.S.C. 1007 (fraudulent Federal Deposit Insurance transactions) (30 years);
-18 U.S.C. 1014 (fraudulent loan or credit applications) (30 years);
-18 U.S.C. 1028 (fraud and related activity in connection with identification documents) (various from 1 to
30 years);*
-18 U.S.C. 1029 (fraud and related activity in connection with access devices) (various from 10 to 20
years);*
-18 U.S.C. 1030 (computer fraud and abuse) (various from 1 to 20 years);
-18 U.S.C. 1032 (concealment of assets from conservator, receiver, or liquidating agent of financial
institution) (5 years);
-18 U.S.C. 1035 (false statements relating to federal health care) (5 years); ~
-18 U.S.C. 1084 (transmission of gambling information) (2 years);*
-18 U.S.C. 1111 (murder) (life);
-18 U.S.C. 1114 (killing a United States employee or officer) (various from 8 years to life);
-18 U.S.C. 1116 (killing a foreign official, official guest, or internationally protected person) (various from
7 years to life);
-18 U.S.C. 1201 (kidnapping) (life);
-18 U.S.C. 1203 (hostage taking) (life);
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-18 U.S.C. 1341 (mail fraud) (various from 20 to 30 years);*
-18 U.S.C. 1343 (wire fraud) (various from 20 to 30 years);*
-18 U.S.C. 1344 (financial institution fraud) (30 years);*
-18 U.S.C. 1347 (federal health care fraud) (various from 20 years to life);
-18 U.S.C. 1361 (willful injury of Government property) (various from 1 to 10 years);
-18 U.S.C. 1362 (destruction of communication lines, stations, or systems) (10 years);**
-18 U.S.C. 1363 (destruction of property within the special maritime and territorial jurisdiction) (various
from 5 to 20 years);
-18 U.S.C. 1366(a) (destruction of an energy facility) (20 years );**
-18 U.S.C. 1425 (procurement of citizenship or nationalization unlawfully) (various from 10 to 25 years);*
-18 U.S.C. 1426 (reproduction of naturalization or citizenship papers) (various from 10 to 25 years);*
-18 U.S.C. 1427 (sale of naturalization or citizenship papers) (various from 10 to 25 years);*
-18 U.S.C. 1461-1465 (obscene matter) (various from 2 to 10 years);*
-18 U.S.C. 1503 (obstruction of justice) (various from 8 years to life);*
-18 U.S.C. 1510 (relating to obstruction of criminal investigations) (5 years);*
-18 U.S.C. 1511 (obstruction of State or local law enforcement) (5 years);*
-18 U.S.C. 1512 (tampering with a witness, victim, or an informant) (various from 3 years to life);*
-18 U.S.C. 1513 (retaliating against a witness, victim, or an informant) (various from 8 years to life);*
-18 U.S.C. 1518 (obstructing a federal health care investigation) (5 years); ~
-18 U.S.C. 1542 (false statement in application and use of passport) (various from 10 to 25 years);*
-18 U.S.C. 1543 (forgery or false use of passport) (various from 10 to 25 years);*
-18 U.S.C. 1544 (misuse of passport) (various from 10 to 25 years);*
-18 U.S.C. 1546 (fraud and misuse of visas, permits, and other documents) (various from 10 to 25 years);*
-18 U.S.C. 1581-1592 (peonage, slavery, and trafficking in persons) (various from 2 years to life);*
-18 U.S.C. 1708 (theft from the mail) (5 years);
-18 U.S.C. 1751 (violence against the President) (various from 1 year to life);
-18 U.S.C. 1951 (interference with commerce, robbery, or extortion) (20 years);*
-18 U.S.C. 1952 (racketeering (Travel Act)) (various from 5 years to life);*
-18 U.S.C. 1953 (interstate transportation of wagering paraphernalia) (5 years);*
-18 U.S.C. 1954 (unlawful welfare fund payments) (3 years);*
-18 U.S.C. 1955 (illegal gambling businesses) (5 years);*
-18 U.S.C. 1956 (laundering of monetary instruments) (20 years);*
-18 U.S.C. 1957 (engaging in monetary transactions in property derived from specified unlawful activity)
(10 years);*
-18 U.S.C. 1958 (use of interstate commerce facilities in the commission of murder-for-hire) (various from
10 years to life);*
-18 U.S.C. 1960 (money transmitters) (5 years);*
-18 U.S.C. 1992 (attacks and other acts of violence against mass transportation systems) (various from 20
years to life);**
-18 U.S.C. 2113, 2114 (bank and postal robbery and theft) (various from 1 year to life);
-18 U.S.C. 2155 (destruction of national defense materials, premises, or utilities) (various from 20 years to
life);**
-18 U.S.C. 2156 (national defense material, premises, or utilities) (10 years);**
-18 U.S.C. 2251, 2251A, 2252, and 2260 (sexual exploitation of children) (various from 10 years to life);*
-18 U.S.C. 2280 (violence against maritime navigation) (various from 20 years to life);
-18 U.S.C. 2281 (violence against maritime fixed platforms) (various from 20 years to life);
-18 U.S.C. 2312, 2313 (interstate transportation of stolen motor vehicles) (10 years);*
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Money Laundering: An Overview of 18 U.S.C. 1956 and Related Federal Criminal Law
-18 U.S.C. 2314, 2315 (interstate transportation of stolen property) (10 years)
-18 U.S.C. 2318 (trafficking in counterfeit labels for phonorecords, computer programs or computer
program documentation or packaging and copies of motion pictures or other audiovisual works) (5 years);*
-18 U.S.C. 2319 (criminal infringement of a copyright) (various from 1 to 5 years);*
-18 U.S.C. 2319A (relating to unauthorized fixation of and trafficking in sound recordings and music
videos of live musical performances) (various from 5 to 10 years);*
-18 U.S.C. 2320 (trafficking in goods or services bearing counterfeit marks) (various from 10 to 20 years);*
-18 U.S.C. 2321 (trafficking in certain motor vehicles or motor vehicle parts) (10 years);*
-18 U.S.C. 2332 (terrorist acts abroad against United States nationals) (various from 3 years to life);
-18 U.S.C. 2332a (use of weapons of mass destruction) (life);
-18 U.S.C. 2332b (international terrorist acts transcending national boundaries) (various from 10 years to
life);
-18 U.S.C. 2332f (bombing of public places and facilities) (life);**
-18 U.S.C. 2332g (missile systems designed to destroy aircraft) (life);
-18 U.S.C. 2332h (radiological dispersal devices) (life);
-18 U.S.C. 2339 (harboring terrorists) (10 years);**
-18 U.S.C. 2339A, 2339B (providing material support to terrorists) (various from 15 years to life);
-18 U.S.C. 2339C (financing of terrorism) (various from 10 to 20 years);**
-18 U.S.C. 2339D (foreign military training) (10 years)**
-18 U.S.C. 2340A (torture) (various from 20 years to life);
-18 U.S.C. 2341-2346 (trafficking in contraband cigarettes) (various from 3 to 5 years);*
-18 U.S.C. 2421-2424 (white slave traffic) (various from 10 years to life);*
-19 U.S.C. 1590 (aviation smuggling) (various from 5 to 20 years);
-21 U.S.C. 841 et seq. (felonious manufacture, importation, receiving, concealment, buying, selling, or
otherwise dealing in a controlled substance or listed chemical) (various from 1 year to life);*
-21 U.S.C. 863 (drug paraphernalia) (3 years);
-21 U.S.C. 960A (narc-terrorism) (various from 2 years to life);**
-22 U.S.C. 2778(c) (Arms Export Control Act) (10 years);
-22 U.S.C. 611 et seq. (Foreign Agents Registration Act of 1938 felony) (various from 1 to 5 years);
-29 U.S.C. 186 (dealing with restrictions on payments and loans to labor organizations) (various from 1 to
5 years);*
-29 U.S.C. 501(c) (embezzlement from union funds) (5 years);*
-33 U.S.C. 1251 et seq. (Federal Water Pollution Control Act felony) (various from 1 to 15 years);
-33 U.S.C. 1401 et seq. (Ocean Dumping Act felony) (5 years);
-33 U.S.C. 1901 et seq. (Act to Prevent Pollution from Ships felony) (6 years);
-42 U.S.C. 300f et seq. (Safe Drinking Water Act felony) (various from 3 to 20 years);
-42 U.S.C. 1490s(a)(1) (Housing Act of 1949 (equity skimming)) (5 years);
-42 U.S.C. 2122 (atomic weapons) (life);
-42 U.S.C. 2284 (sabotage of nuclear facilities or fuel) (various from 20 years to life);**
-42 U.S.C. 6901 et seq. (Resources Conservation and Recovery Act felony) (various from 2 to 15 years);
-49 U.S.C. 46502 of title 49 (air piracy) (life);
-49 U.S.C. 46504 (second sentence) (relating to assault on a flight crew with a dangerous weapon) (various
from 20 years to life);**
-49 U.S.C. 46505(b)(3), (c) (explosive or incendiary devices, or endangerment of human life by means of
weapons, on aircraft) (various from 10 to 20 years);**
-49 U.S.C. 46506 (if homicide or attempted homicide is involved) (application of certain criminal laws to
acts on aircraft) (various from 7 years to life);**
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-49 U.S.C. 60123(b) (destruction of interstate gas or hazardous liquid pipeline facility) (various from 5
years to life);**
-50 U.S.C. 1705 (International Emergency Economic Powers Act) (20 years);
-50 U.S.C. App. 16 (Trading with the Enemy Act) (10 years).
State Money Laundering Laws (Citations)
Arizona: Ariz. Rev. Stat. Ann. §13-2317
Montana: Mont. Code Ann. §45-6-341
Arkansas: Ark .Code Ann. §§5-42-201 to 5-42-205
Nebraska: Neb. Rev. Stat. §28-205
California: Cal. Penal Code §§186.9, 186.10
New Jersey: N.J. Stat. Ann. §§2C:21-23 to 2C:21-29
Colorado: Colo. Rev. Stat. Ann. §18-18-408
New Mexico: N.Mex. Stat. Ann. §§30-51-1 to 30-51-5
Connecticut: Conn. Gen. Stat. Ann. §§53a-275 to 53a-282
New York: N.Y. Penal Law §§470.00 to 470.25
Delaware: Del. Code Ann. tit. 11, §951
North Dakota: N.D. Cent. Code §19-03.1-23, 12.108-04
Florida: Fla. Stat. Ann.§§896.101 to 896.107
Georgia: GA. CODE §§7-1-910 to 7-1-916
Hawaii: HAWAII REV. STAT. §§708A-1 to 708A-3
Idaho: IDAHO CODE §18-8201
Illinois: ILL. COMP. LAWS ANN. ch.720 §5/29B-1
Indiana: IND. CODE ANN. §§35-45-15-1 to 35-45-15-5
Iowa: IOWA CODE ANN. §§706B.1 to 706B.3
Ohio: OHIO REV. CODE ANN. §§ 1315.55, 2909.29
Oklahoma: OKLA. STAT. ANN., tit.21 §2001
Oregon: ORE. REV. STAT. §§164.170 to 164.174
Pennsylvania: 18 PA. CONS. STAT. ANN. §5111
Rhode Island: R.I. GEN. LAWS §11-9.1-15
South Carolina: S.C. CODE ANN. §44-53-475
Kansas: KAN. STAT. ANN. §65-4142
Tennessee: TENN. CODE ANN. §§39-14-901 to 39-14909
Louisiana: LA. REV. STAT. ANN. §14:230
Texas: TEX. PENAL CODE ANN. §§34.01 to 34.03
Michigan: Mich. Comp. Laws Ann. §§750.411j to 750.411p
Utah: UTAH CODE ANN. §§76-10-1901 to 76-10-1908
Mississippi: Miss. Code Ann. §97-23-101
Virginia: VA. CODE ANN. §§18.2-246.1 to 18.2-246.5
Missouri: Mo. Ann. Stat. §574.105
Washington: WASH. REV. CODE ANN. §§9A.83.010 to
9A.83.04
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State Money Transmission Laws (Citations)
Alabama: Ala. Code §§5-22-1 to 5-22-8
Massachusetts: MASS. GEN. LAWS ANN. ch.169 §§1 to 16
Alaska: Alaska Stat. §§06.55.101 to 06.55.995
Michigan: MICH. COMP. LAWS §§487.1001 TO 487.1047
Arizona: Ariz. Rev. Stat. Ann. §§6-1201 to 6-1219
MINNESOTA: MINN. STAT. ANN. §§53B.01 TO 53B.26
Arkansas: Ark. Code Ann. §§23-55-101 to 23-55-1005
Nevada: NEV. REV. STAT §§671.010 TO 671.190
California: Cal. Fin. Code §§1800 to 1827
New Hampshire: N.H. Rev. Stat. Ann. §§399-G:1 to 399G:22
Connecticut: Conn. Gen. Stat. Ann. §§36a-595 to 36a610
Colorado: Colo. Rev. Stat. Ann. §§12-52-101 to 12-52117
Delaware: Del. Code Ann. tit.5 §§2301 to 2318
New Jersey: N.J. Stat. Ann. §§17:15C-1 to 17:15C-27
New York: New York Banking Law §§640 to 652-b
North Carolina: N.C. Gen. Stat. §§53-208.1 to 208.30
North Dakota: N.D. Cent. Code §§13-09-01 to 13-09-24
District of Columbia: D.C. Code §§26-1001 to 261026
Ohio: Ohio Rev. Code Ann. §§1315.01 to 1315.99
Florida: Fla.Stat.Ann.§§560.101 to 560.408, 655.50
Oklahoma: Okla. Stat. Ann. tit. 6 §§1511 to 1515
Georgia: Ga. Code Ann. §§7-1-680 to 7-1-692
Oregon: Ore. Rev. Stat. §§717.200 to 717.905
Hawaii: Haw. Rev. Stat. §§4889D-1 to 489D-34
Pennsylvania :Pa. Stat. Ann. tit.7 §§6101 to 6118
Idaho: Idaho Code §§26-2901 to 26-2928
South Dakota: S.D. Codified Laws §§51A-17-1 to 51A17-47
Illinois: Ill. Comp. Laws Ann. ch.205 §§657/1 to
657/105
Tennessee: TENN. CODE ANN. §§45-7-201 to 45-7-226
Indiana: Ind. Code Ann. §§28-8-4-1 to 28-8-4-61
Texas: TEX. FIN. CODE ANN. §§151.301 to 151.405
Iowa: IOWA CODE ANN. §§533C.201 to 533C.904
Vermont: VT. STAT. ANN. tit.8 §§2501 to 2555
Kansas: Kan. Stat. Ann. §§9-50 to 9-513d
Virginia: VA. CODE ANN. §§6.1-370 to 6.1-378.4
Kentucky: KY. REV. STAT. ANN. §§286.11.001 TO
286.11.067
Washington: WASH. REV. CODE ANN. §§19.230.005 to
19.230.905
Louisiana: La. Rev. Stat. Ann. §§6:1301 to 6:1054
West Virginia: W.VA. CODE ANN. §§32A-2-1 to 32A-2-28
Maine: ME. REV. STAT. ANN. tit. 32 §§6101 to 6162
Wyoming: WYO. STAT. §§40-22-101 to 40-22-129
Maryland: Md. Fin. Inst. Code §§12-401 to 12-431
Selected Federal Money Laundering Laws (Text)
18 U.S.C. 1956. Laundering of monetary instruments
(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of
some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact
involves the proceeds of specified unlawful activity–
(A)(i) with the intent to promote the carrying on of specified unlawful activity; or
(ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal
Revenue Code of 1986; or
(B) knowing that the transaction is designed in whole or in part–
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the
proceeds of specified unlawful activity; or
(ii) to avoid a transaction reporting requirement under State or Federal law,
shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in
the transaction, whichever is greater, or imprisonment for not more than twenty years, or both. For
purposes of this paragraph, a financial transaction shall be considered to be one involving the proceeds
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of specified unlawful activity if it is part of a set of parallel or dependent transactions, any one of
which involves the proceeds of specified unlawful activity, and all of which are part of a single plan or
arrangement.
(2) Whoever transports, transmits, or transfers, or attempts 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–
(A) with the intent to promote the carrying on of specified unlawful activity; or
(B) knowing that the monetary instrument or funds involved in the transportation, transmission, or
transfer represent the proceeds of some form of unlawful activity and knowing that such transportation,
transmission, or transfer is designed in whole or in part–
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the
proceeds of specified unlawful activity; or
(ii) to avoid a transaction reporting requirement under State or Federal law,
shall be sentenced to 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, or imprisonment for not
more than twenty years, or both. For the purpose of the offense described in subparagraph (B), the
defendant's knowledge may be established by proof that a law enforcement officer represented the matter
specified in subparagraph (B) as true, and the defendant's subsequent statements or actions indicate that the
defendant believed such representations to be true.
(3) Whoever, with the intent–
(A) to promote the carrying on of specified unlawful activity;
(B) to conceal or disguise the nature, location, source, ownership, or control of property believed to be
the proceeds of specified unlawful activity; or
(C) to avoid a transaction reporting requirement under State or Federal law,
conducts or attempts 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, shall be
fined under this title or imprisoned for not more than 20 years, or both. For purposes of this paragraph and
paragraph (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.
(b) Penalties.–
(1) In general.– Whoever conducts or attempts to conduct a transaction described in subsection (a)(1) or
(a)(3), or section 1957, or a transportation, transmission, or transfer described in subsection (a)(2), is liable
to the United States for a civil penalty of not more than the greater of–
(A) the value of the property, funds, or monetary instruments involved in the transaction; or
(B) $10,000.
(2) Jurisdiction over foreign persons.– For purposes of adjudicating an action filed or enforcing a penalty
ordered under this section, the district courts shall have jurisdiction over any foreign person, including any
financial institution authorized under the laws of a foreign country, against whom the action is brought, if
service of process upon the foreign person is made under the Federal Rules of Civil Procedure or the laws
of the country in which the foreign person is found, and–
(A) the foreign person commits an offense under subsection (a) involving a financial transaction that
occurs in whole or in part in the United States;
(B) the foreign person converts, to his or her own use, property in which the United States has an
ownership interest by virtue of the entry of an order of forfeiture by a court of the United States; or
(C) the foreign person is a financial institution that maintains a bank account at a financial institution
in the United States.
(3) Court authority over assets.– A court may 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 under this section.
(4) Federal receiver.–
(A) In general.–A court may appoint a Federal Receiver, in accordance with subparagraph (B) of this
paragraph, 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 section
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981 or 982, or a criminal sentence under section 1957 or subsection (a) of this section, including an
order of restitution to any victim of a specified unlawful activity.
(B) Appointment and authority.–A Federal Receiver described in subparagraph (A)–
(i) may be appointed upon application of a Federal prosecutor or a Federal or State regulator, by the
court having jurisdiction over the defendant in the case;
(ii) shall be an officer of the court, and the powers of the Federal Receiver shall include the powers set
out in section 754 of title 28, United States Code; and
(iii) shall have standing equivalent to that of a Federal prosecutor for the purpose of submitting
requests to obtain information regarding the assets of the defendant–
(I) from the Financial Crimes Enforcement Network of the Department of the Treasury; or
(II) from a foreign country pursuant to a mutual legal assistance treaty, multilateral agreement, or
other arrangement for international law enforcement assistance, provided that such requests are in
accordance with the policies and procedures of the Attorney General.
(c) As used in this section–
(1) the term “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 paragraph (7);
(2) the term “conducts” includes initiating, concluding, or participating in initiating, or concluding a
transaction;
(3) the term “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;
(4) the term “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;
(5) the term “monetary instruments” means (i) coin or currency of the United States or of any other
country, travelers' checks, personal checks, bank checks, and money orders, or (ii) investment securities or
negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery;
(6) the term “financial institution” includes–
(A) any financial institution, as defined in section 5312(a)(2) of title 31, United States Code, or the
regulations promulgated thereunder; and
(B) any foreign bank, as defined in section 1 of the International Banking Act of 1978 (12 U.S.C.
3101);
(7) the term “specified unlawful activity” means–
(A) any act or activity constituting an offense listed in section 1961(1) of this title except an act which
is indictable under subchapter II of chapter 53 of title 31;
(B) with respect to a financial transaction occurring in whole or in part in the United States, an offense
against a foreign nation involving–
(i) the manufacture, importation, sale, or distribution of a controlled substance (as such term is
defined for the purposes of the Controlled Substances Act);
(ii) murder, kidnapping, robbery, extortion, destruction of property by means of explosive or fire,
or a crime of violence (as defined in section 16);
(iii) fraud, or any scheme or attempt to defraud, by or against a foreign bank (as defined in
paragraph 7 of section 1(b) of the International Banking Act of 1978);
(iv) bribery of a public official, or the misappropriation, theft, or embezzlement of public funds
by or for the benefit of a public official;
(v) smuggling or export control violations involving–
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(I) an item controlled on the United States Munitions List established under section 38 of the
Arms Export Control Act (22 U.S.C. 2778); or
(II) an item controlled under regulations under the Export Administration Regulations (15
C.F.R. Parts 730-774);
(vi) 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; or
(vii) trafficking in persons, selling or buying children, sexual exploitation of children, or
transporting, recruiting or harboring a person, including a child, for commercial sex acts;
(C) any act or acts constituting a continuing criminal enterprise, as that term is defined in section 408
of the Controlled Substances Act (21 U.S.C. 848);
(D) an offense under section 32 (relating to the destruction of aircraft), section 37 (relating to violence
at international airports), section 115 (relating to influencing, impeding, or retaliating against a Federal
official by threatening or injuring a family member), section 152 (relating to concealment of assets;
false oaths and claims; bribery), section 215 (relating to commissions or gifts for procuring loans),
section 351 (relating to congressional or Cabinet officer assassination), any of sections 500 through
503 (relating to certain counterfeiting offenses), section 513 (relating to securities of States and private
entities), section 541 (relating to goods falsely classified), section 542 (relating to entry of goods by
means of false statements), section 545 (relating to smuggling goods into the United States), section
549 (relating to removing goods from Customs custody), section 544 (relating to smuggling goods
from the United States), section 641 (relating to public money, property, or records), section 656
(relating to theft, embezzlement, or misapplication by bank officer or employee), section 657 (relating
to lending, credit, and insurance institutions), section 658 (relating to property mortgaged or pledged to
farm credit agencies), section 666 (relating to theft or bribery concerning programs receiving Federal
funds), section 793, 794, or 798 (relating to espionage), section 831 (relating to prohibited transactions
involving nuclear materials), section 844(f) or (i) (relating to destruction by explosives or fire of
Government property or property affecting interstate or foreign commerce), section 875 (relating to
interstate communications), section 922(1) (relating to the unlawful importation of firearms), section
924(n) (relating to firearms trafficking), section 956 (relating to conspiracy to kill, kidnap, maim, or
injure certain property in a foreign country), section 1005 (relating to fraudulent bank entries), 1006
(relating to fraudulent Federal credit institution entries), 1007 (relating to fraudulent Federal Deposit
Insurance transactions), 1014 (relating to fraudulent loan or credit applications), section 1030 (relating
to computer fraud and abuse), 1032 (relating to concealment of assets from conservator, receiver, or
liquidating agent of financial institution), section 1111 (relating to murder), section 1114 (relating to
murder of United States law enforcement officials), section 1116 (relating to murder of foreign
officials, official guests, or internationally protected persons), section 1201 (relating to kidnapping),
section 1203 (relating to hostage taking), section 1361 (relating to willful injury of Government
property), section 1363 (relating to destruction of property within the special maritime and territorial
jurisdiction), section 1708 (theft from the mail), section 1751 (relating to Presidential assassination),
section 2113 or 2114 (relating to bank and postal robbery and theft), section 2252A (relating to child
pornography) where the child pornography contains a visual depiction of an actual minor engaging in
sexually explicit conduct, section 2260 (production of certain child pornography for importation into
the United States), section 2280 (relating to violence against maritime navigation), section 2281
(relating to violence against maritime fixed platforms), section 2319 (relating to copyright
infringement), section 2320 (relating to trafficking in counterfeit goods and services), section 2332
(relating to terrorist acts abroad against United States nationals), section 2332a (relating to use of
weapons of mass destruction), section 2332b (relating to international terrorist acts transcending
national boundaries), section 2339A or 2339B (relating to providing material support to terrorists),
section 2339C (relating to financing of terrorism), or section 2339D (relating to receiving military-type
training from a foreign terrorist organization) of this title, section 46502 of title 49, United States
Code, a felony violation of the Chemical Diversion and Trafficking Act of 1988 (relating to precursor
and essential chemicals), section 590 of the Tariff Act of 1930 (19 U.S.C. 1590) (relating to aviation
smuggling), section 422 of the Controlled Substances Act (relating to transportation of drug
paraphernalia), section 38(c) (relating to criminal violations) of the Arms Export Control Act, section
11 (relating to violations) of the Export Administration Act of 1979, section 206 (relating to penalties)
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of the International Emergency Economic Powers Act, section 16 (relating to offenses and
punishment) of the Trading with the Enemy Act, any felony violation of section 15 of the Food Stamp
Act of 1977 [7 U.S.C.A. 2024] (relating to supplemental nutrition assistance program benefits fraud)
involving a quantity of benefits having a value of not less than $5,000, any violation of section
543(a)(1) of the Housing Act of 1949 [42 U.S.C. 1490s(a)(1)] (relating to equity skimming), any
felony violation of the Foreign Agents Registration Act of 1938, or any felony violation of the Foreign
Corrupt Practices Act;
(E) a felony violation of 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.), or the Resources Conservation and
Recovery Act (42 U.S.C. 6901 et seq.); or
(F) any act or activity constituting an offense involving a Federal health care offense;
(8) the term “State” includes a State of the United States, the District of Columbia, and any
commonwealth, territory, or possession of the United States; and
(9) the term “proceeds” means any property derived from or obtained or retained, directly or indirectly,
through some form of unlawful activity, including the gross receipts of such activity.
(d) Nothing in this section shall supersede any provision of Federal, State, or other law imposing criminal
penalties or affording civil remedies in addition to those provided for in this section.
(e) Violations of this section may be investigated by such components of the Department of Justice as the
Attorney General may direct, and by such components of the Department of the Treasury as the Secretary
of the Treasury may direct, as appropriate, and, with respect to offenses over which the Department of
Homeland Security has jurisdiction, by such components of the Department of Homeland Security as the
Secretary of Homeland Security may direct, and, with respect to offenses over which the United States
Postal Service has jurisdiction, by the Postal Service. Such authority of the Secretary of the Treasury, the
Secretary of Homeland Security, and the Postal Service shall be exercised in accordance with an agreement
which shall be entered into by the Secretary of the Treasury, the Secretary of Homeland Security, the Postal
Service, and the Attorney General. Violations of this section involving offenses described in paragraph
(c)(7)(E) may be investigated by such components of the Department of Justice as the Attorney General
may direct, and the National Enforcement Investigations Center of the Environmental Protection Agency.
(f) There is extraterritorial jurisdiction over the conduct prohibited by this section if–
(1) the conduct is by a United States citizen or, in the case of a non-United States citizen, the conduct
occurs in part in the United States; and
(2) the transaction or series of related transactions involves funds or monetary instruments of a value
exceeding $10,000.
(g) Notice of conviction of financial institutions.–If any financial institution or any officer, director, or
employee of any financial institution has been found guilty of an offense under this section, section 1957 or
1960 of this title, or section 5322 or 5324 of title 31, the Attorney General shall provide written notice of
such fact to the appropriate regulatory agency for the financial institution.
(h) Any person who conspires to commit any offense defined in this section or section 1957 shall be subject
to the same penalties as those prescribed for the offense the commission of which was the object of the
conspiracy.
(i) Venue.–
(1) Except as provided in paragraph (2), a prosecution for an offense under this section or section 1957
may be brought in–
(A) any district in which the financial or monetary transaction is conducted; or
(B) any district where a prosecution for the underlying specified unlawful activity could be brought, if
the defendant participated in the transfer of the proceeds of the specified unlawful activity from that
district to the district where the financial or monetary transaction is conducted.
(2) A prosecution for an attempt or conspiracy offense under this section or section 1957 may be brought
in the district where venue would lie for the completed offense under paragraph (1), or in any other district
where an act in furtherance of the attempt or conspiracy took place.
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(3) For purposes of this section, a transfer of funds from 1 place to another, by wire or any other means,
shall constitute a single, continuing transaction. Any person who conducts (as that term is defined in
subsection (c)(2)) any portion of the transaction may be charged in any district in which the transaction
takes place.
18 U.S.C. 1956 note. [P.L. 111-21, Sec. 2(g)]. Sense of the Congress and report
concerning required approval for merger cases.
(1) Sense of Congress. – It is the sense of the Congress that no prosecution of an offense under section
1956 or 1957 of title 18, United States Code, should be undertaken in combination with the prosecution of
any other offense, without prior approval of the Attorney General, the Deputy Attorney General, the
Assistant Attorney General in charge of the Criminal Division, a Deputy Assistant Attorney General in the
Criminal Division, or the relevant United States Attorney, if the conduct to be charged as “specified
unlawful activity” in connection with the offense under section 1956 or 1957 is so closely connected with
the conduct to be charged as the other offense that there is no clear delineation between the two offenses.
(2) Report. – One year after the date of the enactment of this Act, and at the end of each of the four
succeeding one-year periods, the Attorney General shall report to the House and Senate Committees on the
Judiciary on efforts undertaken by the Department of Justice to ensure the review and approval described in
paragraph (1) takes place in all appropriate cases. The report shall include the following:
(A) The number of prosecutions described in paragraph (1) that were undertaken during the previous
one-year period after prior approval by an official described in paragraph (1), classified by type of
offense and by the approving official.
(B) The number of prosecutions described in paragraph (12) that were undertaken during the previous
one-year period without such prior approval, classified by type of offense, and the reasons why such
prior approval was not obtained.
(C) The number of times during the previous year in which an approval described in paragraph (1)
was denied.
18 U.S.C. 1957. Engaging in monetary transactions in property derived from
specified unlawful activity
(a) Whoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts 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, shall be punished as provided in subsection (b).
(b)(1) Except as provided in paragraph (2), the punishment for an offense under this section is a fine under
title 18, United States Code, or imprisonment for not more than ten years or both.
(2) The court may impose an alternate fine to that imposable under paragraph (1) of not more than twice
the amount of the criminally derived property involved in the transaction.
(c) In a prosecution for an offense under this section, the Government is not required to prove the defendant
knew that the offense from which the criminally derived property was derived was specified unlawful
activity.
(d) The circumstances referred to in subsection (a) are –
(1) that the offense under this section takes place in the United States or in the special maritime and
territorial jurisdiction of the United States; or
(2) 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 section 3077 of this title, but excluding the class
described in paragraph (2)(D) of such section).
(e) Violations of this section may be investigated by such components of the Department of Justice as the
Attorney General may direct, and by such components of the Department of the Treasury as the Secretary
of the Treasury may direct, as appropriate, and, with respect to offenses over which the Department of
Homeland Security has jurisdiction, by such components of the Department of Homeland Security as the
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Secretary of Homeland Security may direct, and, with respect to offenses over which the United States
Postal Service has jurisdiction, by the Postal Service. Such authority of the Secretary of the Treasury, the
Secretary of Homeland Security, and the Postal Service shall be exercised in accordance with an agreement
which shall be entered into by the Secretary of the Treasury, the Secretary of Homeland Security, the Postal
Service, and the Attorney General.
(f) As used in this section–
(1) the term “monetary transaction” means the deposit, withdrawal, transfer, or exchange, in or affecting
interstate or foreign commerce, of funds or a monetary instrument (as defined in section 1956(c)(5) of this
title) by, through, or to a financial institution (as defined in section 1956 of this title), including any
transaction that would be a financial transaction under section 1956(c)(4)(B) of this title, 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;
(2) the term “criminally derived property” means any property constituting, or derived from, proceeds
obtained from a criminal offense; and
(3) the term “specified unlawful activity” and “proceeds” shall have the meaning given that term in section
1956 of this title.
Travel Act: 18 U.S.C. 1952. Interstate and foreign travel or transportation in aid
of racketeering enterprises
(a) Whoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign
commerce, with intent to–
(1) distribute the proceeds of any unlawful activity; or
(2) commit any crime of violence to further any unlawful activity; or
(3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management,
establishment, or carrying on, of any unlawful activity,
and thereafter performs or attempts to perform–
(A) an act described in paragraph (1) or (3) shall be fined under this title, imprisoned not more than
five years, or both; or
(B) an act described in paragraph (2) shall be fined under this title, imprisoned for not more than 20
years, or both, and if death results shall be imprisoned for any term of years or for life.
(b) As used in this section (i) “unlawful activity” means
(1) any business enterprise involving gambling, liquor on which the Federal excise tax has not been paid,
narcotics or controlled substances (as defined in section 102(6) of the Controlled Substances Act), or
prostitution offenses in violation of the laws of the State in which they are committed or of the United
States,
(2) extortion, bribery, or arson in violation of the laws of the State in which committed or of the United
States, or
(3) any act which is indictable under subchapter II of chapter 53 of title 31, United States Code, or under
section 1956 or 1957 of this title and (ii) the term “State” includes a State of the United States, the District
of Columbia, and any commonwealth, territory, or possession of the United States.
(c) Investigations of violations under this section involving liquor shall be conducted under the supervision
of the Attorney General.
31 U.S.C. 5322: Reporting Requirements
(a) A person willfully violating this subchapter or a regulation prescribed or order issued under this
subchapter (except section 5315 or 5324 of this title or a regulation prescribed under section 5315 or 5324),
or willfully violating a regulation prescribed under section 21 of the Federal Deposit Insurance Act or
section 123 of Public Law 91-508, shall be fined not more than $250,000, or imprisoned for not more than
five years, or both.
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(b) A person willfully violating this subchapter or a regulation prescribed or order issued under this
subchapter (except section 5315 or 5324 of this title or a regulation prescribed under section 5315 or 5324),
or willfully violating a regulation prescribed under section 21 of the Federal Deposit Insurance Act or
section 123 of Public Law 91-508, while violating another law of the United States or as part of a pattern of
any illegal activity involving more than $100,000 in a 12-month period, shall be fined not more than
$500,000, imprisoned for not more than 10 years, or both.
(c) For a violation of section 5318(a)(2) of this title or a regulation prescribed under section 5318(a)(2), a
separate violation occurs for each day the violation continues and at each office, branch, or place of
business at which a violation occurs or continues.
(d) A financial institution or agency that violates any provision of subsection (i) or (j) of section 5318, or
any special measures imposed under section 5318A, or any regulation prescribed under subsection (i) or (j)
of section 5318 or section 5318A, shall be fined in an amount equal to not less than 2 times the amount of
the transaction, but not more than $1,000,000.
31 U.S.C. 5324. Structuring transactions to evade reporting requirement
prohibited
(a) Domestic coin and currency transactions involving financial institutions.–No person shall, for the
purpose of evading the reporting requirements of section 5313(a) or 5325 or any regulation prescribed
under any such section, the reporting or recordkeeping requirements imposed by any order issued under
section 5326, or the recordkeeping requirements imposed by any regulation prescribed under section 21 of
the Federal Deposit Insurance Act or section 123 of Public Law 91-508–
(1) cause or attempt to cause a domestic financial institution to fail to file a report required under section
5313(a) or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record
required by an order issued under section 5326, or to maintain a record required pursuant to any regulation
prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508;
(2) cause or attempt to cause a domestic financial institution to file a report required under section 5313(a)
or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record required
by any order issued under section 5326, or to maintain a record required pursuant to any regulation
prescribed under section 5326, or to maintain a record required pursuant to any regulation prescribed under
section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91-508, that contains a
material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one
or more domestic financial institutions.
(b) Domestic coin and currency transactions involving nonfinancial trades or businesses.–No person shall,
for the purpose of evading the report requirements of section 5331 or any regulation prescribed under such
section—
(1) cause or attempt to cause a nonfinancial trade or business to fail to file a report required under section
5331 or any regulation prescribed under such section;
(2) cause or attempt to cause a nonfinancial trade or business to file a report required under section 5331 or
any regulation prescribed under such section that contains a material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with 1 or
more nonfinancial trades or businesses.
(c) International monetary instrument transactions.–No person shall, for the purpose of evading the
reporting requirements of section 5316 –
(1) fail to file a report required by section 5316, or cause or attempt to cause a person to fail to file such a
report;
(2) file or cause or attempt to cause a person to file a report required under section 5316 that contains a
material omission or misstatement of fact; or
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(3) structure or assist in structuring, or attempt to structure or assist in structuring, any importation or
exportation of monetary instruments.
(d) Criminal penalty.–
(1) In general.– Whoever violates this section shall be fined in accordance with title 18, United States
Code, imprisoned for not more than five years, or both.
(2) Enhanced penalty for aggravated cases.– Whoever violates this section while violating another law of
the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month
period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) (as the case may be) of
section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both.
31 U.S.C. 5332. Bulk cash smuggling
(a) Criminal offense.–
(1) In general.–Whoever, with the intent to evade a currency reporting requirement under section 5316,
knowingly conceals more than $10,000 in currency or other monetary instruments on the person of such
individual or in any conveyance, article of luggage, merchandise, or other container, and transports or
transfers or attempts to transport or transfer such currency or monetary instruments from a place within the
United States to a place outside of the United States, or from a place outside the United States to a place
within the United States, shall be guilty of a currency smuggling offense and subject to punishment
pursuant to subsection (b).
(2) Concealment on person.–For purposes of this section, the concealment of currency on the person of any
individual includes concealment in any article of clothing worn by the individual or in any luggage,
backpack, or other container worn or carried by such individual.
(b) Penalty.–
(1) Term of imprisonment.–A person convicted of a currency smuggling offense under subsection (a), or a
conspiracy to commit such offense, shall be imprisoned for not more than five years.
(2) Forfeiture.–In addition, the court, in imposing sentence under paragraph (1), shall order that the
defendant forfeit to the United States, any property, real or personal, involved in the offense, and any
property traceable to such property.
(3) Procedure.–The seizure, restraint, and forfeiture of property under this section shall be governed by
section 413 of the Controlled Substances Act.
(4) Personal money judgment.–If the property subject to forfeiture under paragraph (2) is unavailable, and
the defendant has insufficient substitute property that may be forfeited pursuant to section 413(p) of the
Controlled Substances Act, the court shall enter a personal money judgment against the defendant for the
amount that would be subject to forfeiture.
(c) Civil forfeiture.–
(1) In general.–Any property involved in a violation of subsection (a), or a conspiracy to commit such
violation, and any property traceable to such violation or conspiracy, may be seized and forfeited to the
United States.
(2) Procedure.–The seizure and forfeiture shall be governed by the procedures governing civil forfeitures
in money laundering cases pursuant to section 981(a)(1)(A) of title 18, United States Code.
(3) Treatment of certain property as involved in the offense.–For purposes of this subsection and
subsection (b), any currency or other monetary instrument that is concealed or intended to be concealed in
violation of subsection (a) or a conspiracy to commit such violation, any article, container, or conveyance
used, or intended to be used, to conceal or transport the currency or other monetary instrument, and any
other property used, or intended to be used, to facilitate the offense, shall be considered property involved
in the offense.
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18 U.S.C. 1960. Prohibition of unlicensed money transmitting businesses
(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an
unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more
than 5 years, or both.
(b) As used in this section –
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects
interstate or foreign commerce in any manner or degree and –
(A) is operated without an appropriate money transmitting license in a State where such operation is
punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the
operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330
of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to
have been derived from a criminal offense or are intended to be used to promote or support unlawful
activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means
including but not limited to transfers within this country or to locations abroad by wire, check, draft,
facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana
Islands, and any commonwealth, territory, or possession of the United States.
RICO: 18 U.S.C. 1962. Prohibited activities
(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a
pattern of racketeering activity or through collection of an unlawful debt in which such person has
participated as a principal within the meaning of section 2, title 18, United States Code, to use or invest,
directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest
in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect,
interstate or foreign commerce. A purchase of securities on the open market for purposes of investment,
and without the intention of controlling or participating in the control of the issuer, or of assisting another
to do so, shall not be unlawful under this subsection if the securities of the issuer held by the purchaser, the
members of his immediate family, and his or their accomplices in any pattern or racketeering activity or the
collection of an unlawful debt after such purchase do not amount in the aggregate to one percent of the
outstanding securities of any one class, and do not confer, either in law or in fact, the power to elect one or
more directors of the issuer.
(b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an
unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise
which is engaged in, or the activities of which affect, interstate or foreign commerce.
(c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful
debt.
(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or
(c) of this section.
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18 U.S.C. 1961. Definitions
As used in this chapter–
(1) “racketeering activity” means
(A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion,
dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section
102 of the Controlled Substances Act), which is chargeable under State law and punishable by
imprisonment for more than one year;
(B) any act which is indictable under any of the following provisions of title 18, United States Code:
Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473
(relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable
under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds),
sections 891-894 (relating to extortionate credit transactions), section 1028 (relating to fraud and
related activity in connection with identification documents), section 1029 (relating to fraud and
related activity in connection with access devices), section 1084 (relating to the transmission of
gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud),
section 1344 (relating to financial institution fraud), section 1425 (relating to the procurement of
citizenship or nationalization unlawfully), section 1426 (relating to the reproduction of naturalization
or citizenship papers), section 1427 (relating to the sale of naturalization or citizenship papers),
sections 1461-1465 (relating to obscene matter), section 1503 (relating to obstruction of justice),
section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the
obstruction of State or local law enforcement), section 1512 (relating to tampering with a witness,
victim, or an informant), section 1513 (relating to retaliating against a witness, victim, or an
informant), section 1542 (relating to false statement in application and use of passport), section 1543
(relating to forgery or false use of passport), section 1544 (relating to misuse of passport), section 1546
(relating to fraud and misuse of visas, permits, and other documents), sections 1581-1592 (relating to
peonage, slavery, and trafficking in persons), section 1951 (relating to interference with commerce,
robbery, or extortion), section 1952 (relating to racketeering), section 1953 (relating to interstate
transportation of wagering paraphernalia), section 1954 (relating to unlawful welfare fund payments),
section 1955 (relating to the prohibition of illegal gambling businesses), section 1956 (relating to the
laundering of monetary instruments), section 1957 (relating to engaging in monetary transactions in
property derived from specified unlawful activity), section 1958 (relating to use of interstate commerce
facilities in the commission of murder-for-hire), section 1960 (relating to illegal money transmitters),
sections 2251, 2251A, 2252, and 2260 (relating to sexual exploitation of children), sections 2312 and
2313 (relating to interstate transportation of stolen motor vehicles), sections 2314 and 2315 (relating to
interstate transportation of stolen property), section 2318 (relating to trafficking in counterfeit labels
for phonorecords, computer programs or computer program documentation or packaging and copies of
motion pictures or other audiovisual works), section 2319 (relating to criminal infringement of a
copyright), section 2319A (relating to unauthorized fixation of and trafficking in sound recordings and
music videos of live musical performances), section 2320 (relating to trafficking in goods or services
bearing counterfeit marks), section 2321 (relating to trafficking in certain motor vehicles or motor
vehicle parts), sections 2341-2346 (relating to trafficking in contraband cigarettes), sections 2421-24
(relating to white slave traffic),
(C) any act which is indictable under title 29, United States Code, section 186 (dealing with
restrictions on payments and loans to labor organizations) or section 501(c) (relating to embezzlement
from union funds),
(D) any offense involving fraud connected with a case under title 11 (except a case under section 157
of this title), fraud in the sale of securities, or the felonious manufacture, importation, receiving,
concealment, buying, selling, or otherwise dealing in a controlled substance or listed chemical (as
defined in section 102 of the Controlled Substances Act), punishable under any law of the United
States,
(E) any act which is indictable under the Currency and Foreign Transactions Reporting Act,
(F) any act which is indictable under the Immigration and Nationality Act, section 274 (relating to
bringing in and harboring certain aliens), section 277 (relating to aiding or assisting certain aliens to
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enter the United States), or section 278 (relating to importation of alien for immoral purpose) if the act
indictable under such section of such Act was committed for the purpose of financial gain, or
(G) any act that is indictable under any provision listed in section 2332b(g)(5)(B) [federal crimes of
terrorism];
(2) “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto
Rico, any territory or possession of the United States, any political subdivision, or any department, agency,
or instrumentality thereof;
(3) “person” includes any individual or entity capable of holding a legal or beneficial interest in property;
(4) “enterprise” includes any individual, partnership, corporation, association, or other legal entity, and any
union or group of individuals associated in fact although not a legal entity;
(5) “pattern of racketeering activity” requires at least two acts of racketeering activity, one of which
occurred after the effective date of this chapter and the last of which occurred within ten years (excluding
any period of imprisonment) after the commission of a prior act of racketeering activity;
(6) “unlawful debt” means a debt
(A) incurred or contracted in gambling activity which was in violation of the law of the United States,
a State or political subdivision thereof, or which is unenforceable under State or Federal law in whole
or in part as to principal or interest because of the laws relating to usury, and
(B) which was incurred in connection with the business of gambling in violation of the law of the
United States, a State or political subdivision thereof, or the business of lending money or a thing of
value at a rate usurious under State or Federal law, where the usurious rate is at least twice the
enforceable rate;
(7) “racketeering investigator” means any attorney or investigator so designated by the Attorney General
and charged with the duty of enforcing or carrying into effect this chapter;
(8) “racketeering investigation” means any inquiry conducted by any racketeering investigator for the
purpose of ascertaining whether any person has been involved in any violation of this chapter or of any
final order, judgment, or decree of any court of the United States, duly entered in any case or proceeding
arising under this chapter;
(9) “documentary material” includes any book, paper, document, record, recording, or other material; and
(10) “Attorney General” includes the Attorney General of the United States, the Deputy Attorney General
of the United States, the Associate Attorney General of the United States, any Assistant Attorney General
of the United States, or any employee of the Department of Justice or any employee of any department or
agency of the United States so designated by the Attorney General to carry out the powers conferred on the
Attorney General by this chapter. Any department or agency so designated may use in investigations
authorized by this chapter either the investigative provisions of this chapter or the investigative power of
such department or agency otherwise conferred by law.
18 U.S.C. 1963. Criminal penalties
(a) Whoever violates any provision of section 1962 of this chapter shall be fined under this title or
imprisoned not more than 20 years (or for life if the violation is based on a racketeering activity for which
the maximum penalty includes life imprisonment), or both, and shall forfeit to the United States,
irrespective of any provision of State law –
(1) any interest the person has acquired or maintained in violation of section 1962;
(2) any –
(A) interest in;
(B) security of;
(C) claim against; or
(D) property or contractual right of any kind affording a source of influence over;
any enterprise which the person has established, operated, controlled, conducted, or participated in the
conduct of, in violation of section 1962; and
(3) any property constituting, or derived from, any proceeds which the person obtained, directly or
indirectly, from racketeering activity or unlawful debt collection in violation of section 1962.
The court, in imposing sentence on such person shall order, in addition to any other sentence imposed
pursuant to this section, that the person forfeit to the United States all property described in this subsection.
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In lieu of a fine otherwise authorized by this section, a defendant who derives profits or other proceeds
from an offense may be fined not more than twice the gross profits or other proceeds.
(b) Property subject to criminal forfeiture under this section includes—
(1) real property, including things growing on, affixed to, and found in land; and
(2) tangible and intangible personal property, including rights, privileges, interests, claims, and securities.
(c) All right, title, and interest in property described in subsection (a) vests in the United States upon the
commission of the act giving rise to forfeiture under this section. Any such property that is subsequently
transferred to a person other than the defendant may be the subject of a special verdict of forfeiture and
thereafter shall be ordered forfeited to the United States, unless the transferee establishes in a hearing
pursuant to subsection (l) that he is a bona fide purchaser for value of such property who at the time of
purchase was reasonably without cause to believe that the property was subject to forfeiture under this
section.
(d)(1) Upon application of the United States, the court may enter a restraining order or injunction, require
the execution of a satisfactory performance bond, or take any other action to preserve the availability of
property described in subsection (a) for forfeiture under this section—
(A) upon the filing of an indictment or information charging a violation of section 1962 of this chapter
and alleging that the property with respect to which the order is sought would, in the event of
conviction, be subject to forfeiture under this section; or
(B) prior to the filing of such an indictment or information, if, after notice to persons appearing to
have an interest in the property and opportunity for a hearing, the court determines that—
(i) there is a substantial probability that the United States will prevail on the issue of forfeiture
and that failure to enter the order will result in the property being destroyed, removed from the
jurisdiction of the court, or otherwise made unavailable for forfeiture; and
(ii) the need to preserve the availability of the property through the entry of the requested order
outweighs the hardship on any party against whom the order is to be entered:
Provided, however, That an order entered pursuant to subparagraph (B) shall be effective for not more than
ninety days, unless extended by the court for good cause shown or unless an indictment or information
described in subparagraph (A) has been filed.
(2) A temporary restraining order under this subsection may be entered upon application of the United
States without notice or opportunity for a hearing when an information or indictment has not yet been filed
with respect to the property, if the United States demonstrates that there is probable cause to believe that
the property with respect to which the order is sought would, in the event of conviction, be subject to
forfeiture under this section and that provision of notice will jeopardize the availability of the property for
forfeiture. Such a temporary order shall expire not more than ten days after the date on which it is entered,
unless extended for good cause shown or unless the party against whom it is entered consents to an
extension for a longer period. A hearing requested concerning an order entered under this paragraph shall
be held at the earliest possible time, and prior to the expiration of the temporary order.
(3) The court may receive and consider, at a hearing held pursuant to this subsection, evidence and
information that would be inadmissible under the Federal Rules of Evidence.
(e) Upon conviction of a person under this section, the court shall enter a judgment of forfeiture of the
property to the United States and shall also authorize the Attorney General to seize all property ordered
forfeited upon such terms and conditions as the court shall deem proper. Following the entry of an order
declaring the property forfeited, the court may, upon application of the United States, enter such
appropriate restraining orders or injunctions, require the execution of satisfactory performance bonds,
appoint receivers, conservators, appraisers, accountants, or trustees, or take any other action to protect the
interest of the United States in the property ordered forfeited. Any income accruing to, or derived from, an
enterprise or an interest in an enterprise which has been ordered forfeited under this section may be used to
offset ordinary and necessary expenses to the enterprise which are required by law, or which are necessary
to protect the interests of the United States or third parties.
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(f) Following the seizure of property ordered forfeited under this section, the Attorney General shall direct
the disposition of the property by sale or any other commercially feasible means, making due provision for
the rights of any innocent persons. Any property right or interest not exercisable by, or transferable for
value to, the United States shall expire and shall not revert to the defendant, nor shall the defendant or any
person acting in concert with or on behalf of the defendant be eligible to purchase forfeited property at any
sale held by the United States. Upon application of a person, other than the defendant or a person acting in
concert with or on behalf of the defendant, the court may restrain or stay the sale or disposition of the
property pending the conclusion of any appeal of the criminal case giving rise to the forfeiture, if the
applicant demonstrates that proceeding with the sale or disposition of the property will result in irreparable
injury, harm or loss to him. Notwithstanding 31 U.S.C. 3302(b), the proceeds of any sale or other
disposition of property forfeited under this section and any moneys forfeited shall be used to pay all proper
expenses for the forfeiture and the sale, including expenses of seizure, maintenance and custody of the
property pending its disposition, advertising and court costs. The Attorney General shall deposit in the
Treasury any amounts of such proceeds or moneys remaining after the payment of such expenses.
(g) With respect to property ordered forfeited under this section, the Attorney General is authorized to—
(1) grant petitions for mitigation or remission of forfeiture, restore forfeited property to victims of a
violation of this chapter, or take any other action to protect the rights of innocent persons which is in the
interest of justice and which is not inconsistent with the provisions of this chapter;
(2) compromise claims arising under this section;
(3) award compensation to persons providing information resulting in a forfeiture under this section;
(4) direct the disposition by the United States of all property ordered forfeited under this section by public
sale or any other commercially feasible means, making due provision for the rights of innocent persons;
and
(5) take appropriate measures necessary to safeguard and maintain property ordered forfeited under this
section pending its disposition.
(h) The Attorney General may promulgate regulations with respect to—
(1) making reasonable efforts to provide notice to persons who may have an interest in property ordered
forfeited under this section;
(2) granting petitions for remission or mitigation of forfeiture;
(3) the restitution of property to victims of an offense petitioning for remission or mitigation of forfeiture
under this chapter;
(4) the disposition by the United States of forfeited property by public sale or other commercially feasible
means;
(5) the maintenance and safekeeping of any property forfeited under this section pending its disposition;
and
(6) the compromise of claims arising under this chapter.
Pending the promulgation of such regulations, all provisions of law relating to the disposition of property,
or the proceeds from the sale thereof, or the remission or mitigation of forfeitures for violation of the
customs laws, and the compromise of claims and the award of compensation to informers in respect of such
forfeitures shall apply to forfeitures incurred, or alleged to have been incurred, under the provisions of this
section, insofar as applicable and not inconsistent with the provisions hereof. Such duties as are imposed
upon the Customs Service or any person with respect to the disposition of property under the customs law
shall be performed under this chapter by the Attorney General.
(i) Except as provided in subsection (l), no party claiming an interest in property subject to forfeiture under
this section may–
(1) intervene in a trial or appeal of a criminal case involving the forfeiture of such property under this
section; or
(2) commence an action at law or equity against the United States concerning the validity of his alleged
interest in the property subsequent to the filing of an indictment or information alleging that the property is
subject to forfeiture under this section.
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(j) The district courts of the United States shall have jurisdiction to enter orders as provided in this section
without regard to the location of any property which may be subject to forfeiture under this section or
which has been ordered forfeited under this section.
(k) In order to facilitate the identification or location of property declared forfeited and to facilitate the
disposition of petitions for remission or mitigation of forfeiture, after the entry of an order declaring
property forfeited to the United States the court may, upon application of the United States, order that the
testimony of any witness relating to the property forfeited be taken by deposition and that any designated
book, paper, document, record, recording, or other material not privileged be produced at the same time and
place, in the same manner as provided for the taking of depositions under Rule 15 of the Federal Rules of
Criminal Procedure.
(l)(1) Following the entry of an order of forfeiture under this section, the United States shall publish notice
of the order and of its intent to dispose of the property in such manner as the Attorney General may direct.
The Government may also, to the extent practicable, provide direct written notice to any person known to
have alleged an interest in the property that is the subject of the order of forfeiture as a substitute for
published notice as to those persons so notified.
(2) Any person, other than the defendant, asserting a legal interest in property which has been ordered
forfeited to the United States pursuant to this section may, within thirty days of the final publication of
notice or his receipt of notice under paragraph (1), whichever is earlier, petition the court for a hearing to
adjudicate the validity of his alleged interest in the property. The hearing shall be held before the court
alone, without a jury.
(3) The petition shall be signed by the petitioner under penalty of perjury and shall set forth the nature and
extent of the petitioner's right, title, or interest in the property, the time and circumstances of the petitioner's
acquisition of the right, title, or interest in the property, any additional facts supporting the petitioner's
claim, and the relief sought.
(4) The hearing on the petition shall, to the extent practicable and consistent with the interests of justice, be
held within thirty days of the filing of the petition. The court may consolidate the hearing on the petition
with a hearing on any other petition filed by a person other than the defendant under this subsection.
(5) At the hearing, the petitioner may testify and present evidence and witnesses on his own behalf, and
cross-examine witnesses who appear at the hearing. The United States may present evidence and witnesses
in rebuttal and in defense of its claim to the property and cross-examine witnesses who appear at the
hearing. In addition to testimony and evidence presented at the hearing, the court shall consider the relevant
portions of the record of the criminal case which resulted in the order of forfeiture.
(6) If, after the hearing, the court determines that the petitioner has established by a preponderance of the
evidence that –
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest
renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested
in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant
at the time of the commission of the acts which gave rise to the forfeiture of the property under this
section; or
(B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and
was at the time of purchase reasonably without cause to believe that the property was subject to
forfeiture under this section;
the court shall amend the order of forfeiture in accordance with its determination.
(7) Following the court's disposition of all petitions filed under this subsection, or if no such petitions are
filed following the expiration of the period provided in paragraph (2) for the filing of such petitions, the
United States shall have clear title to property that is the subject of the order of forfeiture and may warrant
good title to any subsequent purchaser or transferee.
(m) If any of the property described in subsection (a), as a result of any act or omission of the defendant—
(1) cannot be located upon the exercise of due diligence;
(2) has been transferred or sold to, or deposited with, a third party;
(3) has been placed beyond the jurisdiction of the court;
(4) has been substantially diminished in value; or
(5) has been commingled with other property which cannot be divided without difficulty;
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the court shall order the forfeiture of any other property of the defendant up to the value of any property
described in paragraphs (1) through (5).
18 U.S.C. 1964. Civil remedies
(a) The district courts of the United States shall have jurisdiction to prevent and restrain violations of
section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person
to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the
future activities or investments of any person, including, but not limited to, prohibiting any person from
engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate
or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for
the rights of innocent persons.
(b) The Attorney General may institute proceedings under this section. Pending final determination thereof,
the court may at any time enter such restraining orders or prohibitions, or take such other actions, including
the acceptance of satisfactory performance bonds, as it shall deem proper.
(c) Any person injured in his business or property by reason of a violation of section 1962 of this chapter
may sue therefore in any appropriate United States district court and shall recover threefold the damages he
sustains and the cost of the suit, including a reasonable attorney's fee, except that no person may rely upon
any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a
violation of section 1962. The exception contained in the preceding sentence does not apply to an action
against any person that is criminally convicted in connection with the fraud, in which case the statute of
limitations shall start to run on the date on which the conviction becomes final.
(d) A final judgment or decree rendered in favor of the United States in any criminal proceeding brought by
the United States under this chapter shall stop the defendant from denying the essential allegations of the
criminal offense in any subsequent civil proceeding brought by the United States.
Bibliography
CRS Reports
CRS Report 97-139, Crime and Forfeiture, by Charles Doyle.
CRS Report RS22005, Crime and Forfeiture: In Short, by Charles Doyle.
CRS Report 96-950, RICO: A Brief Sketch, by Charles Doyle.
CRS Report RS20376, RICO: An Abridged Sketch, by Charles Doyle.
CRS Report RL33020, Terrorist Financing: U.S. Agency Efforts and Inter-Agency Coordination,
by Martin A. Weiss et al.
CRS Report RS21547, Financial Institution Customer Identification Programs Mandated by the
USA PATRIOT Act, by M. Maureen Murphy.
ALR Fed
Construction and Application of United States Sentencing Guideline §2S1.1 (USSG §2S1/1)
Pertaining to Sentencing for Money Laundering, 130 ALR FED 323
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Criminalization, Validity, Construction, and Application of 18 USC §1956, Which Criminalizes
Money Laundering, 121 ALR FED 525
What Is Considered Property “Involved in” Money Laundering Offense, and Thus Subject to
Civil or Criminal Forfeiture, for Purposes of Money Laundering Control Act (18 USCA
§981((a)(1)(A) and 982(a)(1)), 135 ALR FED 367
When Does Forfeiture of Currency, Bank Account, Cash Equivalent Violate Excessive Fines
Clause of Eight Amendment, 164 ALR FED 591
When Does Forfeiture of Real Property Violate Excessive Fines Clause of Eight Amendment –
Post Austin Cases, 168 ALR FED 375
Venue for Currency Reporting Offense Under Currency and Foreign Transactions Report Act
(CFTRA)(31 USCA §5311 et seq.), 113 ALR FED 639
Books, Articles, and Notes
Airing the Dirty Laundry: The Application of the United States Sentencing Guidelines to White
Collar Money Laundering Offenses, 49 AMERICAN UNIVERSITY LAW REVIEW 289 (1999-2000)
Cassella, The Forfeiture of Property Involved in Money Laundering Offenses, 7 BUFFALO
CRIMINAL LAW REVIEW 583 (2004)
The Obstacles to Regulating the Hawala: A Cultural Norm or a Terrorist Hotbed?, 27 FORDHAM
INTERNATIONAL LAW JOURNAL 2007 (2004)
Tacking on Money Laundering Charges to White Collar Crimes: What Did Congress Intend, and
What Are the Courts Doing, 17 GEORGIA STATE UNIVERSITY LAW REVIEW 531 (2000-2001)
Twenty-Sixth Annual Survey of White Collar Crime: Money Laundering, 48 AMERICAN CRIMINAL
LAW REVIEW 929 (2011)
Twenty-Sixth Annual Survey of White Collar Crime: Racketeer Influenced and Corrupt
Organizations, 48 AMERICAN CRIMINAL LAW REVIEW 1075 (2011)
United States Money Laundering Threat Assessment Working Group, U.S. MONEY LAUNDERING
THREAT ASSESSMENT (December 2005)
Welling, Smurfs, Money Laundering, and the Federal Criminal Law: The Crime of Structuring
Transactions, 41 FLORIDA LAW REVIEW 287 (1989)
Williams & Whitney, FEDERAL MONEY LAUNDERING: CRIMES AND FORFEITURE (1999 & 2004
Supp.)
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Author Contact Information
Charles Doyle
Senior Specialist in American Public Law
[email protected], 7-6968
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65
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