Contrary to the common idiom, crime often pays. It can pay so much, in fact, that people with illegally acquired funds often develop complicated plans to make it appear as if the money originated from a legal source. This is money laundering. According to the International Monetary Fund, the amount of money laundered every year is estimated to be between $600 billion and $1.5 trillion.
Money laundering occurs whenever a person attempts to conceal the source, destination, or identity of illegally obtained or acquired money. Money laundering is criminalized under both state and federal laws.
Spending vs Concealment
Money laundering applies when a person attempts to conceal illegally obtained funds, but it doesn't include merely spending money. If, for example, you make $1,000 selling stolen goods and then go out and buy something, you have not laundered any money. Though you have committed the crime of dealing in stolen goods, to be convicted of money laundering you'd need to try to conceal or disguise where the money originated, or otherwise disguise it.
The Supreme Court has ruled that in order to prove federal money laundering charges, prosecutors must show a person concealed money specifically to conceal the location, ownership, source, nature, or control of the money. It isn't money laundering, for example, to try to conceal money during transportation by putting it in a hidden place. Laundering would involve taking that money and trying to make it appear as if it came from a legitimate source.
Criminal Proceeds or Criminal Receipts
The Supreme Court has also ruled that federal money laundering laws don't apply when someone is simply making money from crime. For example, if you decide to run an illegal lottery in which you collect money from people who play and then pay the winners, this isn't money laundering. Though you're receiving money from illegal activity and using that money to pay winners, money laundering requires that you in some way try to hide the profits from your activity. Paying money to winners isn't considered concealing profits.
Money laundering targets the specific act of concealing, or attempting to conceal, the ill-begotten proceeds of criminal activity. Courts have ruled that there must be some criminal activity involved that produced the profits before it can be money laundering. If, for example, you make $10,000 by selling a car and then try to hide that money from the IRS at tax time, you haven't committed money laundering. You've violated tax laws, but because the sale of the car was legal your actions do not count as money laundering.
State and federal money laundering laws differ significantly in the potential penalties associated with them. Money laundering convictions typically result in fines, prison, probation, or a combination of penalties.
- Prison. Money laundering is almost charged as a felony offense, but in some states misdemeanor charges are possible. A misdemeanor money laundering conviction can result in a jail sentence up to a year long, while felony convictions have penalties of a year or more in prison. In some situations, such as when a person is a repeat offender, where the money laundering was a part of an ongoing criminal enterprise, or where the laundering was related to terrorist activities, prison sentences can last 35 years or more.
- Fines. Money laundering fines can be steep. While misdemeanor convictions typically allow for fines up to no more than a few thousand dollars, a federal conviction for money laundering can result in fines of up to $500,000 or double the amount of money that was laundered, whichever is greater.
- Probation. Probation sentences are possible for money laundering convictions. Courts impose probation sentences that last a specific amount of time, typically at least one year, but sometimes as long as three years or more. During the time you're on probation you have to meet specific probation conditions. Probation terms typically include regularly reporting to a probation officer, allowing the officer to conduct random home checks, taking random drug tests, and not committing other crimes. If you violate probation a court can revoke it and order you to serve a prison term, lengthen the probation period, impose additional fines, or impose other penalties.
Consult a Lawyer in Your Area
Money laundering charges are very serious, and a conviction can ruin your life. If you're charged with money laundering you need to speak to a local criminal defense attorney who can review your case, evaluate your options, and give you advice. Federal and state money laundering laws also have significant differences in what they requires and what penalties apply, so you need an attorney who knows the difference to provide you with legal advice.