Federal Money Laundering – 18 U.S.C. §§ 1956/1957

Money laundering is the act of disguising the origins of money obtained through criminal activity. It typically involves moving funds through layers of legitimate financial systems so the end result appears legal. Federal law doesn’t focus on how complex the method is; it focuses on whether the funds came from a crime and whether someone tried to conceal that fact.

Sections 1956 and 1957 of Title 18 were introduced to expand federal reach over financial crimes. These laws target both the people profiting from a crime and those helping move or mask the proceeds. Together, they give prosecutors tools to trace the money trail, whether it’s local, interstate, or international.

Both sections address laundering, but with different standards. 18 U.S.C. § 1956 targets transactions done with the intent of concealing, promoting criminal activity, or avoiding reporting. Section 1957 doesn’t require intent; it simply criminalizes spending more than $10,000 of fraud money in one go.

The basis of an 18 U.S.C. § 1956 charge is a financial transaction involving proceeds from a “specified unlawful activity,” which includes a bank deposit to a real estate deal, as long as the money stems from illegal conduct. Oftentimes, many federal money laundering prosecutions stem from conspiracies involving drug distribution or bank fraud.

Prosecutors have to show that the defendant either knew or chose not to care that the money came from illegal activities. “Willful blindness” is often enough for courts. This means that avoiding the truth doesn’t keep you safe.

Intent is central to § 1956. The government must show that the defendant acted to further a crime, hide its profits, or dodge reporting duties. Without this, the charge doesn’t hold.

Section 1956 applies broadly. It includes domestic transactions, international transfers, and even sting operations. The law doesn’t require the money to move physically, only that a transaction occurred with criminal intent.

18 U.S.C. § 1957 outlaws knowingly spending more than $10,000 in criminal proceeds in a single transaction. Unlike § 1956, it doesn’t require an intent to promote or conceal. It’s a strict liability rule; if the amount and source qualify, that’s enough.

This has nothing to do with intent. The amount and whether the person knew the money was illegal are the basis for the law. That makes it easier for prosecutors to use ¥ 1957, especially when large amounts of money are involved in a crime.

Frequent scenarios include buying cars, investing in businesses, or making large cash deposits with money tied to fraud, narcotics, or theft. Even if there was no cover-up, the act of spending can still be charged.

Investigations often involve more than one agency. The FBI, the DEA, the IRS Criminal Investigation Division, and Homeland Security Investigations (HSI) all have a part to play. When there are problems across borders, police from different countries can work together through Interpol.

Banks and financial institutions file Suspicious Activity Reports (SARs) when transactions raise red flags. These reports often trigger investigations. Authorities then issue search warrants or subpoenas for records, looking at deposits, transfers, and account behavior.

Money laundering charges frequently rest on insider accounts. Informants, cooperating witnesses, and undercover agents help build the story behind the transactions. Their testimony can link the paper trail to specific criminal acts.

A conviction under § 1956 can bring up to 20 years in prison. Under 18 U.S.C. § 1956, the cap is 10 years. Both carry steep fines, often twice the amount involved in the laundering.

The federal government can seize assets that are believed to be linked to money laundering. This includes money, property, cars, and other business-related assets. This forfeiture can happen before or after a trial, and even if the charges are dropped.

Beyond prison, a conviction affects nearly every part of life. It may result in deportation for non-citizens, loss of professional licenses, loss of state programs funded under the Social Security Act or Federal Food Stamp Act, valuable civic rights such as the right to vote, the right to possess a firearm, and the right to serve on a jury, and permanent difficulty in finding employment in finance or government.

Demonstrating a lack of knowledge or intent regarding the unlawful origin of funds can be a strong defense. If you reasonably believed the money was legitimate, or if you were misled about its source, the prosecution’s case is significantly weakened.

Prosecutors must connect the funds to a particular crime, like drug sales or wire fraud, to move forward. The laundering charge might be dropped if they are unable to.

If the funds were earned through a legitimate business with proper records, that fact may undermine the entire case. Showing transparency in operations and taxes helps.

Any overreach by law enforcement, such as an illegal search or a flawed warrant, can be challenged. If evidence was gathered improperly, it might be thrown out.

Engaging legal counsel early is critical. Even if you haven’t been charged, speaking with investigators or turning over documents without advice can be damaging. A good attorney will take over communication and set clear boundaries.

Money laundering cases often hinge on accounting. Your legal team will work with financial experts to scrutinize transactions and challenge claims about their origins.

If authorities overstep, whether by wiretapping or seizing files unlawfully, your lawyer may file a motion to suppress that evidence. These motions can shift the entire balance of a case.

Getting the law involved early also gives space for negotiation. A prosecutor may agree to lower charges or even dismissal if there isn’t enough evidence or if the person’s intent isn’t clear.

Money laundering charges can be brought as standalone offenses or tied to an underlying “predicate” crime. DCD LAW defends clients in both situations, carefully challenging the government’s ability to prove the link between alleged funds and unlawful activity.

Our team has extensive experience handling high-stakes financial cases in federal court. From tracing international transfers to dissecting digital payment records, we know how to identify weaknesses in the government’s evidence.

Every money laundering case hinges on transaction records. We build tailored defense strategies by scrutinizing financial documents, highlighting lawful explanations, and challenging assumptions about intent or knowledge.