Money Laundering

AuthorMichael Bednarczyk
Pages1129-1156
MONEY LAUNDERING
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1129
II. OVERVIEW OF THE STATUTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1131
A. Section 1956. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1131
1. Transaction Money Laundering. . . . . . . . . . . . . . . . . . . . 1132
2. Transportation (or International) Money Laundering . . . . 1133
3. Sting Money Laundering (Sting Operations) . . . . . . . . . . 1134
B. Section 1957. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1135
III. ELEMENTS OF THE OFFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1135
A. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1136
B. Proceeds Derived From a Specified Unlawful Activity . . . . . . 1138
1. Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1138
2. Specified Unlawful Activity . . . . . . . . . . . . . . . . . . . . . . 1140
C. Financial Transaction Affecting Interstate or Foreign
Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1141
1. Financial Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . 1141
2. Interstate Commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1144
3. Multiple Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1145
D. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1146
IV. DEFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1148
A. Constitutional Vagueness . . . . . . . . . . . . . . . . . . . . . . . . . . . 1148
B. Double Jeopardy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1149
C. Constitutionally Impermissible . . . . . . . . . . . . . . . . . . . . . . . 1150
V. PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1150
A. Criminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1150
B. Civil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1153
VI. INTRODUCTION TO THE BSA’S AML REGULATORY FRAMEWORK . . . . . . 1153
A. Introduction to the BSA’s AML Regulatory Framework. . . . . . 1154
B. The AML Provisions in the FY 2021 NDAA . . . . . . . . . . . . . . 1155
I. INTRODUCTION
The Treasury Department defines money launderingas the process of mak-
ing illegally-gained proceeds (i.e., ‘dirty money’) appear legal (i.e., ‘clean’).
1
Money laundering typically follows a three-step process: (i) placementthe laun-
derer places criminally derived money into a legitimate enterprise; (ii) layering
the launderer places the money in various pretextual transactions to obscure the
original source; and (iii) integrationthe launderer transforms the funds into non-
1. U.S. Dep’t of the Treasury, History of Anti-Money Laundering Laws, FIN. CRIMES ENFT NETWORK, https://
www.fincen.gov/history-anti-money-laundering-laws (last visited Oct. 17, 2021).
1129
cash instruments recognized in the legitimate financial world, such as bank notes,
loans, letters of credit, or any number of recognizable financial instruments.
2
Once
the money is in these accepted forms, criminals can effectively use the funds to
finance illicit activities such as illegal narcotics trafficking,
3
illegal weapons sales,
human trafficking, fraud, political corruption, child pornography, and terrorism.
4
Recognizing this problem, Congress has passed several regulatory measures in
the civil code, starting with the Bank Secrecy Act of 1970 (BSA), which forbids
the export of more than $10,000 of undeclared monies, requires financial institu-
tions to have adequate anti-money laundering (AML) programs, and requires fi-
nancial institutions to file suspicious activity reports (SARs), among other
requirements.
5
Subsequent amendments to the BSA allowed the Treasury
Department to enact additional rules, such as requiring all businesses that wire
money internationally to register with the government, file a report for all transac-
tions exceeding $750, report suspicious activity, and furnish the names of both the
transferor and the recipient.
6
The Money Laundering Control Act of 1986 (the Act) added teeth to the BSA
by criminalizing money laundering.
7
Then, the terrorist attacks of September 11,
2001 motivated Congress and the executive branch to expand the Act through the
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (IMLAFA), thereby broadening existing rules and enforcement efforts to
combat money laundering.
8
The Act’s expansive definition of money laundering
criminalizes a broad spectrum of activities.
9
Then, in early 2021, Congress
2. See Teresa E. Adams, Tacking on Money Laundering Charges to White Collar Crimes: What Did Congress
Intend, and What Are the Courts Doing?, 17 GA. ST. U. L. REV. 531, 53538 (2000) (describing the money
laundering process).
3. See generally GUY STESSENS, MONEY LAUNDERING: A NEW INTERNATIONAL LAW ENFORCEMENT MODEL
(2000) (discussing the U.N. Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances,
opened for signature Dec. 19, 1988).
4. See generally PAUL ALLAN SCHOTT, REFERENCE GUIDE TO ANTI-MONEY LAUNDERING AND COMBATING
THE FINANCING OF TERRORISM (2d ed. 2006) (defining money laundering and outlining the scope of the problem).
5. See 31 U.S.C. § 5316. While the BSA’s AML regulatory framework is not the central focus of this Article,
Section VI contains a brief overview of the regulatory framework.
6. See 31 C.F.R. § 1010 (2019); see also infra Section VI (introducing the reader to federal government’s
AML regulatory framework and recent relevant statutory updates included in the FY 2021 NDAA); Transfer and
Reorganization of Bank Secrecy Act Regulations, 75 Fed. Reg. 65,806 (Oct. 26, 2010).
7. 18 U.S.C. §§ 195657.
8. See USA PATRIOT Act, Pub. L. No. 107-56, § 302, 115 Stat. 272, 29697 (2001) (stating that the
IMLAFA amends the Act by expanding the list of predicate offenses that give rise to a money laundering charge,
including corruption and export control violations; it also expands the international reach of prosecutors); Jessica
Silver-Greenberg & Ben Protess, Money-Laundering Inquiry Is Said to Aim at U.S. Banks, N.Y. TIMES (Sept. 14,
2012), www.nytimes.com/2012/09/15/business/money-laundering-inquiry-said-to-target-us-banks.html (noting
that additional resources were allocated to prosecute banks).
9. See generally Jonathan H. Hecht, Airing the Dirty Laundry: The Application of the United States
Sentencing Guidelines to White Collar Money Laundering Offenses, 49 AM. U. L. REV. 289, 293300 (1999)
(discussing background of Money Laundering Control Act). The IMLAFA amended 18 U.S.C. § 1956 by
expanding the list of predicate offenses. USA PATRIOT Act, Pub. L. No. 107-56, § 315, 115 Stat. 272, 30809
(2001); see also Andres Rueda, International Money Laundering Law Enforcement & The USA PATRIOT Act
1130 AMERICAN CRIMINAL LAW REVIEW [Vol. 59:1129

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