Federal and state laws regarding money laundering

On Behalf of | May 1, 2020 | Criminal Law |

Financial offenses may seem less harmful than violent crimes, but the government imposes severe penalties on white collar crimes, nonetheless.

Money laundering is both a federal and state offense.

Federal law

According to the U.S. Department of Justice, money laundering is intentionally conducting a financial transaction that involves property that comes from illegal activity. Before a defendant can receive a conviction of money laundering, the prosecution must prove that he or she knew the property came from a state or federal felony offense, or from the violation of a foreign law. The prosecution does not have to prove that the defendant knew of the specific offense that produced the funds.

For the purposes of money laundering, federal law defines a financial transaction as one that affects commerce at the interstate or international level. It must also involve one of the following:

  • Moving funds through wire transaction or other means
  • Using a monetary instrument
  • Transferring the title to real estate, vehicle, aircraft or vessel
  • Using a financial institution that engages in interstate or foreign commerce or conducts activities that affect such commerce

The defendant had to act with the intention of promoting a specific illegal activity or engaging in tax fraud or evasion. Alternately, the defendant must have known that the purpose of the financial transaction was to disguise or conceal the source, ownership, nature or location of the funds, or that the purpose of the transaction was to avoid having to report it under state or federal laws.

State law

New York’s laws include eight degrees of money laundering, including first- through fourth-degree money laundering and first- through fourth-degree money laundering involving terrorism. The amount of money involved in the financial transaction affects the seriousness of the penalties.

As with federal law, intent and knowledge of illegal conduct are essential components of a conviction. The definitions of financial transactions are also similar, although to violate state and not federal law, these take place within the state rather than at the interstate or international level. Financial transactions include the following:

  • Payments or loans
  • Sales, purchases or transfers of title
  • Currency exchanges
  • Wire transfers
  • Deposits
  • Extensions of credit

Financial institutions may include businesses, brokers, lenders, travel agencies, credit unions or banks.