Money laundering is a serious criminal offense that can have a great impact on your life if you are accused of it or convicted. Due to its associations with organized crime and international terrorism, money laundering has severe penalties to any defendant. In short, money laundering is defined as the willful act of disguising the origins of illegally obtained money by making it appear to have come from a different source. Charges of money laundering fall under federal jurisdiction, which means that anyone accused of money laundering will be prosecuted by the federal government and could be convicted of a serious federal offense.
The Money Laundering Control Act of 1986 saw to it that there is no minimum threshold of funds for charges to be placed upon an individual, organization, or business entity. This means that if you laundered $1 you will receive the same scrutiny under law as you would if you laundered $1,000,000. The only difference between the prosecutions of each of these hypothetical defendants would be up to the discretion of the federal prosecutor. This is not good news for the defendant, as federal prosecutors can often be unbending and stubborn in their prosecution of even minor federal crimes.
What is Money Laundering
Money laundering is the collective steps that financial gains from criminal acts are transformed into apparently legitimate finances — cash or other assets. Relatively recently, the term has become intermixed with other types of criminal acts surrounding finances. These include securities, digital currencies, credit/debit cards as well as traditional money. Most money laundering legislation deals with terrorism financing.
Stages of Money Laundering
There are three phases money launderers use to disguise illegal income. These three steps are Placement, Layering, and Integration. Money launderers typically establish anonymous companies in select countries and send false import-export invoices overvaluing goods that allow the transfer of money from one country to another while the fake invoices verify the origin of the money.
A method that has grown more popular with the advent of the Internet is to transfer the money to a legitimate bank from a bank owned by the launderers.
Regardless of the method used, money laundering still involves the three steps mentioned.
Concealing the source of illegal income requires creating layers upon layers of transactions. Burying the illegal finances helps to make the money harder to trace and confounds (almost) any audit trail with a web of complex transactions, the source and ownership of the funds is hidden as well.
Money is moved into, and out of, shell businesses through money orders, wire transfers and other forms of electronic funds transfer. With over 500,000 wire transfers a day, an insufficient amount of information is disclosed on any single transaction. With the details of any one transaction difficult to find, EFT is a premier way to move funds. The huge volume — and anonymity — make the odds of finding a transaction insignificant.
New York State Laws
New York classifies money laundering offenses from the first degree to the fourth degree, with the degree depending on the total of the financial transaction(s). The state also sets out separate penalties when the amount goes over $5K, $50K, $100K and $1 million. Additional penalties — and degrees — come into play if the source of the “dirty money” is from drug trafficking or if the crime of money laundering involves support to terrorist organizations.
The Internal Revenue Service (IRS) has jurisdiction for criminal violations of the Internal Revenue Code (IRC). The IRS has defined gross income as “…”. . . all income from whatever source derived.” The courts have upheld this statute to include income earned from illegal activities including drug trafficking, embezzlement, healthcare fraud, and money laundering.
The IRC requires that any individual involved in a trade or business to report currency received in excess of $10,000. This requirement has created an obstacle to the use of illegal profits by narcotics traffickers, terrorism supporters, and others who would typically benefit from money laundering.
The USA Patriot Act gave jurisdiction to both the IRS and the Treasury Department’s Financial Crimes Enforcement Network (FINCEN). Now, both agencies have jurisdiction to investigate criminal acts that violate the anti-money laundering statutes. Anyone who transports currency or other financial instruments over $10,000 to a place outside of the US — or to a place within America from outside the country — is in violation.
The specific crimes and penalties at the federal level for money laundering are spelled out in the Money Laundering Control Act of 1986 which make it illegal to conduct financial transactions with proceeds generated by narcotics trafficking, Medicare fraud, embezzlement, and others.
One of the most effective tools used by the federal government is the asset forfeiture program. In coordination with other federal, state and local agencies, Criminal Investigation makes use of asset forfeiture statues to break criminal enterprises by seizing their assets. So far, most of the seizures and forfeitures are the result of Titles 18 and 31 which deal with money laundering and investments revolving around currency and financial instruments.
MONEY LAUNDERING SCHEMES
In America, wire fraud is any intentional scheme meant to deprive another individual of property or services via wire communication.
The full statute reads what anyone who devises or intends to devise a scheme to defraud through false pretenses or promises, transmits electronically with the intention of carrying out the plan will be imprisoned for up to twenty years. If the target of the fraud is a bank, credit union or other financial business, the individual perpetuating the scheme will be fined not more than $1 million, imprisoned for not more than thirty years — or both.
While mail fraud applies to domestic mailings within the U.S., wire fraud has been legislated by Congress to include foreign wire communication or connections through such means as an email server, telephone switch or radio communication.
Real Estate Money Laundering
One relatively recent development in money laundering involves the purchase and resale of real estate. An individual will set up an LLC that acts on behalf of the holders’ interests. While an LLC can own property, enter into agreements and create accounts, it also avoids the tax obligations that go with being a corporation as well as the legal filing requirements.
Through the protection of the LLC, the individual will purchase property, usually in cash which has been generated by illegal activities, and then resell, or “flip” it, as soon as the closing is completed. Once the resale is completed, the original buyer now has their financial assets compartmentalized from criminal activity, and it can be placed in the traditional financial market.
Some of the criteria that investigators look for:
- The finances come from a region and country that is known for weak anti-money laundering laws
- A Limited Liability Corporation (LLC) or partnership is used to hid the identity of the individual controlling the property
- Names should be checked against the OFAC
- The deal in question undervalues the property
- Cash is brought to the closing
- Buyer pays all cash, and the amount doesn’t meet their personal characteristics or occupation
- The purchaser resells the property almost immediately
- The buyer does not take time to see the property and/or is not interested in the property’s features
Money laundering as an integrate part of terrorism stepped into the spotlight in America after 9/11. To make sure there was a sufficient amount of monitoring by financial institutions, the US Government made sure to include clauses in the USA Patriot Act which dealt with the financing of terrorism and anti-money laundering laws. The law also reached outside of American borders and American banks requiring extra-territorial banks to upgrade their processes.
At first, the focus of the regulatory efforts was non-profit groups and unregistered money service businesses. The Financial action Task Force developed specific recommendations, and these nine recommendations have become the standard for global banking.
Online and Electronic Money Laundering
Funds can be laundered online through fraudulent auctions, online sales, gambling websites and online gaming. A current example of laundering is Liberty Reserve (LR). LR allowed cyber crooks to launder illicit funds in large amounts — some law enforcement agencies put the total at over $6 billion (USD).
Other methods of payment that have the potential to be utilized by cybercriminals seeking to launder money are Bitcoin, Second Life’s online currency, and the Linden dollar. Others also use prepaid payment cards, various kinds of e-money, PayPal accounts and payments made over mobile phones.
The laundering of money over through the Internet and cellular services is easy because of the increasing demand for peer-to-peer financial transactions where finances are transferred directly from individual to individual without going through a financial institution. Even if funds did go through a third-party, such as a bank, the funds won’t always alert the detection software.
Illicit funds can be moved around the globe quickly and cyber-criminal proceeds get laundered or delivered to terrorist organizations in ways that escape the attention of law enforcement.
Drug Money Laundering
A raid on money laundering sites in Los Angeles in 2012 focused attention on alternatives to financial institutions for laundering drug money. Law enforcement officers in Los Angeles arrested nine people and seized over $70 mill in cash during raids on several businesses in the cities’ Fashion District.
As more restrictions are put on financial institutions, more traffickers are avoiding the need to carry large amounts of US cash across the border or having to channel the funds through banks. Using businesses, such as those in the Fashion District, helps avoid drawing the attention of law enforcement. Arkady Bukh has a long track record of representing clients accused of serious federal and state crimes in NYC TOP RATED ON: SUPER LAWYERS, AVVO, NATIONAL TRIAL LAWYERS
Top Rated Criminal Lawyer
Arkady Bukh has a long track record of representing clients accused of serious federal and state crimes in NYC
TOP RATED ON: SUPER LAWYERS, AVVO, NATIONAL TRIAL LAWYERS
Corporate Money Laundering
Corporations can launder money in many of the same ways as individuals. However, most corporate money laundering does take different forms that can be categorized into one of a few types. The most common are:
■ Structuring. Also known as smurfing, structuring is a means of dirty money placement where cash is split into smaller deposits so as to defeat suspicion of money laundering. Corporations also use a sub-component of smurfing that makes use of smaller amounts of cash to invest in bearer instruments such as money orders that are then deposited, again in small quantities.
■ Bulk Cash Smuggling. Physically smuggling currency to another jurisdiction using existing corporate shipping methods and ultimately depositing the funds in an offshore bank.
■ Cash-Intensive Business. A cash intense business may use its accounts to mix and depositing both legal and illegal money and claim all of it as legitimate earnings. Service businesses, which have no varying costs, are best for this method. Detecting variables between revenue and cost can be difficult as well, thus enhancing the money laundering efforts.
■ Trade-based Laundering. Trade-based laundering calls for the corporation to either over or under value invoices and disguise the transfer of currency.
■ Round-Tripping. Finances are deposited in an offshore company where minimal records are maintained. The money is then shipped back as a direct investment which makes it exempt from taxes. One variation is to send financial assets to a law firm as funds on account and then cancel the retainer. When the money is returned, the money launderer can say the funds received from the attorneys are proceeds from litigation.
Tax evasion and money laundering go hand-in-hand. Naturally, if someone — or a business — is laundering money, they won’t report the extra income to the Internal Revenue Service. Tax evasion is a deliberate underreporting of revenue.
Tax evasion is most likely first to be spotted during an audit. The auditor can either penalize with a fine or refer the case to the Internal Revenue Service’s Criminal Investigation Division, or CID.
Depending on the unique situations of each case, prosecutors have been known to forego money laundering charges and pursue tax evasion charges as the latter, sometimes, is easier to prove.
Al Capone, one of America’s most notorious mobsters during prohibition, was finally sentenced to 11 years in federal prison for — tax evasion.
Insurance fraud is another crime that is often found co-existing with money laundering. With the numerous schemes available matched with the large dollar amounts, insurance fraud is an increasingly favorite way to turn illegal dollars into legitimate finances.
One scheme is staged collisions where the money launderer uses a vehicle to stage an accident. Usually, there are several fraudsters in the vehicle that makes an unexpected move which causes an innocent individual to collide with the fraudsters car. Each of the fraudsters files insurance claims for injuries that are usually a whiplash or other soft tissue injuries.
With the help of a hired “doctor,” the insurance pays off the claim, the proceeds are mixed with laundered money and then transferred into the legitimate economy.
If you have been accused of money laundering, you need an attorney that is experienced in negotiating with federal prosecutors on your behalf. Your lawyer must understand the complex nature of money laundering, and needs to be prepared to represent you in a federal trial. The Federal criminal attorneys at Bukh Law Firm are experienced trial lawyers, and they understand the complex financial language that the law uses to define money laundering cases.
New York statutes establish a range of consequences for money laundering. The sentence and fine for money laundering depend on the degree of the crime as charged by the prosecutor. Money laundering charges can be levied in the fourth, third, second or first degree — with the most serious offense being in the first degree. Money laundering in the fourth degree could result in a Class E felony with a prison sentence of up to four years while the first degree could lead to a prison sentence up to 25 years.
Monetary fines usually cannot exceed twice the value of the financial transaction which triggered the charge of money laundering.
New York Money Laundering Criminal Defense Attorney
Money laundering is a federal crime that has grave consequences. Bukh Law Firm provide aggressive criminal defense to individuals charged with money laundering nationwide. Based in New York City, Bukh Law Firm represents clients nationally in federal court.
Immediate legal assistance and guidance is needed if you are arrested and charged with money laundering. The Federal Bureau of Investigation, Drug Enforcement Administration or Immigration and Customs Enforcement may each be involved in investigating your case. Their pursuit of evidence against you — leading to a conviction — will be tireless. You need to meet aggressive prosecution with an aggressive defense
To learn more about how Bukh Law Firm can help, contact our offices today at (212) 729-1632 for a free initial consultation.
How Bukh Law Firm can Help With Your Money Laundering Case
If you have been charged with money laundering, brought in for questioning under suspicion of money laundering, or connected in any way with an individual accused of this crime, you should obtain legal counsel immediately. Our NYC defense attorneys have handled these cases many times before and we know that you must act quickly before events spiral out of control. At Law Office of Bukh Law Firm, PLLC, we not only want to help you get a reduced sentence or acquittal, but we also want to help make sure your rights are not violated by Federal prosecutors. Beyond the courtroom, our money laundering attorneys take great pride in helping their clients through the criminal justice system, by making sure that defendants have all the information and tools they need to make important legal decisions.
Our firm not only wants to see our clients cleared of any money laundering charges, but we hope to see them turn their lives around and move forward in their lives. We understand how frightening it can be to be accused of a crime, and we are here to help our clients through a difficult time.