LAW638 White Collar Crime

WEEK 11
MONEY LAUNDERING
Federal White Collar Crime pp 753-842
Notes
Money Laundering – Various Concepts:
o Process by which one conceals the existence, illegal source, or illegal
application of income, and disguises that income to make it appear
legitimate. Conceal the source, location or ownership of criminally tainted
money
o Using tainted and sometimes untainted funds to facilitate or promote
criminal activity
o Use of proceeds of criminal activity when one knows of the criminal
origins of those funds. This type of laundering is essentially a tainted
money-spending prohibition, not an effort to prevent the concealment of
past crimes or the promotion of future ones
Relevant Provisions §1956
(a)(1) Whoever, knowing that the property involved in a financial transaction
represents the proceeds of some form of unlawful activity, conducts or attempts to
conduct such a financial transaction which in fact involves the proceeds of specified
unlawful activity--

(A)(i) with the intent to promote the carrying on of specified unlawful activity; or

(ii) with intent to engage in conduct constituting a violation of section 7201 or 7206
of the Internal Revenue Code of 1986; or

(B) knowing that the transaction is designed in whole or in part--

(i) to conceal or disguise the nature, the location, the source, the ownership, or
the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the
property involved in the transaction, whichever is greater, or imprisonment for not
more than twenty years, or both. For purposes of this paragraph, a financial
transaction shall be considered to be one involving the proceeds of specified
unlawful activity if it is part of a set of parallel or dependent transactions, any one of
which involves the proceeds of specified unlawful activity, and all of which are part
of a single plan or arrangement.

(2) Whoever transports, transmits, or transfers, or attempts to transport, transmit, or

transfer a monetary instrument or funds from a place in the United States to or
through a place outside the United States or to a place in the United States from or
through a place outside the United States--

(A) with the intent to promote the carrying on of specified unlawful activity; or

(B) knowing that the monetary instrument or funds involved in the transportation,

107
LAW638 White Collar Crime

transmission, or transfer represent the proceeds of some form of unlawful activity

and knowing that such transportation, transmission, or transfer is designed in
whole or in part--

(i) to conceal or disguise the nature, the location, the source, the ownership, or
the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the
monetary instrument or funds involved in the transportation, transmission, or
transfer whichever is greater, or imprisonment for not more than twenty years, or
both. For the purpose of the offense described in subparagraph (B), the defendant‟s
knowledge may be established by proof that a law enforcement officer represented
the matter specified in subparagraph (B) as true, and the defendant‟s subsequent
statements or actions indicate that the defendant believed such representations to be
true.

(3) Whoever, with the intent--

(A) to promote the carrying on of specified unlawful activity;

(B) to conceal or disguise the nature, location, source, ownership, or control of

property believed to be the proceeds of specified unlawful activity; or

(C) to avoid a transaction reporting requirement under State or Federal law,

conducts or attempts to conduct a financial transaction involving property

represented to be the proceeds of specified unlawful activity, or property used to
conduct or facilitate specified unlawful activity, shall be fined under this title or
imprisoned for not more than 20 years, or both. For purposes of this paragraph and
paragraph (2), the term “represented” means any representation made by a law
enforcement officer or by another person at the direction of, or with the approval of,
a Federal official authorized to investigate or prosecute violations of this section.
A. “TRANSACTION” OFFENCES UNDER 1956(a)(I) AND 1957
(I) “Concealment” Offence Under 1956(a)(1)(B)(i)
United States v Campbell
977 F. 2d 854 (4th Cir 1992)
Facts Lawing (drug dealer) decided to buy a house on Lake Norman. He
obtained Campbell (real estate agent)‟s business card and arranged
an appointment to look at houses. He represented to her as the
owner of a legitimate business
Lawing eventually settled upon a house listed for $191,000 and
owned by Edward & Nancy Guy Fortier. Lawing was unable to
secure a loan and decided to ask the Fortiers to accept $60,000
under the table in cash and to lower the contract price to $122,500.
Lawing contacted Campbell and informed her of the proposal.
Campbell relayed the proposal to Fox, who forwarded the offer to
Fortiers, Fortiers agreed.
Issue Whether there was sufficient evidence for the jury to find that

108
LAW638 White Collar Crime

Campbell possessed the knowledge that (1) Lawing‟s funds were

the proceeds of illegal activity, and (2) the transaction was designed
to disguise the nature of those proceeds. Statute requires actual
subjective knowledge
Holding Govt need not prove that D had the purpose of concealing the
proceeds of illegal activity. Instead, as the plain language of the
statute suggests, the Govt must only show that D possessed the
knowledge that the transaction was designed to conceal illegal
proceeds
Under the terms of the statute, the relevant question is not
Campbell‟s purpose, but rather her knowledge of Lawing‟s
purpose
Campbell had stated prior to the sale to Sara Fox (listing broker)
that the funds “may have been drug money”. Campbell had
“deliberately closed her eyes to what would otherwise have been
obvious to her”
NOTES
To prove a transaction money laundering offence under 1956(a)(I), Govt must
show beyond a reasonable doubt that D:
o Conducted or attempted to conduct a financial transaction
o Knowing that the property involved in the transaction represented the
proceeds of unlawful activity
o Transaction in fact “involved” the proceeds of “specified unlawful
activity”
o D acted with the requisite knowledge or purpose
In a “concealment” prosecution under either the “transaction” or the
“transportation” prongs, the govt must prove an intent to conceal – that is, that
the “animating purpose” of the transaction or transportation was to conceal the
nature, source, or location of illicit funds
Actual nature of the proceeds; Issues that arise would include:
o Degree to which the govt may rely on circumstantial evidence to
demonstrate this “fact”
o Whether tracing is required when the transaction “involves” dollars from
an account where proceeds of specified unlawful activity have been
commingled with legitimate funds

Campbell was also charged under §1957 – which carries lesser penalties, and is
much less frequently invoked, than §1956(a)(I). To secure the conviction, the govt
must prove beyond a reasonable doubt that D:
o Knowingly engaged or attempted to engage;
o In a monetary transaction; - unlike 1956, this definition requires that the
transaction involve a “financial institution”
o In criminally derived property with a value of more than $10,000;
o Knowing that the property was derived from unlawful activity; and
o The property was, in fact, derived from “specified unlawful activity”
Scope under §1957: The section does not require the government to show that D
actually laundered the funds or intended to promote or conceal unlawful activity.
It does not require that D even know that others are engaging in the transaction
to promote or conceal unlawful activity
B. “TRANSPORTATION” OFFENCES UNDER 1956(a)(2)

109
LAW638 White Collar Crime

(I) “Promotion” Offence under 1956(a)(2)(A)

United States v Piervinanzi
23 F.3d 670 (2d Cir. 1994)
Facts Defendants were convicted in the United States District Court of
conspiracy, wire fraud, attempted bank fraud, money laundering, and
attempted money laundering. Defendants appealed. The Court of
Appeals held that: (1) defendant was not guilty of money laundering
under statute governing engaging in monetary transactions in property
derived from specified unlawful activity; (2) defendants' unauthorized
attempted overseas transmissions of funds in bank wire transfers did
not merge with underlying bank fraud so as to preclude independent
liability of defendants under statute governing foreign money
laundering; and (3) district court's refusal to apply diminished capacity
sentencing guideline to defendant was proper.
Ruling Affirmed in part, vacated in part, and remanded for resentencing.
Holding §1957
Piervinanzi argues that the language of the statute only
encompasses transactions in which D first obtains “criminally
derived property”, and then engages in a monetary transaction
with that property. Because the funds transferred from Morgan
Guaranty were not yet property derived from the wire fraud and
bank fraud scheme, Piervinanzi contends, his actions did not come
within the purview of 1957. The govt does not dispute this reading
of the statute, and joins Piervinanzi‟s request to vacate his
conviction on this count.
The use of the language „obtained‟ and „property‟ demonstrates a
congressional intent that the proceeds of a crime be in D‟s
possession before he can attempt to transfer those proceeds in
violation of 1957 – Congress intended the provision to separately punish
D for monetary transactions that follow in time the underlying specified
unlawful activity that generated the criminally derived property in the
first place

§1956(a)(2)
The statutory language at issue requires that there be a transmission
of funds “with the intent to promote the carrying on of specified
unlawful activity”. As previously noted, “specified unlawful
activity” includes bank fraud
Piervinanzi contends that in this case, the overseas transmission of
funds “merges” with the underlying bank fraud, precluding
independent liability under 1956(a)(2). In our view, however, the
conduct at issue in this case falls within the prohibition of the
statute
If the transportation, transmission or transfer was conducted with
the intent to promote the carrying on of specific unlawful activity,
the prosecutor need not show that the funds or monetary
instruments were actually derived from any criminal activity.
The act of attempting to fraudulently transfer funds out of the
banks was analytically distinct from the attempted transmission of
those funds overseas, and was itself independently illegal

110
LAW638 White Collar Crime

The fact that Congress uses different language in defining

violations in a statute indicates that Congress intentionally sought
to create distinct offences
NOTES
Elements of a 1956(a)(2) “transportation” money laundering offence – D must
have:
o Transported, transmitted, or transferred (or attempted to do so);
o Monetary instruments or funds;
o Across the border of the United States (the transborder element requires that
the funds or monetary instruments cross a US border – “either originating or
terminating in the United States”); and
o Acted with the requisite knowledge or purpose

Difference between transaction promotion case and transaction promotion case

Difference 1: 1956(a)(2)(A) “contains no requirement that „proceeds‟ first be
generated by unlawful activity, followed by a financial transaction with those
proceeds”
Difference 2: 1956(a)(2)(B)(i) does not expressly require that the property
involved in fact represents the proceeds of specific unlawful activity. It only state
that D must know that the monetary instrument or funds involved in the
transportation “represent” the proceeds of some form of unlawful activity.
Transportation concealment cases: Subsection 1956(a)(2)(B)(i) obviously does
require that “proceeds” be laundered, providing as it does that the govt must
prove that D knew both that the transfer represents the “proceeds of some form
of unlawful activity” and that the transfer is designed in whole or in part to
conceal or disguise the nature, location, source or ownership of the “proceeds” of
specified unlawful activity.

111