Money Laundering

CORPORATE CRIMES

UNIVERSITY OF IOWA, COLLEGE OF LAW

 Background

 Making illegitimate money look legitimate

 Initially criminalized to combat drug trade
 Three types:
 Concealing illegal source of money

 Spending illegal proceeds

 Using money (from any source) for criminal activity

 Significance

 Crucial to every crime engaged in for profit

 Accounts for 2-5% of global GDP
 Major banks often complicit
 HSBC and JPMorgan fined $2B each
 Breakout Discussion

Should money laundering be criminal? The

underlying conduct is already criminal subject to its
own sanctions. Should providing dental services or
massages to criminals also be illegal?
 Rationale

 Why criminalize it if the underlying conduct is

already criminal?
 Increases risk of detection
 Collect tax revenue
 Harder to benefit from crime is banks won’t deal with you
 Useful tool for prosecuting white collar crime
 Generally involves money laundering

 Asset forfeiture

 Generally carries greater sentence

 Bank Secrecy Act of 1970

 Recordkeeping and reporting, especially of cash

transactions over $10k
 Bank of New England
 Money Laundering Control Act of 1986

 First established money laundering as a federal

crime
 Includes forfeiture provisions
 Directed banks to implement procedures to ensure
compliance with Bank Secrecy Act
 MLCA, cont’d

 18 U.S.C. 1956(a)(1)
 Defendant conducted a financial transaction, and
 Knowing that the property represented the proceeds of some
unlawful activity, and
 The funds in fact were the proceeds of a specified unlawful activity,
and
 Intent element:
 Intended to promote the specified illegal activity, or
 Knew the transaction was designed to conceal the
nature/location/source/ownership/control of illegal funds, or
 Engaged in the transaction intending to engage in tax fraud, or
 Knew the transaction was designed to avoid a transaction reporting
requirement
 Penalties: $500k or twice the value of the transacted property, and
20 years
 MLCA, cont’d

 18 U.S.C. 1957a
 The defendant knowingly engaged

 In a monetary transaction of >$10K involving a financial

institution
 In property derived from specified unlawful activity

 Knowing the property was derived from unlawful activity

 Difference with 18 U.S.C. 1956?

 No need to prove the intent element

 Financial institution involved

 Minimum transaction amount

 Lower penalties
 Miscellaneous

 Annunzio-Wylie Act of 1992

 Amended Banking Secrecy Act to require banks to detect and
report suspicious activity
 Money Laundering Suppression Act of 1994 (18
USC 1960)
 Targets unlicensed money services businesses
 USA PATRIOT Act of 2001
 Criminalized financing terrorism
 Required banks to establish anti-money laundering programs
 More requirements to report any suspicious activity involving
>$5k
 U.S. v. Campbell (4th Cir. 1992)

 Facts: Campbell was a real estate agent and Lawning was a drug
dealer; Campbell arranged with a seller to let Lawning pay for a
house in part in under-the-table cash, to lower the official sale price,
ostensibly so Lawning could get a mortgage; Campbell was charged
with money laundering under 1956; Campbell claimed she didn’t
know the cash was drug money; the District Court held that the
prosecutor had to show that Campbell knew about Lawning’s drug
dealing and that she had to have the purpose of concealing
Lawning’s illegal proceeds; she was acquitted by the judge
 Question presented: Was there sufficient evidence for a jury to find
that Campbell knew Lawning’s funds were the proceeds of illegal
activity and that the transaction was designed to conceal the nature
of those proceeds
 Answer: Yes
 Takeaway: Be careful parsing mens rea in money laundering
statutes.
 Summary

 Money laundering applies to most offenses, with high

penalties
 Three types of transactional money laundering:
promoting crime, spending, concealing
 18 USC 1956(a)(1):
 Financial transaction, and
 Knowing funds came from some unlawful activity, and
 Funds came from a specified unlawful activity, and
 Intent element
 18 USC 1957a: Same as above but no intent element,
transaction with financial institution
 Willful blindness, with no affirmative step, can show
knowledge (U.S. v. Campbell)