Federal law prohibits the laundering of money instruments under 18 U.S.C. §1956. The section applies to transactions in connection with a wide variety of unlawful activities. This gives law enforcement wide latitude to bring money laundering charges against offenders.

Broadly, the section prohibits financial transactions involving the proceeds of unlawful activity. The statute establishes a clear mens rea, or criminal mindset, requirement, stating that the offense must occur knowingly, and with either the intent to promote further unlawful activity or the intent to violate §§7201 or 7206 of the Internal Revenue Code. The mens rea requirement can also be met when the offender knows that the transaction is designed to conceal the proceeds or unlawful activity, or to avoid transaction reporting requirements. Notably, the transaction is considered unlawful even if the property was only represented as unlawful, provided the offender had the requisite mindset. Penalties for such offenses include fines of up to $500,000, or twice the value of the property, whichever is greater. The statute also provides for a prison sentence of up to twenty years in addition to financial penalties. Money laundering has an extraterritorial facet, penalizing offenders with identical sentences for the transport, transmission, or transfer of funds outside of the United States, so long as the money is knowingly or intentionally connected to unlawful activity, whether through concealment, promoting the further carrying on of unlawful activity, or avoiding legally imposed transaction reporting requirements. In addition to criminal penalties, §1956(b) imposes civil penalties for money laundering offenses. Depending on the severity of the offense, the offender is liable to the United States for either the value of the property, funds, or monetary instruments, or $10,000, whichever is greater.

The statute also defines “specified unlawful activity,” indicating which sorts of unlawful activities money laundering may be tied to. The “unlawful activity” can include racketeering, controlled substance violations, murder, kidnapping, robbery, fraud, bribery, smuggling and export control violations, human trafficking, criminal enterprise offenses, federal health care offenses, and environmental crimes in violation of 33 U.S.C. §§1251, 1401, 1901, and 300f, as well as 42 U.S.C. §6901. §1956(c)(7)(D) also provides a list of additional “unlawful activities” in connection with money laundering, including destruction of aircraft, violence at international airports, retaliating against a Federal official, concealment of assets, bribery, certain counterfeiting offenses, goods falsely classified, entry of goods by means of false statements, smuggling goods into and away from the U.S., removing goods from Customs custody, border tunnel offenses, theft or bribery connecting to programs receiving Federal funds, espionage, nuclear materials and atomic weapons offenses, unlawful importation of firearms, fraudulent bank and Federal credit institution entries, fraudulent loan or credit applications, computer fraud, concealment of assets, murder of United States law enforcement officials, hostage taking, willful injury of government property, mail theft, assassination, child pornography, copyright infringement, trafficking counterfeit goods, terrorism offenses, and offenses involving weapons of mass destruction, among others.

Earlier this month, the Eleventh Circuit affirmed a conviction under §1956 in United States v. Bindranauth, No. 22-10944, 2024 WL 4440291 (11th Cir. Oct. 8, 2024), illustrating both the required elements and permissible sentencing considerations for a money laundering offense. In Bindranauth, the defendant operated a money laundering scheme in which he, along with his co-conspirators, engaged in investment and romance scams, inducing victims into sending money to the defendant. The defendant then laundered the money through transfers to Nigerian bank accounts. On appeal, the defendant challenged his sentence and a jury instruction. Reviewing his arguments, the Court reiterated the burden carried in proving the knowledge element—that the government must show the defendant had knowledge that the funds came from “some form of unlawful activity.” The defendant argued that the government failed to prove actual knowledge, and therefore erred by giving a deliberate ignorance jury instruction. The evidence indicated that the defendant was repeatedly warned of the potential illegality of his actions but chose to ignore the warnings. Coupled with circumstantial evidence of the defendant’s actions, the Court found that no reversible error had been committed, because the alternative to deliberate ignorance was actual knowledge, and either mindset supported the conviction. The Court also found no error in the enhancement of the defendant’s sentence under the Sentencing Guidelines. The guidelines allow courts to consider six non-exclusive factors, including regular engagement in laundering funds, laundering funds for an extended period of time, generating substantial revenue, and laundering funds from multiple sources. The Court also reviewed the “sophisticated laundering” enhancement and the enhancement applying when a “defendant was an organizer or leader of a criminal activity.” Finding sufficient evidence to support each enhancement, the Eleventh Circuit affirmed the district court’s convictions and sentences.

Bindranauth demonstrates the relevance of the knowledge requirement within §1956. Although the statute encompasses a wide range of offenses in connection with money laundering, money laundering offenses require a guilty mind in some capacity. This important element is essential to support a money laundering conviction.

If you have a Federal Criminal case, a State Criminal case, a Municipal Case or a Family Law case in the Northern District of Alabama, Middle District of Alabama, Southern District of Alabama, or any federal jurisdiction in the Eleventh Circuit, including Alabama, Florida, and Georgia, contact Joe Ingram or Joe Ingram Law LLC at 205-335-2640. Get Relief * Get Results.