What Is Money Laundering? The Defenses? The Punishment?

Drug dealers often acquire large amounts of cash, but they are not the only ones who commit crimes that involve large cash transactions. When such recipients of money from illegal activity seek to conceal the source of the income by depositing it in a bank (rather than hold onto it and risk being robbed), later to write checks from it and hide the money’s criminal connection, this is money laundering.

Summary in 50 Words or Less: Money laundering is any form of trying to hide or clean the connection between cash proceeds from crime by changing the cash into other assets, including by buying possessions, i.e. cars, jewelry, clothing, through using a check from a bank (after first depositing the cash in a bank). There are certain transaction amounts that trigger suspicion as money laundering, such as $5,000 over 7 days or $25,000 over 30 days. The crime is a wobbler.

Two California statutes address money laundering as a crime in and of itself. The statutes have different definitions, but are similar. One can be guilty of one, but not the other, or both.

Under Penal Code § 186.10, money laundering is committed when one conducts, or attempts to conduct, a transaction with a bank (deposit, withdrawal, write a check) involving a total value of $5,000 over a seven-day period, or more than $25,000 in a thirty-day period, with the specific intent to promote criminal activity or with knowledge that the money involved came from criminal activity.

CCB
The second definition is strictly related to drug sales and does not require a bank. Under Health and Safety Code § 11370.9, one is guilty of money laundering if he or she receives, acquires or engages in a transaction involving money or property acquired from an illegal controlled substance, he or she did so to conceal the source, ownership or control of the money, and the total amount of money was more than $25,000 over a thirty-day period.

Both forms of money laundering, either through 186.10 or 11370.9, are wobblers. This means the prosecutor can charge the offense as a misdemeanor or a felony, depending upon the suspect’s prior criminal history and the specific facts of the case.

If the offense is charged as a misdemeanor under either code section, the maximum amount of time defendant can serve as punishment is one year in county jail. The maximum fine is $1,000, plus penalties and assessments. Keep in mind that there would most likely also be punishment for the underlying drug sales case, prostitution, copyright infringement (counterfeit items), sales of alcohol to a minor, etc.

If one is charged with a felony under Penal Code § 186.10, the maximum punishment is three years in state prison (to be served in county jail under AB109 if the client is not otherwise disqualified) and a fine of up to $250,000 or twice the amount of money laundered, whichever is larger.

When the amount laundered exceeds $50,000, but is less than $150,000, the time in prison is subject to an enhancement of one year. When the amount is between $150,000 and $1,000,000, there is a two-year sentence enhancement. When the amount laundered is between $1,000,000 and $2,500,000, there is s three-year sentence enhancement. A four-year sentence enhancement applies when the total laundered exceeds $2,500,000.

The maximum penalty under Health and Safety Code § 11370.9, relating to drugs, is more. It is four years in state prison. There is also a fine of $250,000 or twice the amount of the money laundered, whichever is greater.

The defenses to such charges start with a claim that the money came from legal sources. This means there must be an alternative explanation for the source of the money. This can be an accounting nightmare for the prosecution if there is a significant legal business mixed in with an illegal business, especially if the two businesses added together read the $5,000 or $25,000 minimum amounts, but just barely.

When police suspect some type of legal business as also engaging in drug sales, or counterfeit music sales, for example, police may engage in surveillance techniques that violate the Fourth Amendment (i.e. unlawful searches without a warrant, or illegal wiretaps).

For more information about offenses related to money laundering please click on the following articles:

1. What Is Possession of a Controlled Substance for Sale?
2. Granddaughter Guilty of Financial Elder Abuse Through Embezzlement and Moving Grandmother Out of Home
3. What Is Insurance Fraud? The Punishment? Defenses?
   

Contact us.

---