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Colorado Law: U.S. Money Laundering Laws

by H. Michael Steinberg – Federal Money Laundering Lawyer in Colorado

Money Laundering is taken very seriously as a Federal  and State Crime. Not only are the money laundering suspects held accountable, but if any inside connections such as employees at Financial Institutions had the remote idea the money was being laundered and failed to report it and even assisted with the transactions, they can be held in just as much trouble.

If you honestly did not know and didn’t willfully help launder the money, the charge can be dropped if proven so in court. However, it is absolutely imperative you hire a skilled criminal defense attorney to help you defend your case. Having no prior record, little evidence, and no direct connection to the laundering suspect would be very helpful and put you in a strong position.

If you are convicted, unfortunately you are looking at a Felony charge, a minimum of a $15,000 fine, and/or three years of jail time. It is all relative to your individual states laws surrounding this matter and the extent of the amount of money that was laundered. Consult with a Criminal Defense Lawyer immediately.

Overview

In 1986, the United States became the first country to make money laundering a crime. It enacted a law that is the most powerful in the world. It applies to far more than drug trafficking proceeds and to much more than just cash (Title 18, U.S. Code Sec. 1956). This extremely broad law has become a favorite weapon of federal prosecutors because of its heavy penalties and broad reach. In 1989, there were 28 convictions for money laundering in the U.S. By 1998, that number had climbed to more than 1,500.

The law has an extraterritorial reach if the offense is committed by a U.S. citizen or by a non‑U.S. citizen who conducts at least part of the offense in the U.S., and if the transaction involves more than $10,000. In addition to its heavy criminal penalties of up to 20 years in prison and $500,000 in fines, the law permits civil penalty lawsuits by the government for the value of the funds or property involved in the transaction.

Civil money laundering lawsuits by the government

The Department of Justice has the unique power under the money laundering law to pursue civil lawsuits against financial institutions even if they are not charged with the crime of money laundering. The suits are based on allegations that the institutions, through their officers and employees, or individuals laundered money (Title 18, USC Sec. 1956(b)). In the case of an institution, the lawsuits seek recovery of the amount of money laundered through the institution by its employees.

That civil penalty provision of the money laundering law says:

Whoever conducts or attempts to conduct a transaction described in subsection (a)(1) or (a)(3), or a transportation, transmission, or transfer described in subsection (a)(2), is liable to the United States for a civil penalty of not more than the greater of ‑

(1) the value of the property, funds, or monetary instruments involved in the transaction, or

(2) $10,000.

On May 20, 1998, the U.S. government filed such a civil penalty suit in federal court in Los Angeles against Mexico’s Bancomer, a bank that had also been indicted for money laundering in a case that stems from a U.S. Customs Service undercover “sting” investigation known as Operation Casablanca. (Operation Casablanca is discussed in more detail below.) The suit, which was settled when Bancomer pleaded guilty to money laundering in mid 1999, sought $21.5 million in damages. The lawsuit was the first of its kind against a foreign bank and the first against a bank that was also simultaneously under criminal indictment for the same acts.

A few months after filing the Bancomer suit, the U.S. sued Caribbean American Bank, the Netherlands Antilles subsidiary of the Venezuelan bank, Banco del Caribe, on the same grounds for $4.26 million allegedly laundered by bank employees during the Casablanca undercover investigation. The case is still unresolved.

The power of the government in the laundering field is seen in the case of the Mexican bank, Bital. In December 1999, it became the third Casablanca bank to face a civil laundering lawsuit after the U.S. had lost a forfeiture case to the bank. Bital , acronym for Banco Internacional, faces a $3.9 million lawsuit after prevailing in a forfeiture suit in which the U.S. sought to take the exact amount.

The most famous application of the civil penalty provision of the money laundering law was against American Express Bank International in 1994 when two of its private bankers were convicted of money laundering. The U.S. sued AEBI for $7 million, the sum the employees had laundered. AEBI settled for the full amount plus an additional $3 million for improved laundering controls.

The government has used it to sanction institutions for the acts of their employees without filing criminal charges against the institution. In two well‑publicized cases, against Norwest Bank Great Falls in 1992 and American Express Bank International in 1995, the U.S. filed civil actions and collected respective penalties of $327,712 and $10 million.

Extraterritorial reach

The U.S. money laundering law contains several provisions that extend its prohibitions and powerful sanctions into foreign countries. The “extraterritorial jurisdiction” of the principal U.S. money laundering law can apply to a financial transaction that occurs “in whole or part” in the U.S. if the funds involved were derived from purely foreign crimes that include drug trafficking, extortion, fraud against a foreign bank, kidnapping, robbery, or destruction of property by explosion or fire.

The crime of foreign extortion creates still‑untested opportunities for federal prosecutors who can identify present or former foreign public officials who conduct financial transactions in the U.S. with funds extortionately‑derived from persons who were subject to their official actions in their countries. The 176 “specified unlawful activities” whose proceeds can serve as the underpinning of a U.S. money laundering prosecution also include violations of the Foreign Corrupt Practices Act and the Trading with the Enemy Act.

One of the three prongs of the money laundering law deals purely with the international transportation, transmissions or transfers, from or to the United States, of illicit proceeds if done with the intent to “promote the carrying on of specified unlawful activity” or if, with knowledge that the funds are from “some form of unlawful activity,” to conceal or disguise the nature, location, source, ownership or control of the funds or avoid a federal or state transaction reporting requirement.

Another law makes it a crime to operate a money transmitting businesses without a state license. The law defines money transmitting as “transferring funds … by any and all means … within this country or to locations abroad….” Violation carries penalties of up to five years in prison. Money services businesses are examined for BSA compliance by the Examination Division of the Internal Revenue Service (Title 18, USC Section 1960).


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___________________________
H. Michael Steinberg Esq.
Attorney and Counselor at Law
The Colorado Criminal Defense Law Firm of H. Michael Steinberg
A Denver, Colorado Lawyer Focused Exclusively On
Colorado Criminal Law For Over 30 Years.
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