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Background

Money Laundering — Making illegitimate money look legitimate

— Initially criminalized to combat drug trade
CORPORATE CRIMES — Three types:
¡ Concealing illegal source of money
UNIVERSITY OF IOWA, COLLEGE OF LAW
¡ Spending illegal proceeds

¡ Using money (from any source) for criminal activity

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Significance Breakout Discussion

— 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
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?

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Rationale Bank Secrecy Act of 1970

— Why criminalize it if the underlying conduct is — Recordkeeping and reporting, especially of cash
already criminal? transactions over $10k
¡ Increases risk of detection ¡ Bank of New England
¡ 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

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Money Laundering Control Act of 1986 MLCA, cont’d

— First established money laundering as a federal — 18 U.S.C. 1956(a)(1)

¡ Defendant conducted a financial transaction, and
crime ¡ Knowing that the property represented the proceeds of some
unlawful activity, and
— Includes forfeiture provisions
¡ The funds in fact were the proceeds of a specified unlawful activity,
— Directed banks to implement procedures to ensure and
¡ Intent element:
compliance with Bank Secrecy Act ÷ 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

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MLCA, cont’d Miscellaneous

— 18 U.S.C. 1957a — Annunzio-Wylie Act of 1992

¡ The defendant knowingly engaged ¡ Amended Banking Secrecy Act to require banks to detect and
report suspicious activity
¡ In a monetary transaction of >$10K involving a financial
institution — Money Laundering Suppression Act of 1994 (18
¡ In property derived from specified unlawful activity USC 1960)
¡ Knowing the property was derived from unlawful activity ¡ Targets unlicensed money services businesses
— Difference with 18 U.S.C. 1956? — USA PATRIOT Act of 2001
¡ No need to prove the intent element ¡ Criminalized financing terrorism
¡ Financial institution involved ¡ Required banks to establish anti-money laundering programs
¡ More requirements to report any suspicious activity involving
¡ Minimum transaction amount
>$5k
¡ Lower penalties

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U.S. v. Campbell (4th Cir. 1992) Summary

— Facts: Campbell was a real estate agent and Lawning was a drug — Money laundering applies to most offenses, with high
dealer; Campbell arranged with a seller to let Lawning pay for a penalties
house in part in under-the-table cash, to lower the official sale price,
ostensibly so Lawning could get a mortgage; Campbell was charged — Three types of transactional money laundering:
with money laundering under 1956; Campbell claimed she didn’t promoting crime, spending, concealing
know the cash was drug money; the District Court held that the
prosecutor had to show that Campbell knew about Lawning’s drug — 18 USC 1956(a)(1):
dealing and that she had to have the purpose of concealing ¡ Financial transaction, and
Lawning’s illegal proceeds; she was acquitted by the judge ¡ Knowing funds came from some unlawful activity, and
— Question presented: Was there sufficient evidence for a jury to find ¡ Funds came from a specified unlawful activity, and
that Campbell knew Lawning’s funds were the proceeds of illegal ¡ Intent element
activity and that the transaction was designed to conceal the nature — 18 USC 1957a: Same as above but no intent element,
of those proceeds transaction with financial institution
— Answer: Yes
— Takeaway: Be careful parsing mens rea in money laundering
— Willful blindness, with no affirmative step, can show
statutes. knowledge (U.S. v. Campbell)

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