Money Laundering: An Overview of 18 U.S.C. § 1956 and Related Federal Criminal Law

This report provides an overview of the elements of federal criminal money laundering statutes and the sanctions imposed for their violation. The most prominent is 18 U.S.C. § 1956. Section 1956: outlaws (1) four kinds of money laundering of proceeds generated by designated federal, state, and foreign underlying crimes (predicate offenses): promotional, concealment, structuring, and tax evasion laundering (2) when committed or attempted under one or more of three jurisdictional conditions (i.e., laundering involving certain financial transactions, laundering involving international transfers, and stings). Its companion, 18 U.S.C. § 1957, prohibits depositing or spending more than $10,000 of the proceeds from a predicate offense. Section 1956 violations are punishable by imprisonment for not more than twenty years. Section 1957 carries a maximum penalty of imprisonment for ten years. Property involved in either case is subject to confiscation. Misconduct that implicates either offense may implicate other federal criminal statutes as well. Federal racketeer influenced and corrupt organization (RICO) provisions outlaw acquiring or conducting the affairs of an enterprise (whose activities affect interstate or foreign commerce) through the patterned commission of a series of underlying federal or state crimes. RICO violations are also twenty-year felonies. The § 1956 predicate offense list automatically includes every RICO predicate offense, including each “federal crime of terrorism.” A second related statute, the Travel Act (18 U.S.C. § 1952), punishes interstate or foreign travel, or the use of interstate or foreign facilities, conducted with the intent to distribute the proceeds of a more modest list of predicate offenses or to promote or carry on such offenses when an overt act is committed in furtherance of that intent. Such misconduct is punishable by imprisonment for not more than five years. Other federal statutes proscribe, with varying sanctions, bulk cash smuggling, layering bank deposits to avoid reporting requirements, failure to comply with federal anti-money laundering provisions, or conducting an unlawful money transmission business. Section 1956’s ban on attempted international transportation of tainted proceeds for the purpose of concealing their ownership, source, nature, or ultimate location is limited to instances where concealment is a purpose rather than an attribute of the transportation (simple smuggling is not proscribed as such), as the Supreme Court explained in Cuellar v. United States, 553 U.S. 550 (2008). In a second case, the Court held that the “proceeds” of a predicate offense often referred to the profits rather than the gross receipts realized from the offense. United States v. Santos, 553 U.S. 507 (2008). Congress responded by defining “proceeds” for money laundering purposes as the property obtained or retained as a consequence of a predicate offense, including gross receipts. Fraud Enforcement Recovery Act of 2009 (FERA), P.L. 111-21, 123 Stat. 1627. http://www.congress.gov/cgi-lis/bdquery/R?d111:FLD002:@1(111+21) The citation to the federal statutes discussed, to state money laundering and money transmission statutes, and to federal predicate offenses with their accompanying maximum terms of imprisonment appear at the end of the report. Related CRS Reports include CRS In Focus IF11064, U.S. Efforts to Combat Money Laundering, Terrorist Financing, and Other Illicit Financial Threats, by Rena S. Miller and Liana W. Rosen, and CRS Report R47255, The Financial Crimes Enforcement Network (FinCEN): Anti-Money Laundering Act of 2020 Implementation and Beyond, by Liana W. Rosen and Rena S. Miller.