Money Laundering · Federal Charges

What Are the Elements of Federal Money Laundering Under Section 1956?

A guide to the charged subsection, transaction records, and the knowledge or intent prosecutors must establish.

By Heath Hyde · East Texas and statewide

Mr. Heath Enix ‘Heath’ Hyde
Eligible to Practice in Texas
Attorney at Law
Bar Card Number: 00796807
TX License Date: 11/01/1996

Primary Practice Location: Sulphur Springs, TX and Dallas, TX
214 Connally St Ste A
Sulphur Spgs, TX 75482-2612

Start with the number after “1956” on the charging paper. An (a)(1) count concerns a financial transaction with criminal proceeds. The source offense has to qualify under the statute. Prosecutors also need proof that the accused knew the funds came from felony activity, although they needn’t prove knowledge of precisely which felony. There is a further requirement about intent or design, discussed below.

That still leaves an important question: what was this transaction supposed to accomplish? The diagram above lists the alternatives. Promotion means the intent to advance specified unlawful activity. The tax branch concerns conduct prohibited by § 7201 or § 7206. For concealment or reporting avoidance, the issue is knowledge of the transaction’s design. Concealment may concern the nature, location, source, ownership, or control of the proceeds; the design need only be partly to conceal. None of those findings follows just from money changing accounts.

Other parts of the statute work differently. An (a)(2) charge involves a transfer across the U.S. border. Its promotion branch doesn’t require the same proof of proceeds as its concealment branch. In an undercover (a)(3) case, investigators may have supplied money represented to be criminal proceeds. An agreement to launder can also be charged under § 1956(h). Counsel needs to examine what the accused allegedly agreed to and knew, even if someone else handled the transfer.

Build an element chart from the records

A transfer dated June 4 on a prosecution chart ought to have a corresponding entry in the source records. Sometimes the bank shows a reversal the chart has left out. Or the company names on either side of an arrow conceal several different accounts. Start there. Once the entries reconcile, work backward to the deposit said to have supplied the money and the offense said to have produced it.

Add the payment authorization, if you have it. Ask counsel to check jurisdiction under the Official statute.

Why the statutory branch matters

Ask to see the proposed jury instructions when they become available. Does the government allege promotion, concealment, or both? The instructions should tell jurors what findings the charged theory requires. If alternatives are offered, counsel also needs to research whether the jury must agree on a particular one.