Don’t Get Snared in Any of the Three Stages of Money-Laundering

“Money laundering generally refers to financial transactions in which criminals, including terrorist organizations, attempt to disguise the proceeds, sources or nature of their illicit activities.”…U.S. Department of Treasury Website

Law enforcement and financial regulators everywhere are on the lookout for money laundering. Big corporations and financial institutions hire compliance experts, and those experts cooperate fully rather than face huge fines and penalties.

While money laundering is a single process, it does have three stages:

1. The Placement Stage

This is where the “dirty” money or cash proceeds of criminal activity first enter the mainstream financial system. Criminals cannot afford to hold on to and safeguard large amounts of cash. At this stage the money launderer is most vulnerable as financial officials are on the lookout for suspicious cash transactions.

In the placement stage, criminals strive to defeat the threshold reporting regulations by, among other methods, using so-called “Smurfs,” who, according to one piece in About Business Crime Solutions, Inc.:

“…exchange illicit funds (in smaller, less conspicuous amounts) for highly liquid items such as traveller cheques, bank drafts, or deposited directly into savings accounts.“

2. The Layering Stage

Here is where money laundering gets fast and complicated. The purpose of this stage is to separate the dirty money from its illegal source. By sophisticated financial legerdemain, the money is moved and transformed in a way to foil any audit trail. During the layering stage the money can go from one country to another, divide into investments and move on quicker than regulators can react.

3. The Integration Stage

This is the last stage, and it completes the cycle by returning the money to the criminal from apparently reputable sources. Through placement and layering, the cash is now fully integrated into the financial system. In the integration stage the criminal and his ill-gotten gains are reunited in ways that do not draw attention and appear to be from legitimate sources.

Defending Against Charges of Money Laundering

Anyone who is an unwitting participant in the complicated process of money laundering could be the subject of a criminal investigation. Money laundering is, of course, a crime. So any defense available to any other criminal charge can be applied to money laundering.

For example:

  • Lack of intent to commit the crime. People who handle money — accountants, bankers, etc. — can be involved unknowingly in any stage of the money laundering process. The defense needs only to prove that the accused was unaware that the money involved was from illegal sources.
  • Duress or Intimidation. A defendant who believes that some harm may come to his or her person or family by refusing to participate in the crime of money laundering can plead not guilty to money laundering.
  • Lack of or insufficient evidence. To be convicted of money laundering, the prosecution must prove that the defendant intended to cover up the source of the illegal funds. Also, the prosecution must prove that the laundered funds came from some illegal activity.

If you are caught up in a money laundering investigation, you’ll need the services of an expert white-collar criminal defense attorney. Don’t be intimidated by aggressive prosecutor tactics. You have rights, and we specialize in an equally aggressive white-collar criminal defense.

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