Money laundering is the channeling of money obtained through illegal or criminal activity into legitimate uses or locations, such as bank accounts or shell companies, in order to camouflage the source of the funds. In California, money laundering is defined under two statutes:
- Penal Code 186.10 PC – which defines money laundering and covers the channeling of money related to any kind of illegal or criminal activity
- California Health and Safety Code 11370.9 HS – which exclusively covers money obtained through drug crimes
Money laundering can be charged as a misdemeanor or a felony and can also be charged on either a state or federal level. Penalties for money laundering involve jail time as well as fines that can be quite steep, depending on the circumstances of the case.
If you or someone you love has been charged with money laundering, there are defense strategies available to fight the accusations against you. It is important that you work with a criminal defense attorney who can help you to navigate the legal system and build the strongest possible defense based on the facts of your individual case.
How is “money laundering” defined in California?
Under California law, money laundering is defined by the elements of the crime. The elements of the crime are the things that a prosecutor must prove in order to make a conviction. According to PC 186.10, you are guilty of money laundering if:
- You conducted, or attempted to conduct, one or more financial transactions through a bank,
- You acted with specific intent to promote criminal activity or with the knowledge that the money involved in the transaction(s) was obtained illegally or through criminal activity, and
- The total value of the money involved in the transaction(s) is more than $5,000 in a seven-day period, or more than $25,000 in a 30-day period.
Money laundering schemes exist in many different forms. They may involve concealing drug money or other “dirty money” via wire transfers or elaborate schemes wherein organized crime rings launder money through offshore accounts or shell companies. More recently, with the rise of cryptocurrencies, there have been more cases of money laundering involving bitcoin or other digital currencies or accounting systems. Typically, money laundering involves an attempt to hide the source of money obtained through illegal or criminal activity by making it look like the source of the money is legitimate; an activity known as “layering.”
Whatever the complexity of the scheme or the type of illegal activity involved, the element of specific intent or knowledge must be present for someone to be guilty of money laundering. If, for example, a loved one asks you for $15,000 to help them start a cleaning business but they use the money instead to purchase a large amount of drugs with the intent to resell them, you are not guilty of money laundering because you did not specifically intend to support their criminal enterprise or have knowledge of their actual intentions for the use of the funds.
What are the penalties for money laundering?
PC 186.10 is what is known as a “wobbler” offense. A wobbler offense is one that can be charged as either a misdemeanor or a felony depending on the facts of the case and the criminal history of the person being charged.
If charged as a misdemeanor, penalties for violating PC 186.10 include:
- A fine of up to $1,000
- Up to one year in county jail
If charged as a felony, penalties for violating PC 186.10 include:
- A fine of up to $250,000 or twice the amount of money that was laundered (whichever amount is greater)
- Up to four years in jail under California’s realignment program
Additionally, there are a few circumstances of the case that can impact the penalties for a violation of PC 186.10:
- If the amount of money laundered is more than $50,000, the maximum jail sentence can increase by one year
- If the amount of money laundered is more than $2,500,000, the maximum jail sentence can increase by four years
- If you are found guilty of laundering money on more than one occasion, you face a fine of up to $500,000 or five times the laundered amount (whichever amount is greater)
Other offenses related to money laundering
There are three offenses that are closely related to money laundering. While these offenses are similar to PC 186.10, they may have different or additional penalties and may be charged instead of or in addition to money laundering depending on the offense and the facts of the case.
- Federal money laundering – 18 U.S.C. 1956&1955
Money laundering can be both a state crime under California PC 186.10 or a federal crime under 18 U.S.C. 1956.
Federal money laundering is defined as the transfer of money obtained through criminal activity into legitimate channels in an attempt to disguise the illegal source of the funds.
18 U.S.C. 1956 can include types of money laundering such as terrorist financing and tax evasion.
A violation of 18 U.S.C 1956 is punishable by up to 20 years in federal prison, as opposed to state prison or county jail.
- Laundering drug money – HS 11370.9
If money being laundered in the manner defined under PC 186.10 is money obtained through the unlawful sale or trafficking of drugs, the violation may be charged under Health and Safety Code 11370.9, laundering drug money.
- Freeze and seize penalty enhancement – PC 186.11
The freeze and seize penalty enhancement under Penal Code 186.11 adds an additional prison term to the penalties of money laundering in cases where:
- The defendant is convicted of two or more felonies related to fraud or embezzlement in a single case, and
- The crimes involve the unlawful acquisition of funds over $100,000
It is also important to note that the prison term for the freeze and seize penalty enhancement must be served in state prison and not in county jail as with violations of PC 186.10.
Legal defenses against money laundering charges
If you’ve been charged with money laundering, it is possible to fight the charges with a legal defense. The most important thing you can do in your defense is to hire a criminal defense attorney who can advise and represent you. Your attorney will examine the facts of your case in order to determine the defense strategy that is most likely to get you the best possible outcome. Some of the most common defense strategies against charges of money laundering are:
Not enough money was deposited
Money laundering is a crime in which relatively substantial amounts of illegally obtained money are channeled through legitimate sources. If, however, the transactions in question only involved minimal amounts of money, you may not be convicted of violating PC 186.10. According to the statute, transactions must involve more than $5,000 over a seven-day time period or $25,000 over a 30-day time period. If the amount is less than what is listed in the statute, this defense may be effective in your case.
Lack of criminal intent
Another common defense strategy against money laundering charges is demonstrating that you did not act with criminal intent or knowledge of criminal activity. This defense is also known as “mistake of fact.” In order to be guilty of money laundering under PC 186.10, you need to have either:
- Acted with knowledge that the money involved was obtained illegally or through criminal activity, or
- Acted with specific intent to promote illegal activity
If, for example, you deposited some money into an account for your grandson without knowing that the money was obtained through criminal activity, you are not guilty of money laundering due to mistake of fact.
Violation of constitutional rights
If law enforcement violated one or more of your constitutional rights at any point during the investigation or legal process, you can contest the charges against you. If a judge finds that your rights have been violated, they may choose to reduce or drop your charges. Rights violations by law enforcement could include:
- Failing to read you your Miranda rights
- Stopping or arresting you without probable cause
- Illegal search or seizure
- Illegally obtaining or coercing a confession
If you or someone you love is facing money laundering charges, you deserve to have an experienced and dedicated attorney who will work to defend your rights. As a California criminal defense attorney with over 30 years of experience representing clients against state and federal charges, Robert M. Helfend has the expertise to build you a strong and aggressive legal defense. If you’re in need of legal advice or representation, call us today at 805-273-5611 to schedule a free consultation or case evaluation.