Source: Zagaris, 1999, p. 1023.
Therefore, building a case against sophisticated money-laundering schemes begins with recognizing when a violation of one more of the controlling laws have been violated, and understanding which law enforcement organization is the most appropriate for handling it and these issues are discussed further below.
How a Case is Built against Money Launderers.
While any of the foregoing current laws could be used in building a case against money laundering operations, the Money Laundering Control Act's ("the Act") expanded definition of "money laundering" activities has provided investigators with the ability to reach the proceeds of a broader range of illegal activities; for example, Lahey (2005) reports that the Act encompasses the proceeds of conduct that is characteristic of organized crime, such as narcotics trafficking, certain state offenses, and predicate offenses under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Furthermore, the Act addresses proceeds from a wide range of additional criminal offenses including copyright infringement, environmental offenses, espionage, trading with the enemy, and conducting financial transactions with intent to engage in violations of the Internal Revenue Code (Lahey, 2005).
The Money Laundering Control Act is comprised of two sections: (a) Section 1956 and (b) Section 1957; Section 1956 addresses the knowing and intentional transportation or transfer of monetary funds that are derived from specified unlawful activities and Section 1957 addresses transactions that involve property exceeding $10,000 in value that are derived from the specified unlawful activities (April & Grasso, 2001). A further description of how Section 1956 can be used to build a case against money launders is provided in Table 2 below.
Table 2.
Application of Sections 1956 of the Money Laundering Act.
Section 1956
Description
Section 1956(a) has three subdivisions a) Subsection 1956(a)(1) concerns domestic money laundering and prohibits knowingly participating in transactions with criminal proceeds; Subsection 1956(a)(2) deals with international money laundering and prohibits knowingly transporting criminally derived monetary instruments in foreign commerce; and Subsection 1956(a)(3) explicitly authorizes the use of government sting operations to expose criminal activity.
Transaction Money Laundering
Offenses referred to in [sections] 1956(a)(1) fall under the rubric of "transaction money laundering" because the prohibited action is the financial transaction itself. An offense occurs when an individual conducts or attempts to conduct a financial transaction with criminally derived money. The four prohibited transactions are: (1) a financial transaction with the intent to promote specified unlawful activity, (2) a financial transaction with the intent to engage in 26 U.S.C. [subsections] 7201, 7206(28) tax evasion violations, (3) a financial transaction designed to conceal or disguise the nature, location, source, ownership, or control of the proceeds of specified unlawful activity, and (4) a financial transaction designed to avoid a state or federal reporting requirement.
Transportation Money Laundering
Section 1956(a)(2) contains three separate offenses relating to the transportation, transmission, or transfer of criminally derived proceeds into or out of the United States. The three possible crimes involve: (1) the intent to promote the carrying on of a specified unlawful activity; (2) the transportation of a monetary instrument that represents the proceeds of some form of unlawful activity, designed to conceal or disguise that instrument; and (3) the transportation of the monetary instrument that represents the proceeds of some form of unlawful activity, designed to avoid a state or federal transaction reporting requirement.(35)
Sting Operations
Section 1956(a)(3) authorizes the government to utilize sting operations. Under the sting provisions of [sections] 1956, it is illegal to conduct, or attempt to conduct, a financial transaction involving property that a law enforcement officer represents to be the proceeds of a specified unlawful activity with the intent to: (1) promote specified unlawful activity; (2) conceal or disguise the nature, location, source, ownership, or control of the proceeds of specified unlawful activity; or (3) avoid a state or federal transaction reporting requirement.
Source: April & Grasso, 2001, p. 1051.
Since the passage of the U.S.A. PATRIOT Act, the U.S. Treasury Department has been tasked with the responsibility for developing regulations for implementation of its money-laundering provisions and for financial services businesses, including mutual funds, credit card companies, and securities brokers and dealers registered with the Securities and Exchange Commission (Connolly, 2003). According to Ronczkowski (2004), "The U.S.A. PATRIOT Act of 2001, formally known as the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 from the 107th Congress, HR 3162, was established to deter and punish...
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