Breaking the bank.

The process by which drug traffickers and other criminals introduce proceeds gained through their criminal activities into legitimate financial markets is known as money laundering. (1) According to the International Monetary Fund, money laundering activities are estimated to constitute between 2 and 5 percent of the world's Gross Domestic Product, amounting to approximately $600 billion annually. (2) The Drug Enforcement Administration (DEA) explains the methods drug traffickers currently use to launder their illegal proceeds:

    Drug traffickers use various methods to launder their profits both
    inside and outside of the United States. Presently, some of the
    more common laundering methods include: the Black Market Peso
    Exchange, cash smuggling (couriers or bulk cash shipments), gold
    purchases, structured deposits to or withdrawals from bank
    accounts, purchase of monetary instruments (e.g., cashier's checks,
    money orders, traveler's checks), wire transfers, and forms of
    underground banking, particularly the Hawala system. (3)

In addition to tracking, seizing, and forfeiting laundered illegal proceeds, the federal government can also prosecute a person for the separate crime of money laundering. A person involved in crimes traditionally associated with racketeering, which include, but are not limited to, murder, kidnapping, arson, robbery, and felonious drug trafficking, (4) can be prosecuted under federal law for laundering the proceeds of those crimes. Federal money laundering investigations are among the most effective ways to thwart the criminal schemes of drug and organized crime groups.

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For example, in Operation Juno, the DEA Atlanta Field Division provided financial services via the Colombian Black Market Peso Exchange. (5) That operation resulted in the arrest of 40 suspects, $10 million in seizures, the seizure of 3,601 kilograms of cocaine, 106 grams of hashish oil, and civil seizure warrants of 59 domestic bank accounts. (6)

Three Stages of Money Laundering

The first stage in money laundering is the placement of the proceeds of criminal activities into the financial system. Currency is difficult to handle and sometimes hard to move. Large amounts of currency attract attention. For that reason, the placement stage is the most vulnerable stage in the money laundering process. At this stage, government reporting requirements for currency transactions create an impediment for criminals introducing their proceeds into legitimate commerce. (7)

Once the money is placed in the financial system, it must be moved and divided to hide its illegal origin. This second stage in the money laundering process is the layering process, which involves breaking up the funds and distributing them from one nation or financial institution into several. Breaking up the funds makes it difficult to trace their illegal origins. The complexity of the layering is one of the ways in which the money launderer seeks to conceal the illegal nature of the proceeds. The objective of this activity is to create a complicated maze of transactions so that it becomes a difficult puzzle that will frustrate government efforts to discover the illegal source of the funds. (8)

The third, and final, stage is integrating the money into legitimate commerce. Once the funds are layered, the criminals who control the money can integrate those funds into the channels of ordinary commerce. They then can use them in legitimate business enterprises without the usual suspicion that goes with transacting business using large amounts of cash. (9)

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Title 18, U.S. Code, Section 1956

Title 18, U.S. Code, Section 1956 (hereinafter Section 1956) is the primary federal money laundering statute. It is a violation of Section 1956(a)(1) for someone to conduct or attempt to conduct a financial transaction that involves (10) the proceeds (11) of specified unlawful activity (SUA) while knowing (12) that the property involved in the financial transaction represents the proceeds of some form of unlawful activity (13) and to do so: 1) with the intent to promote (14) the carrying on of an SUA; 2) with the intent to engage in conduct constituting tax evasion, (15) fraud, or a false statement under the Internal Revenue Code; 3) knowing (16) that the transaction is designed in whole or in part to conceal or disguise (17) the nature, location, source, ownership, or control of the proceeds of an SUA; or 4) knowing that the transaction is designed in whole or in part to avoid transaction reporting requirements under state or federal law.

One federal transaction reporting requirement is the Currency Transaction Report (CTR). (18) A CTR must be filed (19) when a domestic financial institution (20) is involved in a transaction for the payment, receipt, or transfer of United States coins or currency (21) in an amount greater than $10,000. (22) A CTR is required to be filed for all currency transactions with a financial institution over $10,000, regardless of the source of the funds. (23) It is not required that the funds be proceeds of illegal activity. There are civil (24) and criminal penalties (25) for violating the CTR filing requirements. In addition, it is a violation of federal law, (26) subjecting the violator to criminal penalties (27) if the person, for the purpose of evading the CTR filing requirements, causes or attempts to cause a financial institution not to file a CTR, (28) to file a false CTR, (29) or if he structures (30) transactions with one or more financial institutions in such a manner as to avoid the filing of a CTR. (31)

The term transaction has a particular meaning under Section 1956. For purposes of Section 1956, "transaction includes a purchase, sale, loan, pledge, gift, transfer, delivery, or other disposition, and with respect to a financial institution includes a deposit, withdrawal, transfer between accounts, exchange of currency, loan, extension of credit, purchase or sale of any stock, bond, certificate of deposit, or other monetary instrument, use of a safe deposit box, or any other payment, transferred, or delivery by, through, or to a financial institution, by whatever means effected." (32) Congress used the word includes rather than means, which suggests that Congress intended to add to the common understanding of the word transaction rather than replace it. (33) The most inclusive term listed is transfer. A transfer would still be a transaction even if the transfer of title did not change the beneficial ownership of the property or was a fraudulent transfer voidable by the creditors or the government.

Mere possession or transportation of drug proceeds that does not involve some transfer is not a transaction. (34) If a suspect transports money from the basement to the attic of his house that would not be a transaction because there has not been any change in the custody or ownership of the money. To have a transaction under Section 1956, there must be some disposition, which means placing the property elsewhere, such that one gives the property over to the care or possession of another. (35) For example, if a suspect uses a courier to travel to the suspect's home and remove money owned by the suspect from under the suspect's bed and then transport the money to the suspect's beach house, that conduct by the courier would constitute two transactions. (36) The first transaction took place when the courier removed the money from under the owner's bed at the owner's home. The owner had constructive possession of the money at his home and he retained constructive possession of the money when the courier took the money from under the bed. The owner maintained constructive possession of the money throughout this example because the courier acted as his agent, and the suspect controlled what the agent did with the money. A transaction, however, took place in this case when the courier took care and custody of money, even though the suspect maintained ownership and control over the money. The taking of the money from under the bed in this example was a transaction. The second transaction took place when the money was put under the bed at the beach house. When the money was put under the bed at the beach house, the courier gave up custody of the money. When the courier delivered the money to the beach house, that was a disposition of the money by him. That delivery or transfer was a transaction. Therefore, two transactions took place during one movement of money between two houses. No transaction occurred while the courier was merely transporting the money between the houses. (37) The above example only illustrates what constitutes a transaction within the meaning of Section 1956. There would have to be more facts given to determine whether any of the transactions violated Section 1956.

For a transaction to be considered money laundering under Section 1956, it must be a financial transaction. For purposes of Section 1956, financial transaction means a "transaction" which in any way or degree affects interstate or foreign commerce, (38) involving the movement of funds by wire or other means; one or more monetary instruments; the transfer of title to any real property, vehicle, vessel, or aircraft; or the use of a financial institution engaged in, or the activities of which affect, interstate or foreign commerce (39) in any way or degree. For example, giving drug proceeds to a courier is both a transfer and a delivery involving the movement of funds, and it is also a transfer and a delivery involving one or more monetary instruments. It is, therefore, a financial transaction within the meaning of Section 1956(c)(4). (40)

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For purposes of Section 1956, monetary instruments means coin or currency of the United States or of any other country, travelers' checks, personal checks, (41) bank checks and money orders, or investment securities or negotiable instruments in bearer form or otherwise in such form that title passes upon delivery. Under Section 1956, (42) financial institution is a term of art that includes the types of businesses targeted by someone intending to launder illegal proceeds. Examples of financial institutions listed in the statute include, but are not limited to, banks; savings and loans; credit unions; securities brokers; currency exchanges; issuers, redeemers, or cashiers of travelers' checks, checks, money orders, or similar instruments; insurance companies; dealers in precious metals, stones, or jewels; pawnbrokers; travel agencies; businesses engaged in vehicle sales; persons involved in real estate closings and settlements; the U.S. Postal Service; licensed casinos or other gaming establishments with annual gaming revenue of more than $10,000; and any other businesses designated by the secretary of the treasury in the Code of Federal Regulations similar to the businesses listed above.

Specified unlawful activity, under Section 1956 means racketeering as defined in Title 18, U.S. Code, Section 1961. Section 1961 provides that racketeering includes, but is not limited to, any act or threat involving murder; kidnapping; gambling; arson; robbery; bribery; extortion; dealing in obscene matter; counterfeiting; mail or wire fraud; obstruction of justice; slavery; money laundering under Sections 1956 and 1957 of Title 18; sexual exploitation of children, interstate transportation of stolen vehicles; dealing in a controlled substance or listed chemical chargeable under state law and punishable by imprisonment for more than 1 year; or felonious manufacture, importation, receiving, concealing, buying, selling, or otherwise dealing in a controlled substance or listed chemical punishable under any law of the United States. (43)

A money laundering conviction under Section 1956 requires proof that the laundered funds constituted the proceeds of a predicate SUA. (44) However, a conviction under Section 1956 does not require the government to trace the laundered proceeds to a specific SUA. The evidence that funds are proceeds of an SUA can be established by circumstantial evidence. For example, where the predicate SUA is drug trafficking, it is enough if the government proves that the defendant engaged in drug trafficking and had no legitimate means of income. It can be inferred from those facts that the drug trafficker obtained the funds from drug trafficking. (45)

It would not be a money laundering transaction for a suspect to exchange money obtained from a legitimate source for illegal drugs. (46) Once that exchange has taken place, however, the money becomes proceeds of the drug transaction. If there is evidence that a drug trafficker is using illegal drug proceeds to buy more illegal drugs to sell, that drug purchase using drug proceeds would also constitute a money laundering transaction because the purchase of the drugs would be evidence of using the illegal drug proceeds with the "intent to promote" the carrying on of the SUA under Section 1956(a)(1)(A)(I). (47) Even if the drug trafficker does not use the proceeds to buy more drugs, it would be money laundering in violation of Section 1956 for him to engage in a financial transaction with those funds (e.g., depositing them in his bank account) with the intent to promote the SUA or evade taxes or with knowledge that the transaction is designed to disguise the nature of the illegal proceeds or avoid a state or federal transaction filing requirement. (48)

Suppose a wholesale illegal drug trafficker has fronted drugs to a retail drug trafficking customer. That is, the wholesaler has delivered drugs without first requiring payment from the retailer. The wholesaler expects payment sometime in the future, presumably once the retailer, in turn, has sold the drugs received from the wholesaler. When the retailer comes back later to pay the money owed to the wholesaler for the previous transaction, it would be reasonable to infer from the circumstances that the money the retailer is paying the wholesaler is proceeds from selling the illegal drugs previously delivered to him by the wholesaler. The transfer of the money from the retailer to the drug trafficker would be a financial transaction within the meaning of Section 1956 because the money would be proceeds of drug trafficking. It is not illogical to infer the additional intent to promote prong required under Section 1956. The payment for previously delivered drugs would satisfy the intent to promote requirement under Section 1956 by the payor reestablishing good credit with the drug supplier for future deliveries of illegal drugs. In addition, to prove intent to promote, some courts do not require that the SUA that is promoted be a future SUA. In which case, the SUA that is promoted could be a completed SUA. For example, the payment for drugs already delivered would satisfy the intent to promote requirement under Section 1956, even though the offense promoted (the prior distribution of the illegal drugs) has already taken place. (49)

In certain circumstances, there may be proceeds of an SUA before the SUA is completed. For example, a drug dealer may insist on payment of $1,000 from his customer prior to delivering illegal drugs to the customer. If the drug dealer, in turn, deposits the $1,000 in a nominee name to conceal the illegal source of the funds at a bank prior to delivering the drugs to the customer, that deposit would be a money laundering offense under Section 1956. That is because the drug trafficker has engaged in a financial transaction with proceeds of an SUA to conceal the illegal source of the funds, even though the SUA has not yet been completed. (50) Section 1956 does not require that the money laundering transaction take place after the completion of the SUA crime. The statute has been interpreted to only require that the proceeds be received, actually or constructively, prior to the money laundering transaction. (51) Arguably, the drug trafficker in the above example may have completed the SUA of attempted possession with intent to distribute a controlled substance under Title 21, U.S. Code, Section 846.

A person convicted under Title 18, U.S.Code, Section 1956 is subject to a fine of up to $500,000 or twice the value of the property involved, whichever is greater, or imprisonment for not more than 20 years, or both. (52) In addition, a violation of Section 1956 subjects the violator to a civil fine of not more than the greater of the value of the property, funds, or monetary measurements involved in the transaction or $10,000. (53) In addition, a court, when imposing a sentence on a person convicted of violating Section 1956, shall order the person to forfeit to the federal government any property, real or personal, involved in the violation of those statutes, or any property traceable to such property. (54)

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Furthermore, even if a suspect is not criminally prosecuted under Section 1956, any property, real or personal, involved in a transaction or attempted transaction in violation of Section 1956, or any property traceable (55) to such property, is subject to civil forfeiture. (56) Unlike a criminal case where the burden of proof is beyond a reasonable doubt, in a civil forfeiture case the government has the burden of proving that any property sought to be forfeited is subject to forfeiture by the lower standard of preponderance of the evidence. (57) If the government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, the government is required to establish that there was a substantial connection between the property and the offense. (58) An innocent owner's (59) interest in property may not be forfeited under any federal civil forfeiture statute. (60) The innocent owner has the burden of proving by a preponderance of the evidence that he is an innocent owner. (61)

Title 18, U.S. Code, Section 1957

Other federal statutes in addition to Title 18, U.S. Code, Section 1956 address money laundering activity. (62) For example, Title 18, U.S. Code, Section 1957 (hereinafter Section 1957) prohibits knowingly engaging in monetary transactions involving over $10,000 derived from an SUA. (63) Unlike Section 1956, Section 1957 does not require proof that the suspect intended to promote the illegal activity, conceal proceeds, avoid the transaction reporting requirement, or even know that the transaction is designed to conceal or disguise the nature or ownership of the funds. Section 1957 only requires the government to prove that the defendant knew that the criminally derived property (valued at greater than $10,000) involved in the monetary transaction constituted proceeds obtained from some criminal offense.

Under Section 1957, once a person (64) knowingly engages or attempts to engage in a monetary transaction in criminally derived property of greater than $10,000, he has violated federal law. Monetary transaction as defined in Section 1957 means the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined in Section 1956) by, through, or to a financial institution (as defined in Section 1956). (65) The "in or affecting interstate or foreign commerce" requirement of Section 1957 is both jurisdictional and an essential element of the offense. It is an issue to be determined by the jury. (66) The interstate nexus must be proven beyond a reasonable doubt. (67)

There are three ways to prove an interstate nexus: 1) the defendant used the channels of interstate commerce; 2) the defendant used instrumentalities of interstate commerce or persons or things in interstate commerce; or 3) the defendant's activities (although taken alone only minimally affect interstate commerce) when taken in aggregate with others similarly situated have a substantial relation to, or substantially affect, interstate commerce. (68) Checks drawn on federally insured banks or services purchased from an out-of-state company would be sufficient to establish the use of persons or things in interstate commerce without having to show substantial effect upon interstate commerce. (69) It is only if the conduct is purely intrastate, noncommercial, and traditionally regulated by state governments that the federal government must resort to proving some substantial relation to or effect upon interstate commerce. In United States v. Allen, (70) the court described the nexus to interstate commerce for the Section 1957 prosecution in that case as "overwhelming" where the defendant "deposited proceeds from the forged checks in a financial institution as defined in the statute, withdrew those funds, and transferred them by using cashier's checks to be deposited out of state." (71)

Section 1957 states that "[t]he term criminally derived property means any property constituting, or derived from, proceeds obtained from a criminal offense." (72) Criminally derived property under Section 1957 has been interpreted to have the same meaning as the word proceeds under Section 1956. (73) The government does not have to prove that the defendant knew the precise nature of the criminal offense from which the proceeds were derived. (74) However, the proceeds must, in fact, be from an SUA, as that term is defined in Section 1956. (75)

A person convicted under Section 1957 is subject to a fine as provided in Title 18, (76) imprisonment for not more than 10 years, or both. A court, when imposing a sentence on a person convicted of violating Section 1957, shall order the person to forfeit to the federal government any property, real or personal, involved in the violation of those statutes, or any property traceable to such property. (77) In addition, a violation of Section 1957 subjects the violator to a civil fine of not more than the greater of the value of the property, funds, or monetary measurements involved in the transaction or $10,000. (78) Finally, even if no criminal prosecution is brought against a suspect, any property, real or personal, involved in a transaction or attempted transaction in violation of Section 1957, or any property traceable to such property, would still be subject to civil forfeiture. (79)

Conspiracy

Under Title 18, U.S. Code, Section 1956(h), any person who conspires to commit any offense defined in Sections 1956 or 1957 shall be subject to the same penalties as those prescribed for the offense the commission of which was the object of the conspiracy. There are a number of advantages for the government to prosecuting a conspiracy under Section 1956(h) rather than the general conspiracy statute, Title 18, U.S. Code, Section 371. First, conviction under the general conspiracy statute does not provide a basis for criminal forfeiture, whereas conviction for a money laundering conspiracy under Section 1957(h) mandates forfeiture of all property involved in the conspiracy. If the conspiracy is a long-term conspiracy, the value of the assets could be substantial. Second, it is not required under Section 1956(h) to prove an overt act in furtherance of the conspiracy as required under Section 371. Third, the sentence for a conspiracy under Section 1956(h) is up to 10 years for a conspiracy to violate Section 1957 or up to 20 years for a conspiracy to violate Section 1956. Whereas, the sentence for a conspiracy conviction under Section 371 is no more than 5 years.

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A person who, in concert with others, launders proceeds from certain criminal activity may be charged and convicted as a coconspirator in that criminal activity because of his money laundering contribution to the crime. If the crime is drug trafficking, the conspirator could be charged under the federal drug conspiracy statute, Title 21, U.S. Code, Section 846 (80) in addition to being charged with money laundering.

When the statute of limitations precludes prosecuting a suspect for the underlying crime, or there is insufficient evidence to prove the crimes, the government could still prosecute him for laundering the proceeds from that crime. (81) As with most other noncapital federal offenses, the statute of limitations for a money laundering offense itself is 5 years. (82) The statute of limitations begins to run as soon as the offense is committed. That means that the defendant must be formally charged with money laundering within 5 years of the commission of the money laundering offense. However, money laundering is a crime typically perpetrated after the underlying crime has been committed.

In a drug case, the government may be precluded from charging the suspect with the commission of the underlying offense because the statute of limitations (5 years for a noncapital federal drug charge) has run. However, the suspect could still be charged with conspiracy under Title 21, U.S. Code, Section 846 long after the statute of limitations has run for a given substantive criminal offense. The money laundering activity by a conspirator would be an overt act in furtherance of the conspiracy and thus extend the life of the conspiracy for purposes of calculating the statute of limitations. (83)

The application of the statute of limitations in a conspiracy case is unique. (84) Unlike other offenses where the statute of limitations begins when the crime is first committed, in a conspiracy case, the statute of limitations does not begin to run until the conspiracy has ended. In the usual case, that point would be at the last overt act committed in furtherance of the conspiracy. (85)

The U.S. Supreme Court, in Grunewald v. United States, (86) recognized that in some circumstances, acts of concealment can be considered as acts in furtherance of the intended crime. The Court stated that "a vital distinction must be made between acts of concealment done in furtherance of the main criminal objectives of the conspiracy, and acts of concealment done after these central objectives have been attained, for the purpose only of covering up after the crime." (87) Acts considered in furtherance of the main objective would be considered acts in furtherance of the conspiracy and serve to delay the point at which the statute of limitations begins to run.

Money laundering, depending on the circumstances, can be viewed as an act of concealment in furtherance of a conspiracy, particularly in drug cases. (88) Money laundering is certainly a step taken by the conspirators to conceal the proceeds of the drug trafficking. Because the nature of large-scale drug trafficking necessitates that means will be needed to conceal the source of considerable illegal proceeds, laundering of drug proceeds can be considered a central objective of the drug conspiracy. Therefore, money laundering activities in many cases could be regarded as overt acts in furtherance of the drug trafficking conspiracy. As such, the money laundering acts would extend the conclusion of the drug trafficking conspiracy for the purpose of determining the date for calculating the statute of limitations on the drug trafficking conspiracy. (89)

Conclusion

Federal money laundering investigations are among the most effective ways to thwart the criminal schemes of drug and organized crime groups. Title 18, U.S. Code, Section 1956 is the primary federal money laundering statute. Section 1956 prohibits a person from knowingly engaging in financial transactions involving proceeds of certain crimes if the person does so with the intent to promote the crime or evade taxes or knows that the transaction is designed to conceal or disguise the criminal proceeds or avoid financial transaction reporting requirements. Title 18, U.S. Code, Section 1957 is another federal money laundering statute that prohibits knowingly engaging in monetary transactions involving over $10,000 derived from specified unlawful activity. Sections 1956 and 1957 both carry heavy fines and lengthy terms of imprisonment for violations. Even if a suspect is not criminally prosecuted under Section 1956 or 1957, any property, real or personal, involved in a transaction or attempted transaction in violation of Section 1956 or 1957 or any property traceable to such property is subject to civil forfeiture.

Law enforcement officers of other than federal jurisdiction who are interested in this article should consult their legal advisors. Some police procedures ruled permissible under federal constitutional law are of questionable legality under state law or are not permitted at all.

Endnotes

(1) U.S. Drug Enforcement Administration, "Money Laundering"; (visited March 7, 2006) http://www.usdoj.gov/dea/programs/money.htm.

(2) Id.

(3) Id.

(4) Under 18 U.S.C. [section] 1956, the proceeds laundered must be from "specified unlawful activity" for the activity to be money laundering. Specified unlawful activites are those crimes listed as racketeering under 18 U.S.C. [section] 1961.

(5) Supra note 1.

(6) Supra note 1.

(7) Office of Legal Education, U.S. Department of Justice, Financial Investigations Seminar Participant Guide, Module 4-2 (2004).

(8) Id.

(9) Id.

(10) The financial transaction needs only to involve proceeds of an SUA. It is not required that the entire amount of the transaction be proceeds. If any part of the transaction involves proceeds then, assuming the other elements are present, the transaction would be a violation of [section] 1956. See, e.g., United States v. Rodriguez, 53 F.3d 1439, 1447 (7th Cir. 1995) (although only $1,000 of the $17,000 payment was tainted proceeds of an SUA, the purchase involved proceeds); United States v. Jackson, 935 F.2d 832, 840 (7th Cir. 1991). Once an asset is tainted with illegal proceeds it never loses its taint as proceeds. United States v. Ward, 197 F.3d 1076 (11th Cir. 1999). Furthermore, illegal proceeds retain their character as proceeds as they change form. For example, a loan secured with real property purchased with SUA proceeds would itself be proceeds. Furthermore, if that loan was used to purchase a car, the car would then also be proceeds. See United States v. Pergler, 1998 WL 887113 (N.D. Ill. 1998) (unreported in bound volume) (18 U.S.C. [section] 1957 prosecution). While a [section] 1956 violation requires the involvement of proceeds, involvement alone is not enough. 18 U.S.C. [section] 1956 has no application to ordinary commercial transactions that may simply involve proceeds of unlawful activity and nothing more. For there to be a money laundering violation under 18 U.S.C. [section] 1956, there must be evidence that the financial transaction is being done with the intent to promote the SUA or evade taxes or with knowledge that the transaction is designed to disguise the nature of the illegal proceeds or avoid a state or federal transaction filing requirement. Section 1956 is a money laundering statute not a money spending statute. United States v. Rockelman, 49 F.3d 418, 422 (8th Cir. 1995). Proof of knowledge that the funds are illegal proceeds coupled with an unusual transaction may be enough circumstantial evidence to prove the case. United States v. Campbell, 977 F.2d 854, 858 (4th Cir. 1992). If the elements in [section] 1956 are not present, there may still be a violation of [section] 1957.

(11) A large quantity of cash is highly probative of a connection to some illegal activity; however, a large quantity of cash in and of itself is insufficient even to establish probable cause to forfeit that cash as illegal proceeds, let alone prove beyond a reasonable doubt it is proceeds for purposes of proving money laundering. See, e.g., United States v. $121,100.00 in U.S. Currency, 999 F.2d 1503, 1506 (11th Cir. 1993) (drug proceeds forfeiture case under 21 U.S.C. [section] 881(a)(6)); United States v. $506,231 in U.S. Currency, 125 F.3d 442, 452-54 (7th Cir. 1997). In a drug money laundering case, the government must present some additional evidence connecting the money to illegal drug sales to establish that the cash is drug proceeds. It can be proven that money is proceeds of an SUA through circumstantial evidence. In a drug money laundering case, it is not necessary to trace the money from a particular drug sale. In United States v. Blackman, 904 F.2d 1250, 1257 (8th Cir. 1990), proof that the defendant was a drug trafficker who has no legitimate source of income was sufficient to infer that the large amount of money he wired was drug proceeds as defined in [section] 1956. Id. A net worth analysis may also be helpful in proving that the defendant's expenditures exceeded his legitimate income and, therefore, in turn, prove that certain property is the proceeds of an SUA. See United States v. Nelson, 851 F.2d 976, 980-981 (7th Cir. 1988). "Evidence of a differential between legitimate income and cash outflow is sufficient for a money laundering conviction, even when the defendant claims income from additional sources." United States v. Webster, 960 F.2d 1301, 1308 (5th Cir. 1992). Where the transaction in question involves funds withdrawn from an account where illegal proceeds have been commingled with legitimate funds, the government is not required to trace the illegal funds through the account and prove that it was only the illegal funds used in the transaction. It is sufficient to prove that the funds in question came from an account in which tainted proceeds were commingled with other legitimate funds. See United States v. Garcia, 37 F.3d 1359, 1365 (9th Cir. 1994), receded from on other grounds, United States v. Jackson, 167 F.3d 1280 (9th Cir. 1999). If that were not the case, a suspect could avoid prosecution under [section] 1956 by simply commingling legitimate funds with criminal proceeds. United States v. Johnson, 971 F.2d 562, 570 (10th Cir. 1992).

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(12) When defendant is charged with laundering proceeds from an SUA that he committed, it is a virtual foregone conclusion that the defendant knew the property was proceeds from the SUA. See United States v. Shorter, 54 F.3d 1248, 1257 (7th Cir. 1995). However, proving knowledge that the money is illegal proceeds is sometimes more challenging when the money laundering defendant is not a principal in the perpetration of the underlying SUA. In such a case, the element of knowledge can be proven by showing that the defendant was willfully blind. To prove willful blindness, the government must present evidence that the defendant contrived to deliberately and purposely avoid learning facts that he knew would have confirmed that the property involved in the transaction represented proceeds of illegal activity. United States v. Campbell, 977 F.2d 854, 857 (4th Cir. 1992). The Campbell court ruled that the fraudulent nature of the transaction itself provided a sufficient basis to infer not only that the defendant knew the house was being purchased with illegal drug proceeds but also that she knew that the purpose of the transaction was to conceal the nature or ownership of the illegal proceeds. "[T]he knowledge components of the money laundering statute collapse into a single inquiry." Did the defendant know that the funds were derived from an illegal source? Id. at 858. See also United States v. Frigerio-Migiano, 254 F.3d 30, 35 (1st Cir. 2001) (the Frigerio-Migiano court found that there was insufficient evidence of willful blindness).

(13) To prove that the suspect knew that "the property involved in the financial transaction represents the proceeds of some form of unlawful activity," the government need only prove that he knew the property involved in the transaction represents proceeds from some form, though not necessarily which form, of activity that constitutes a felony under state, federal, or foreign law, regardless of whether or not such activity is listed in [section] 1956 as an SUA. 18 U.S.C. [section] 1956(c)(1) (West 2005).

(14) Promote means to further or contribute to the advancement, growth, enlargement, or prosperity of the illegal business. A classic example of promotion in a drug money laundering case would be using drug proceeds to buy more illegal drugs to sell. United States v. Torres, 53 F.3d 1129, 1137 n.6 (10th Cir. 1995). The degree of promotion need not be essential or substantial. In fact, the advancement of the enterprise by the money laundering transaction could be rather minimal. Purchasing an automobile with illegal drug proceeds to use that automobile to deliver illegal drugs would constitute a money laundering offense because the car would assist in advancing the drug enterprise. If, however, the vehicle was not intended to be used in the drug enterprise, it would not be a violation of the promotion subsection of [section] 1956 to purchase the automobile with illegal drug proceeds. Id. at 1138. The asset purchased does not have to be expensive to constitute a money laundering offense. Use of the proceeds derived from illegal drug trafficking to purchase pagers intended to be used by the drug trafficker to stay in contact with drug customers and accomplices would constitute a financial transaction intended to promote his illegal drug activities. United States v. Jackson, 935 F.2d 832, 841 (7th Cir. 1991). Under [section] 1956(a)(1)(A)(i), to convict somebody of money laundering who is not actually involved in the SUA, the government usually must charge the suspect as an aider and abettor in the money laundering under 18 U.S.C. [section] 2. For example, a realtor only looking to obtain a commission, could still be convicted as a money laundering accomplice if he knows that the money for the purchase of a house is drug proceeds, and he knows that the purchaser intends to use the house to store imported illegal drugs. That is because the realtor would be knowingly assisting the drug dealer in his scheme to promote the SUA of drug trafficking. If a suspect involves an asset such as a house, an automobile, or a cell phone in a financial transaction, but he does so not to promote the SUA, the suspect could still be charged with money laundering under one of the other alternative bases in [section] 1956, such as to conceal or disguise the nature, control, or ownership of the proceeds under [section] 1956(a)(1)(B)(i). Jackson, supra.

(15) Tax evasion is not an SUA. To violate [section] 1956 under this section, the suspect must have engaged in a transaction using proceeds of a listed SUA with intent to evade taxes.

(16) The government need not show that the defendant had a purpose to conceal. It is enough if the defendant knows that the financial transaction was designed by someone else to conceal or disguise the illegal proceeds. United States v. Campbell, 977 F.2d 854, 857 (4th Cir. 1992).

(17) It is not necessary to prove that the money laundering transaction concealed the identity of the participants (although that is relevant). Concealment of the funds is all that the government must prove. Id. at 858. See also United States v. Wilson, 77 F.3d 105, 109 (5th Cir. 1996). But, see U.S. v. Herron, 97 F.3d 234, 237 (8th Cir. 1996) (There was no evidence in the record that the appellants made any efforts to disguise the drug proceeds from crack cocaine sales wired from Springfield to Chicago; therefore, their convictions for money laundering were reversed.).

(18) 31 U.S.C. [section] 5313 (West 2005).

(19) Pursuant to 31 C.F.R. [section] 103.27(a)(1) and (4) the CTR is to be filed by the financial institution with the commissioner of the Internal Revenue Service within 15 days from the occurrence of the reportable transaction.

(20) A financial institution is a bank (except bank credit card systems), a broker or dealer in securities, a money services business, a telegraph company, or a casino or card club with gross annual gaming revenues in excess of $1 million, a person subject to supervision by any state or federal bank supervisory authority, a futures commission merchant, or an introducing broker in commodities. 31 C.F.R. [section] 103.11(n).

(21) Currency means: "The coin and paper money of the United States or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance. Currency includes U.S. silver certificates, U.S. notes, and Federal Reserve notes. Currency also includes official foreign bank notes customarily used and accepted as a medium of exchange in a foreign country," 31 C.F.R. [section] 103.11.

(22) 31 C.F.R. [section] 103.22. Although the secretary of the treasury (SOT) has been given authority by Congress in 31 U.S.C. [section] 5313 to require the filing of CTRs for monetary instruments, the SOT has not required the filing of a CTR for monetary instruments in 31 C.F.R. [section] 103.22(a)(1). The SOT has only required the filing of CTRs for coin or currency greater than $10,000.

(23) 31 C.F.R. [section] 103.22.

(24) A domestic financial institution and a partner, director, officer, or employee of a domestic financial institution who willfully violates the CTR provisions is liable for a civil penalty in an amount not greater than the amount involved in the transaction (not to exceed $100,000) or $25,000, 31 U.S.C. [section] 5321(a)(1). The SOT may impose a civil penalty of not more than $500 on any financial institution that negligently violates the CTR provisions. If, however, the financial institution engages in a pattern of negligent violations of the CTR provisions, the SOT could impose a civil penalty of not more than $50,000. 31 U.S.C. [section] 5321(a)(6) (West 2005).

(25) A person who willfully violates the CTR provisions shall be fined not more than $250,000, imprisoned for not more than 5 years, or both. 31 U.S.C. [section] 5322(a). A person who willfully violates the CTR provisions while violating any other law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12 month period shall be fined not more than $500,000, imprisoned for not more than 10 years, or both, 31 U.S.C. [section] 5322(b).

(26) 31 U.S.C. [section] 5324 (West 2005).

(27) Pursuant to 31 U.S.C. [section] 5324(d), a CTR violation is punishable by a fine in accordance with 18 U.S.C. [section] 3571, imprisonment for up to 5 years, or both. Whoever violates [section] 5324 while violating another law of the United States or as part of the pattern of illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in 18 U.S.C. [section] 3571, imprisoned for up to 10 years, or both. This penalty section was added in 1994 to [section] 5324 by Congress (H.R. Rep. No. 103-438, at 22 (1994) in response to the U.S. Supreme Court decision in Ratzlaf v. United States, 510 U.S. 135 (1994), which interpreted the previously applicable penalty provision contained in [section] 5322 to require that the government must prove the defendant knew that structuring was against the law. With this Congressional change, it is not required for the government to prove the defendant knew it was against the law to structure.

(28) 31 U.S.C. [section] 5324(a)(1) (West 2005).

(29) 31 U.S.C. [section] 5324(a)(2) (West 2005).

(30) A person structures a transaction if that person, acting alone or with others, conducts one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements under 31 C.F.R. [section] 103.22. See 31 C.F.R. [section] 103.11(gg). The term in any manner includes, but is not limited to, breaking down a single sum of currency that exceeds $10,000 into smaller sums. The total sum of the transactions themselves need not exceed the $10,000 reporting threshold at any single financial institution in any single day to constitute structuring. Id. It is a violation of [section] 5324 to structure transactions to avoid the reporting requirements, even if the funds used in the structuring are lawfully obtained. See United States v. Gabel, 85 F.3d 1217, 1223 (7th Cir. 1996).

(31) 31 U.S.C. [section] 5324(a)(3) (West 2005).

(32) 18 U.S.C. [section] 1956(c)(3) (West 2005).

(33) The dictionary definition of transaction is "an exchange or transfer of goods, services, or funds." Merriam Webster's Collegiate Dictionary 1252 (10th ed. 1993). Under the legal principle of ejusdem generis, the definition of transaction as found in 18 U.S.C. [section] 1956 would probably exclude services because services are not logically within the category of things listed as examples of transactions in that statute.

(34) A few cases suggest that movement of funds is enough to constitute a transaction. Close reading of those cases reveals that they actually discuss the added requirements for financial transactions, and the facts indicate more than mere possession or transportation of money. See, e.g., United States v. Dimeck, 24 F.3d 1239, 1246 (10th Cir. 1994), wherein there was an actual disposition of the funds. The defendant "moved funds by 'other means' when he delivered the funds to Moore." (emphasis added) The delivery of the money to Moore was more than a movement of the money, it was a transaction. See also United States v. Wydermyer, 51 F.3d 319, 326-327 (2nd Cir. 1995). In Wydermyer, the defendants were arrested after the undercover agents gave them money represented to be illegal proceeds. The court stated that the handover of the money was a movement of funds and, therefore, a financial transaction. The delivery of the money was certainly a movement of funds, but it was more than a mere movement of the funds; it was also a transfer from the agents to the defendants.

(35) United States v. Puig-Infante, 19 F.3d 929, 938 (5th Cir. 1994). See also United States v. Reed, 77 F.3d 139, 143 (6th Cir. 1996) (en banc).

(36) B. Frederick Williams and Frank D. Whitney, Federal Money Laundering, Crimes and Forfeitures [section] 2.1.2, at 23 (1999).

(37) Id.

[ILLUSTRATION OMITTED]

(38) As a general rule, "the use of federally insured banks and/or the transport of monies across state borders to facilitate the money laundering create a sufficient nexus to interstate commerce to allow application of [section] 1956." United States v. Owens, 159 F.3d 221, 226 (6th Cir. 1998). Use of a personal or business check in a transaction necessarily involves at some stage a bank engaged in interstate commerce. United States v. Canavan, 153 F. Supp. 2d 811 (D. Md. 2001). In a case that does not involve a banking institution, there must be some other evidence proving an affect on inter-state or foreign commerce by the transaction. For a federal statute whose authority is based upon the Commerce Clause to pass constitutional muster, there must be a showing that the activity being regulated 1) is a channel of interstate or foreign commerce, 2) uses instrumentality of interstate or foreign commerce, or 3) has a substantial effect on interstate or foreign commerce. United States v. Lopez, 514 U.S. 549 (1995). 18 U.S.C. [section] 1956 is typically reviewed by the courts under the "substantial effect" portion of the interstate or foreign commerce test. The general view of the courts is that money laundering itself is a quintessential economic activity that by its nature, has a substantial effect on interstate or foreign commerce. See, e.g., United States v. Goodwin, 141 F.3d 394, 399 (2nd Cir. 1997). Although any one money laundering transaction may have a rather trivial impact on interstate or foreign commerce, when reviewing a statute for constitutional sufficiency, the courts do not look at the transaction in isolation to determine its impact on interstate or foreign commerce. The courts look at the transaction in aggregate and take into consideration all other persons who are similarly situated and involved in that type of money laundering transaction to determine whether that conduct would have a substantial impact on interstate or foreign commerce. Using the aggregation prism, the courts have had little difficulty in ruling that the SUA of drug trafficking has a substantial effect on interstate or foreign commerce. See, e.g., United States v. Lerebours, 87 F.3d 582, 584 (1st Cir. 1996). Section 1956 does not use the constitutional "substantially affecting" language. Instead, Congress assumed the aggregation principle and only requires proof in [section] 1956(c)(4) that the transaction "in any way or degree affects interstate or foreign commerce." As a consequence, establishing an interstate or foreign commerce nexus has not been a difficult hurdle to overcome in the usual drug proceeds money laundering case. Although the interstate or foreign commerce hurdle in a [section] 1956 or [section] 1957 money laundering case is not a high hurdle, it should not be overlooked because it is a federal jurisdictional requirement and an element of the offense that must be proven beyond a reasonable doubt in each case. There must be circumstantial or direct evidence introduced at trial that the transaction has some minimal effect on interstate or international commerce. United States v. Grey, 56 F.3d 1219, 1223-1226 (10th Cir. 1995). In a money laundering case involving an illegal gambling SUA, a simple hand-to-hand transfer of money from one person to another in and of itself would not be sufficient to prove the interstate or foreign commerce connection. Id. To prove the interstate or foreign commerce nexus under [section] 1956(c)(4), courts are usually satisfied with circumstantial evidence from which it could be inferred that the money or drugs had traveled between states during or after the transaction. In United States v. Burgos, 254 F.3d 8, 13 (1st Cir. 2001), the court found that there was a sufficient effect on interstate commerce for a money laundering charge where an informant had told the defendant when he arranged the exchange of money for drugs that the person delivering the cocaine to the informant had just arrived from New York and was impatient to return there. In a case where the SUA is drug trafficking, the proof that there was an effect on interstate commerce could be proven by evidence that after the transaction, the defendant was driving down the interstate highway with the money. United States v. Gallo, 927 F.2d 815, 823 (5th Cir. 1991). The Gallo court quoted from 21 U.S.C. [section] 801 and ruled that because Congress has found that drug traffick-ing has an effect on interstate and foreign commerce, it is reasonable to conclude that laundering the proceeds of drug trafficking has a similar effect. Id.

(39) "Virtually any exchange of money between two persons constitutes a financial transaction." Jason Shuck & Mathew E. Unterlack, Money Laundering, 33 Am. Crim. L. Rev. 881, 891 (Spring 1986). Under 18 U.S.C. [section] 1956(a)(4)(B), "[i]t is essential to prove an actual nexus to interstate commerce." United States v. Leslie, 103 F.3d 1093, 1101 (2nd Cir. 1997). To prove that nexus, however, "[t]he government need only prove that the individual subject transaction has, at least, a de minimis effect on interstate commerce." Id. "Proof that a savings institution's accounts are federally insured is certainly sufficient to prove that the transaction involved a financial institution, the activities of which affect interstate commerce under 18 U.S.C. [section] 1956(c)(4)(B)." Id. at 1102. Any financial transaction involving a financial institution under [section] 1956(c)(4)(B) is also a monetary transaction under [section] 1957. Use of an FDIC federally insured bank to facilitate a transaction is sufficient to establish that the transaction involved a financial institution that is engaged in, or the activities of which affect, interstate commerce under [section] 1956(c)(4)(B). United States v. Ford, 184 F.3d 566, 583 (6th Cir. 1999). The involvement of the financial institution in the transaction does not have to be integral to the charged count. For example, withdrawing money from a bank or depositing a check in a bank either before or after the charged transaction, although only incidental to the charged transaction itself, would be enough to involve the financial institution in the transaction. The fact that the bank is federally insured would establish an interstate nexus. United States v. Oliveros, 275 F.3d 1299, 1303-1304 (11th Cir. 2001).

(40) United States v. Reed, 77 F.3d 139, 142 (6th Cir. 1996) (en banc).

(41) To be a monetary instrument under 31 C.F.R. [section] 103.11(u), a personal check must be in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery. Under [section] 1956(5), any personal check is a monetary instrument, regardless of whether it is in bearer form or title passes upon delivery. See, e.g., United States v. Prince, 214 F.3d 740, 751 (6th Cir. 2000) (writing a check to the defendant constituted a transfer or disposition of a monetary instrument). In any case, a financial transaction under [section] 1956(4)(A) in pertinent part "means a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments." Consequently, the movement of funds via a personal check would be the movement of funds by other means and, therefore, a financial transaction under [section] 1956(4)(A)(i) regardless of whether the personal check is viewed as a monetary instrument under [section] 1956(c)(5). See United States v. Arditti, 955 F.2d 331(5th Cir. 1992) (case involving issue whether a cashier's check was a bank check).

(42) See 31 U.S.C. [section] 5312(a)(2) (West 2005), incorporated by reference into 18 U.S.C. [section] 1956(a)(6) (West 2005).

(43) Simple possession of a controlled substance under 21 U.S.C. [section] 844 is generally not an SUA under [section] 1956. All drug trafficking SUAs must be felonious. See 18 U.S.C. [section] 1961(1). Under [section] 844, simple possession of a controlled substance is a misdemeanor, except possession of more than 5 grams of cocaine base (crack), which is punishable by 5 to 20 years imprisonment, and possession of any quantity of flunitrazepam (trade name: Rohypnol), which is punishable by up to 3 years imprisonment.

(44) United States v. Mankarious, 151 F.3d 694 (7th Cir. 1998).

(45) United States v. Blackman, 904 F.2d 1250 (8th Cir. 1990).

(46) Under 21 U.S.C. [section] 881, however, if a person is intending to furnish lawfully obtained funds in exchange for illegal drugs, those funds are subject to civil forfeiture.

(47) See United States v. Martinez, 151 F.3d 384, 389 (5th Cir. 1998); United States v. Torres, 53 F.3d 1129, 1137 n.6 (10th Cir. 1995).

(48) See United States v. Kennedy, 64 F.3d 1465 (10th Cir. 1995).

(49) See, e.g., United States v. King, 169 F.3d 1035, 1039 (6th Cir. 1999) (paying for prior drug shipments may constitute promotion when the payment encourages further drug transactions); United States v. Reed, 167 F.3d 984, 992-993 (6th Cir. 1999); United States v. Cavalier, 17 F.3d 90, 93 (5th Cir. 1994) (the transfer of a check from an insurer to an automobile lienholder promoted the previously committed underlying fraud of filing a false insurance claim and, therefore, satisfied the intent to promote requirement under [section] 1956); contra United States v. Heaps, 39 F.3d 479, 483-486 (4th Cir. 1994), overruled on other grounds by United States v. Cabrales, 524 U.S. 1 (1998) (In Heaps, the court found that the payment of drug proceeds was merely to satisfy a debt of a completed and final drug transaction. There were no subsequent drug transactions, and there was no evidence that the purpose of the payment was to encourage the defendant to supply more drugs or to create goodwill for future drug transactions.); United States v. Skinner, 946 F.2d 176, 177-178 (2nd Cir. 1991) (recurrent payment for drugs sold on consignment constituted a money laundering financial transaction to promote the illegal drug trafficking).

(50) See generally United States v. Mankurious, 151 F.3d 694, 703 (7th Cir. 1998) (proceeds for purposes of the money laundering charge were generated before the actual mailing that constituted the mail fraud).

(51) Williams et al., supra [section] 9.2.4, at 296.

(52) 18 U.S.C. [section] 1956(a)(1)(B)(ii) (West 2005).

(53) 18 U.S.C. [section] 1956(b) (West 2005).

(54) 18 U.S.C. [section] 982 (West 2005).

(55) Property traceable to a money laundering offense shall be forfeited without regard to any increase in its value due to market appreciation or anything the defendant may have added to the property, such as improvements made by the defendant's personal efforts. United States v. Hawkey, 148 F.3d 920, 928 (8th Cir. 1998).

(56) 18 U.S.C. [section] 981 (West 2005).

(57) 18 U.S.C. [section] 983(c)(1) (West 2005).

(58) 18 U.S.C. [section] 983(c)(3) (West 2005).

(59) 18 U.S.C. [section] 983(d)(2)(A) provides that with respect to a property interest in existence at the time the illegal conduct giving rise to forfeiture took place, the term innocent owner means an owner who did not know of the conduct giving rise to forfeiture, or upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.

(60) 18 U.S.C. [section] 983(d)(1) (West 2005).

(61) 18 U.S.C. [section] 983(d) (West 2005).

(62) E.g., 31 U.S.C. [section] 5332 (West 2005) (bulk cash smuggling of more than $10,000 on person or conveyance into or out of the United States with intent to evade the Currency and Monetary Instrument Report (CMIR) requirement under 31 U.S.C. [section] 5316); 31 U.S.C. [section] 5316 (West 2005) (transporting currency or other monetary instrument of more than $10,000 into or out of the United States must be reported on a CMIR); 31 U.S.C. [section] 5321 (West 2005) (civil penalties for violating the CMIR requirement); 31 U.S.C. [section] 5324 (c) (West 2005) (criminal penalties for evading the CMIR reporting requirement); 31 U.S.C. [section] 5318 (g) (West 2005) (suspicious activity report (SAR)); 31 U.S.C. [section] 5321 (West 2005) (civil penalty for failing to file an SAR); 31 U.S.C. [section] 5322 (West 2005) (criminal penalties for failure to file an SAR); 31 U.S.C. [section] 5325 (West 2005) (record-keeping requirement for financial institutions that issue a note in a transaction involving coin or currency of $3,000 or more); 31 U.S.C. [section] 5324 (West 2005) (criminal penalties for evading the record-keeping requirement); 31 U.S.C. [section] 5313 (West 2005) (currency transaction report (CTR) required for financial institutions engaging in a currency transaction exceeding $10,000); 31 U.S.C. [section] 5321 (civil penalties for violating CTR requirement); 31 U.S.C. [section][section] 5322, 5324 (West 2005) (criminal penalties for failing to file or evading the CTR requirement); 31 U.S.C. [section] 5317(c)(1) (West 2005) (criminal forfeiture for CTR, CMIR, or structuring violation); 26 U.S.C. [section] 60501 (reporting cash payments of more than $10,000 in a trade or business (IRS Form 8300)); 26 U.S.C. [section] 7203 (criminal penalties for failing to file IRS Form 8300). Note that 31 U.S.C. [section] 5331 has a provision that parallels the requirements of 26 U.S.C. [section] 60501. Section 5331, however, uses the terms coins or currency in place of the term cash used in [section] 60501. The term currency in [section] 5331 has the same definition as the term cash in [section] 60501. 26 U.S.C. [section] 60501(c)(1)(A) provides that cash received in a transaction reported under title 31 (31 U.S.C. [section] 5331) need not be reported under [section] 60501 if the SOT determines that reporting the transaction under [section] 60501 would duplicate the reporting to the treasury under Title 31. The penalty for violating [section] 5331 is up to 5 years or a fine up to $250,000 (which is 10 times the maximum fine for an individual under [section] 60501). A person violating [section] 5331 while violating another federal law or as part of a pattern of illegal activity involving more than $100,000 in a 12-month period shall be fined up to $500,000, imprisoned up to 10 years, or both. 31 U.S.C. [section] 5324(b) contains a provision, similar to the provision at 26 U.S.C. [section] 60501(f), prohibiting a person from evading the reporting requirements of [section] 5331 by causing or attempting to cause a nonfinancial trade or business to fail to file a report or file a report that contains material omissions or misstatements or to structure a transaction. The above crimes could be object crimes of a conspiracy in violation of 18 U.S.C. [section] 371, which prohibits a conspiracy to commit any offense against the United States.

(63) 18 U.S.C. [section] 1957 (f)(1) expressly states that it is not a monetary transaction in violation of [section] 1957 if the transaction is necessary to preserve a person's right to representation as guaranteed by the Sixth Amendment to the Constitution. The investigator should keep in mind that the Sixth Amendment Right to Counsel only applies to representation in criminal matters. The Sixth Amendment Right to Counsel does not apply to a civil forfeiture proceeding. See United States v. 87 Blackheath Road, 201 F.3d 98 (2nd Cir. 2000). Therefore, an attorney who knowingly receives criminal proceeds in excess of $10,000 to represent a suspect in a civil forfeiture would not be afforded any protection under [section] 1957(f)(1). Even in representing a client in a criminal matter, the Sixth Amendment Right to Counsel only attaches at the inception of adversarial judicial proceedings (information, indictment, or initial appearance) and at every subsequent critical stage of the prosecution. See Massiah v. United States, 377 U.S. 201 (1964); United States v. Wade, 388 U.S. 218 (1967); Kirby v. Illinois, 406 U.S. 682 (1972). Arguably, therefore, criminal proceeds over $10,000 knowingly received by an attorney prior to the attachment of a suspect's Sixth Amendment Right to Counsel would not fall under the protection of [section] 1957(f)(1). 18 U.S.C. [section] 1957(f)(1) was enacted in 1988. In 1989, the U.S. Supreme Court ruled that a defendant does not have a Sixth Amendment right to be represented by an attorney he cannot afford. Caplin and Drysdale, Chartered v. United States, 491 U.S. 617, 624 (1989). In Caplin and Drysdale the Court ruled that forfeiting the proceeds of drug trafficking and, therefore, depriving the defendant of his ability to pay his attorney of choice from those proceeds was not a violation of the defendant's Sixth Amendment Right to Counsel. The Supreme Court determined that the proceeds of the defendant's drug trafficking do not belong to the defendant. The Court stated that under the criminal drug forfeiture statute, 21 U. S. C. [section] 853(c), all right, title, and interest in property derived from or used in the commission of a crime under Title 21 vests in the United States upon the commission of the drug crime. In like manner, the money laundering civil forfeiture statute, 18 U.S.C. [section] 981, states that all right, title, and interest in property involved in a transaction in violation of [section][section] 1956, 1957, or 1960 or any property traceable to such property shall vest in the United States upon commission of the money laundering transaction. The U.S. Department of Justice has adopted policies for attorney fee cases that limit prosecutions of attorneys under [section] 1957. The assistant attorney general in charge of the criminal division must give prior approval "for prosecutions of attorneys (under either [section] 1956 or [section] 1957) where the financial transaction is one involving attorneys' fees. This approval is required regardless of whether the fee is received in a criminal or civil case." USAM 9-105.3000(3). See also USAM 9-105.600 for further guidance.

(64) The person does so while in the United States or within the special maritime territorial jurisdiction of United States or the person does so outside the United States and is a national of the United States or an alien lawfully admitted for permanent residence in the United States. Under 18 U.S.C. [section] 1957, the "special maritime and territorial jurisdiction of United States" includes, but is not limited to, the high seas, any aircraft or vessel belonging to the United States, any state, territory, district, or possession thereof or belonging to any United States citizen or corporation, any place outside the jurisdiction of any nation with respect to any act by or against a national of the United States. According to 8 U.S.C. [section] 1101(a)(20), a national of the United States is a U.S. citizen or a person who is not a citizen but owes permanent allegiance to the United States.

(65) 18 U.S.C. [section] 1957(f)(1) (West 2005).

(66) United States v. Allen, 129 F.3d 1159, 1163 (10th Cir. 1997).

(67) United States v. Ripinsky, 109 F.3d 1436, 1443 (9th Cir. 1997), overruled in part on other grounds, United States v. Sablan, 114 F.3d 913 (9th Cir. 1997) (en banc).

(68) Id, at 1444.

(69) Id.

(70) 129 F.3d 1159, 1164 (10th Cir. 1997).

(71) Id. at 1166.

(72) 18 U.S.C. [section] 1957(f)(2) (West 2005).

(73) United States v. Savage, 67 F.3d 1435, 1442 (9th Cir. 1995).

(74) United States v. Allen, 129 F.3d 1159, 1164 (10th Cir. 1997).

(75) 28 U.S.C. [section] 1957(f)(3) (West 2005).

(76) 18 U.S.C. [section] 3571 (West 2005).

(77) 18 U.S.C. [section] 982 (West 2005).

(78) 18 U.S.C. [section] 1956(b) (West 2005).

(79) 18 U.S.C. [section] 981 (West 2005).

(80) See, e.g., United States v. Otis, 127 F.3d 829 (9th Cir. 1997). See also B. Frederick Williams and Frank D. Whitney, Federal Money Laundering, Crimes and Forfeitures [section] 1.3, n.34 (1999).

(81) United States v. La Mata, 266 F.3d 1275, 1291 (11th Cir. 2001).

(82) 18 U.S.C. [section] 3282 (West 2005).

(83) United States v. Arnold, 117 F.3d. 1308 (11th Cir. 1997).

(84) Even though a conspiracy involves an agreement, it continues beyond the moment of the agreement until the object of the conspiracy is fulfilled. "A conspiracy is constituted by an agreement, it is true, but it is the result of the agreement rather than the agreement itself, just as a partnership is constituted by a contract, is not the contract, but is the result of it. The contract is instantaneous; the partnership may endure as one and the same partnership for years. A conspiracy is a partnership in criminal purposes. That as such it may have continuation in time." United States v. Kissel, 218 U.S. 601, 608 (1910).

(85) Grunewald v. United States, 353 U.S. 391, 396-397 (1957). In the case of a Title 21 conspiracy where there are no alleged overt acts, the statute of limitations does not begin to run until the conspiracy is terminated. United States v. Heldon, 479 F. Supp. 316, 320 (D. Pa. 1979).

(86) 353 U.S. 391, 400 (1957).

(87) Id. at 405.

(88) Supra note 83.

(89) Supra note 83 at 1313-1314.

By EDWARD HENDRIE, J.D.

Special Agent Hendrie, DEA Legal Section, is a legal instructor at the DEA Training Academy.