Douglas Husak on dispensing with the malum prohibitum offense of money laundering.
In his stimulating book Overcriminalization: The Limits of the Criminal Law, (1) Douglas Husak claims that, at least in the U.S., a major (even if not the only) factor contributing to the high numbers in prison is what he terms 'overcriminalization' on the part of legislatures, namely, the enactment by them of too many criminal laws. To oversimplify his argument somewhat, his bold thesis is that this excess of laws has contributed to an increase in the number of violations of criminal laws, which, in turn, has resulted in the meting out of too much criminal punishment (in particular, too much imprisonment). Furthermore, this overcriminalization has caused serious injustices to become endemic within the criminal law system (because of problems in fairly enforcing the excessive numbers of laws). He advances what he terms a "presumptive and intuitive case" (2) in support of these contentions and then argues that one way of reducing overcriminalization is to require that criminal laws be subject to a series of constraints that would serve to limit the sorts of conduct that justifiably expose offenders to punishment by the state. He proposes four constraints that he characterizes as "internal" to the criminal law and three that are "external" to it, though he acknowledges that the distinction is somewhat artificial because the categories will sometimes overlap. (Since details of the constraints have been set out in the "Introduction" to this symposium, (3) I will not restate them here.)
According to Husak, the seven constraints are individually and severally necessary if overcriminalization is to be reined in. In addition to mounting powerful arguments for the plausibility of each of the constraints, he contends that requiring their satisfaction would do much to rid the criminal law of some of its more egregious injustices. In particular, he claims that requiring the satisfaction of his seven constraints would lead to the proscription of indefensible strict liability and criminal paternalism offenses, and to a dramatic reduction in the number of mala prohibita (4) and risk-creation offenses presently authorized in statutes. As regards these latter, Husak does not want to deny a place among justifiable criminal law statutes to all mala prohibita and risk-creation offenses, (5) but his detailed consideration of specific examples of such offenses is aimed at showing that the onus should be shouldered by those who advocate their retention within the criminal law. Thus, for instance, he contends that the mandatory imposition of criminal punishment on persons who engage in consensual sexual intercourse with minors (which in U.S. jurisdictions constitutes "statutory rape") would be unjustifiable in light of his proposed constraints because in instances involving minors who are capable of giving consent their consensual participation would afford the defendant a complete defense. Existing statutory rape laws result in overcriminalization because they fail to discriminate between consensual sexual activity and sexual offenses that should be subject to the criminal law. Were these laws framed so as to satisfy the seven constraints, overcriminalization and injustices to individuals would be avoided. More generally, as a minimalist about criminalization, he prefers strategies aimed at restricting both the criminalization of various offenses (for example, some driving offenses) that presently lead to the incarceration of offenders and the use of imprisonment (as presently mandated) for those who offend. He believes that the state should pursue its legitimate interest in discouraging such conduct through the use of "free markets, systems of taxation, civil law, state-sponsored advertising campaigns and the like" rather than via punishment under the criminal law. (6)
There can be no denying that more extensive use is made of criminal punishment in the U.S. than is considered necessary in many other comparable nation states (as was suggested in my opening paragraph). The case Husak mounts for why this is so is plausible and demands a response from those who deny that there is an excessive reliance on the criminal law. Although I have neither the capacity nor the inclination to attempt to refute the generality of his case, I will argue that his case is not as decisive as he suggests in relation to at least one of his favored examples of a dispensable malum prohibitum offense. Obviously, it would not count for much if I could establish only that he was unconvincing about one example of one type of offense that presently comes under the aegis of the criminal law. So I will also attempt to show that a successful counter-argument promises to have wider significance for, at least, some other mala prohibita offenses. Even so, in contrast with the attempts by Antony Duff and Stuart Green, respectively, to provide conceptual underpinnings for hybrid forms and for more pure forms of mala prohibita offenses, my response will be very modest. (7) (This seems to me the better part of valor given that Husak's critiques of their respective attempts are among the most impressive sections in his book. (8)
Instead of trying to emulate the approaches of Duff and Green, I will employ a similar methodology to Husak and appeal to intuitions about particular examples, even though, like him, I recognize that this has its shortcomings. (9) I own to beginning from intuitions that are at odds with his on a number of matters (specifically, for purposes of this symposium, those to do with money laundering, but also ones concerning some recreational drug use and the ownership of hand guns). Despite disagreeing with some of his intuitions about which offenses should be criminalized, I happen to agree with much of what he says about the excessive use of imprisonment in punishing offenders (especially in the U.S.). Accordingly, my focus will be on the offense of money laundering and only in passing with the sentences incurred by those convicted of it. As already indicated, unless my rejoinder to Husak's position on this one specific offense has application to other offenses, it will not pose a serious challenge to the claim that overcriminalization is largely the result of the proliferation of unjustifiable mala prohibita offenses, (10) or to the claim that the legitimate interest the state has in discouraging the conduct proscribed by many mala prohibita offenses fails to justify their criminalization. (11)
I turn my attention, therefore, to money laundering, a malum prohibitum offense that is highlighted by Husak for its contribution to overcriminalization but is also of special interest to him because of its frequent use in connection with one of his bugbears, drug offenses. It is of importance for his argument that it is an offense that satisfies two important desiderata: it does not involve conduct that is patently objectionable and it is representative of those mala prohibita offenses that are prosecuted. Husak writes as follows:
The ancillary offense of money laundering imposes up to ten years imprisonment on persons who engage in a monetary transaction of funds greater than $10,000 known to be derived from a specified form of wrongful activity. This offense is not malum in se; although it is obviously wrongful to profit from illegal conduct, it is hard to see why a person who merely deposits his profits in a bank commits a second wrong that is prior to and independent of law. (12)
The central concern Husak raises in this passage is how a malum prohibitum offense like money laundering can involve the sort of wrongfulness required under the second internal constraint, namely the requirement that hardship and stigma may properly be imposed only for wrongful conduct. Before seeking to answer this question I will briefly comment on a number of matters of direct relevance to the task of providing a credible answer. First, I agree with Husak that money laundering and certain other ancillary criminal offenses sometimes serve as surrogates for what he dubs "core crimes" simply because it is harder for the state to prosecute the core crimes successfully, (13) but in what follows I will set aside this consideration in order to concentrate on the prosecution of money laundering as such. Second, although his description of money laundering as a criminal "merely deposit[ing] his profits" may seem question-begging, Husak is well aware that a malum prohibitum offense cannot (without begging the central question) be excluded from the criminal law just because it does not involve the sort of wrongfulness implicated in a malum in se offense (i.e., an act deemed wrong in itself). (14) This explains why he interrogates the arguments advanced by Duff and Green that purport to explain the nature of the wrongfulness that mala prohibita offenses involve. He exposes their inadequacies and, accordingly, concludes that the burden of proof falls squarely on those who wish to retain an offense such as money laundering within the criminal law to show how it satisfies the wrongfulness requirement. (15) Third, notwithstanding this claim about the burden of proof, he appears to allow that some mala prohibita offenses should remain criminal offenses. (16) But, as I understand him, because one of his main concerns is to minimize the state's reliance on hard treatment and stigma he favors using alternative strategies to curb the socially undesirable behavior these offenses are intended to target. (It is, of course, already the case in some jurisdictions that only administrative sanctions are used to penalize money laundering.) Fourth, since I consider that money laundering should be dealt with under the criminal law I will have to show why it should remain a criminal offense by indicating how it involves wrongfulness. Finally, it will be necessary to show that my account is consistent with satisfaction of the third internal constraint, namely, that the state should be permitted to impose hard treatment and stigma only on those who deserve them.
It is time to confront the key question. Why should money laundering remain subject to criminal sanctions? Even though the passage cited above mentions only those cases of money laundering in which a criminal launders criminal proceeds on his own behalf (vide Husak's denial that such a criminal commits a second wrong), laundering may, of course, also be performed by a person (or persons) on behalf of the author of the so-called predicate offense. Though the individuation of act types, including criminal act types, is subject to controversy, a "professional" money launderer (as I will refer to such a person) undoubtedly performs a type of act that is quite distinct from the type of act performed by the agent of the predicate offense. Since the same act-making features are present in laundering by a criminal on his own behalf and laundering by a professional, I think that when a criminal launders his ill-gotten gains himself (rather than, say, stowing them away under his floorboards) he performs a type of act that is separable from the type of act, or types of acts, that produced those gains. So, he should rightly be considered to have performed a second separable type of act. If it can be shown that this second separable type of act involves wrongdoing (and thus that Husak is mistaken in denying that a money launderer commits a second wrong) it will be legitimate to deal with such an act via the criminal law.
To reinforce my claim that money laundering should be regarded as a separable wrong, consider these close parallels: the crime of handling stolen goods is, and should be, separate from the crime of theft, and the crime of forging is, and should be, separate from the crime of uttering. (I will from now on only make use of the former example for illustrative purposes but similar points could be made about the latter.) No doubt there would still be thefts even if there were no handlers, but it is highly doubtful that there would be as many thefts if there were no handlers. Presumably it is because the facilitating role that the handler plays can be so significant that in some jurisdictions--for example, England and Wales--the maximum penalty for handling exceeds that for theft. The higher penalty is applicable whenever the handler plays a key role in determining how numerous are the thefts. (17)
Professional launderers of criminal proceeds should likewise be seen as facilitating crime. (18) When the proceeds of crime are successfully laundered through the financial system, or successfully converted into real property, the following sorts of effects are apt to occur (albeit they can, of course, also result from other sorts of criminal activity): crime is rendered profitable thereby providing an incentive for further crime, including the crime of professional money laundering; resource allocation is adversely affected; the integrity (such as it is) of the financial system is compromised; and, funds are secured for use in financing further crime.
Even so, it is reasonable to ask (and it is a question that Husak would insist should be asked): what precisely is the wrong that is perpetrated by someone who, for example, does not commit, assist in, or encourage the committing of the predicate crime, but launders the proceeds? (Similarly, it may be asked: what precisely is the wrong involved in buying stolen goods from a thief, always supposing that the handler is not an accessory after the fact?) Husak does not discuss in detail what he thinks wrongfulness consists in, but his understanding of harmfulness is of direct relevance. (19) Like him, I will take my cue from Joel Feinberg's dual contentions that an individual is harmed, or, wronged, when his legitimate interests, or rights, are unjustifiably and inexcusably set back or invaded, and that the occasioning of harm is a reason, albeit neither a necessary nor a sufficient reason, for criminalization. (20)
Even though Feinberg's account is deliberately couched in terms of the interests and rights of individuals, he maintains that someone who wrongs or harms another may be subject to criminal proceedings only if he has violated "a rule that finds justification in its role in promoting the efficiency of governmental practices that are in the public interest." (21) When Feinberg spells out more fully the nature of this public interest, he does it in terms of an interest that most, if not all, members of a community share in common. (22) Husak endorses the idea that a substantial state interest needs to exist before the criminal law may justifiably be invoked, but the few candidates for a substantial state interest that he considers do not include an understanding of the public interest like Feinberg's, (23) which is the one that I will appeal to in arguing for the wrongfulness of money laundering.
I take the wrongfulness of money laundering to be a function of the harmful economic effects it is apt to have (as described in the list I gave above). At the Canberra workshop (July, 2008) Husak challenged me to say more by way of substantiation of these alleged effects. I will endeavor to do so within the space available. Unbeknown to me at that time, a vast literature already existed containing similar, albeit usually more extreme, claims to those I made about the economic effects of money laundering. (These types of studies have been carried out for such organizations as the Financial Action Task Force established under the auspices of the Organization for Economic Co-operation and Development and the International Monetary Fund, and the International Association of Insurance Supervisors, as well as by numerous individual scholars. (24)) Though it has been encouraging to discover that others have previously made similar points, further reading about, and reflection on, the issue has led me to a better appreciation of why it might be thought (with Husak) that criminalization would still not be justified even if money laundering were to give rise to harmful economic effects. (25) Accordingly, I will elaborate on some of the reasons that have been offered for thinking that even if money laundering has harmful economic effects it would still not be justified to criminalize it. I will then set out my critical response. If I can show that a more detailed set of reasons for opposing the criminalization of money laundering than Husak has provided fails to justify such opposition, I will have met his challenge.
Peter Alldridge maintains that criminalization of money laundering requires a justification different from that needed for confiscation of criminal proceeds and for that needed to justify forfeiture (at least where the items to be forfeited are not themselves contraband). (26) Indeed, he believes that the arguments advanced in justification of the criminalization of both forfeiture and money laundering are unsuccessful. I will confine my attention to those aimed at justifying the criminalization of money laundering. Alldridge classifies them into two kinds: moral arguments and economic arguments. Though there is no space here to consider his detailed replies to the former kind of argument, it is a key theme in those replies that criminalization should be a remedy of last resort. Liberals, of course, do not disagree with this sentiment, but it is worthy of mention here because Alldridge appears to share Husak's confidence in the utility of other forms of law enforcement. In relation to money laundering, Alldridge contends that as long as the state has the power to confiscate criminal proceeds (a power that he thinks is relatively easy to justify), there will be sufficient disincentive not to commit the associated predicate crimes. (27) Again like Husak, he thinks that making only the predicate crime subject to prosecution has the further merit of removing any risk of double jeopardy. (28) However, because my focus is on the economic arguments, I will say nothing further about these matters.
Alldridge's first counter-argument to the economic grounds for criminalizing money laundering is that if other means of regulation, such as confiscation, were to be successfully employed there would be no need for criminalization. (29) He makes a supplementary claim that if confiscation were to prove ineffective, criminalization would be unlikely to be more effective. Second, he thinks that even if there were no viable alternative to the coercive use of the criminal law it would still involve a leap in logic to believe that the causal contribution of any given individual launderer to the alleged economic harms would be sufficient to warrant punishment. (30) Third, he contends that the connection between the alleged economic harms of money laundering and the actions of any individual launderer is too remote to satisfy the requirements of mens rea. (31)
In assessing these arguments (especially the third) it is important to note that Alldridge believes that the economic effects attributed to money laundering have become a focus chiefly because of globalization. (32) If he were right about this it would be that much harder to make out a case for the economic harmfulness of acts of money laundering since they would have to be on a massive scale to have any economic impact. No doubt some money laundering activities do occur across several jurisdictions but that is no reason to conclude that they have no impact within particular jurisdictions. Moreover, his characterization of the alleged economic harms is an extreme one mirroring that in some of the documents published by bodies like the Financial Action Task Force--for example, that money laundering has the capacity to undermine international financial markets--and thus goes well beyond what I have claimed. Since Husak says nothing to suggest that he thinks of money laundering as primarily an international activity, and since I am not relying on extreme claims about the economic impact of money laundering, I will disregard Alldridge's third argument in what follows.
As to his second argument, while it seems obvious that a single instance of money laundering can be instrumental to the perpetration of further crimes, I agree that no single instance is likely to be capable of, for example, compromising the integrity of the financial system, or adversely affecting the efficient allocation of economic resources, or damaging the security of a system of ownership and possession. Even so, several pertinent points can still be made. First, there can undoubtedly be economic effects other than the macro-economic ones on which Alldridge concentrates almost all of his attention. In fairness, he does acknowledge in passing that there may be, for instance, micro-economic effects on businesses that are undermined by unfair competition stemming from the use of laundered funds. (33) Nonetheless, to make such effects the subject of only a passing reference seems to me to fail to give them the due they should be given. Second, and more importantly in the present context, the more extensive the practice of money laundering the greater the likelihood of the occurrence of the economic effects I have mentioned. Hence, assuming that the practice of money laundering is extensive, I claim that someone who launders the proceeds of his predicate crime contributes to a practice that: compromises the integrity of the financial system (for example, through circumvention of the notification and compliance requirements that apply within the regulated financial sector); and damages the security of ownership and possession (for example, by sanitizing what has been improperly taken from others to avoid its confiscation and return to the rightful owners, or by distorting and corrupting markets for the sale and purchase of businesses or real estate). In addition to these points about economic harms, there are two further points of relevance. First, a money launderer who has not committed the predicate crime perpetrates a wrong by creating an incentive for others to commit the predicate crime. Second, money laundering may contribute to the facilitation of further crimes. These various ways in which money laundering involve wrongfulness can all be summarized as follows: money laundering is a socially harmful activity because it is contrary to the public interest.
I have claimed that those who launder criminal proceeds--their own or others'--act wrongfully in that they adversely and unjustifiably set back the interests that most members of communities like ours have in the maintenance of integrity within the financial system and dealings in real property, and in restricting the financing of yet more crime. The act of money laundering cannot be universalized without giving rise to these damaging effects and for that reason should be considered socially harmful. Or, to put the point another way, because money laundering would flourish were it no longer criminal to engage in it, to omit to make it a distinct criminal offense would be to allow a form of wrongdoing that causes serious social harm to go unpunished.
Even supposing that I am right about this, it might still be thought that money launderers do not deserve to have harsh treatment and stigma imposed upon them for their wrongdoing because the state interest in their activity is not substantial enough to warrant criminalization (as against, say, having their proceeds confiscated or being subjected to administrative sanctions). If so, my argument might be thought to show only that the second of Husak's internal constraints can be satisfied, while leaving his third constraint unsatisfied. This is the nub of Husak's objection to money laundering remaining a criminal offense and, in effect, is also the gist of Alldridge's first argument.
A by now familiar difficulty arises about how to show that my argument does not have this deficiency. The difficulty arises because Husak does not say much about his conception of desert. (34) Indeed, he says only that criminal punishments are undeserved if they are deployed against private wrongdoing, or against wrongdoing that is excusable, or are disproportionate. (35) Both his acknowledgement that this is meager, and his recognition that it is no simple matter to argue persuasively in favor of the desert constraint, should be seen, I think, as a reflection of his conviction that the main battle is not about filling in the details of the third constraint. (36) Indeed, he allows that something very like it is preserved even in consequentialist justifications of punishment. (37) He is more concerned to demonstrate that any effort to justify punishment will have implications for what may rightly be criminalized. Obviously, given his belief that existing criminal law frequently breaches the constraints he advocates, including the desert constraint, it follows that much criminal punishment is presently unjustified.
However, nothing in Husak's observations about desert dissuades me from thinking that money launderers deserve criminal punishment. I grant that I cannot support my contention by presenting a retributive theory that explains just which offenses would be contained within an ideal theory of the criminal law, and why money laundering would be one of them. But this much I can say: by definition, money launderers know what they are doing so they lack any obvious excuse; and, what they do is not just of private concern (as would be the case were they merely depositing their profits in a bank). Their acts, as previously urged, have serious effects on significant public interests. Hence, there is no reason to think that the criminalization of money laundering violates Husak's third constraint, nor, mutatis mutandis, is there any reason to endorse Alldridge's first argument.
I indicated earlier that I would have only a little in passing to say about sentencing. The little is this: there is no reason why the sentences handed out to money launderers need be anything but proportionate when compared with other criminal offenses (including mala in se offenses). Furthermore, a person who commissions or instigates a predicate offense that requires him to launder the proceeds to make the offense profitable might well be given a longer sentence than someone who commits only one of these offenses without there being any suggestion of disproportionateness. (A comparable consideration was seen to apply in England and Wales for someone guilty both of handling offenses and of masterminding the thefts that yielded the property being handled.) In the event that an additional wrong has been committed a longer sentence can hardly be thought disproportionate.
Finally, I return to the matter of whether the argument I have set out in connection with just one of Husak's examples of a dispensable malum prohibitum offense can be generalized so as to give him significant pause about wholesale dispensing with other mala prohibita offenses. He maintains that the onus is on those who endorse specific mala prohibita offenses to justify them. My contention has been that that onus can be discharged whenever the criminalization of such an offense (as with money laundering) can be justified by reference to the need to protect significant public interests. Despite my sympathy with his quest to reduce overcriminalization, I believe that the onus will be capable of being discharged more often than he warrants.
[I wish to thank John Kleinig and Norvin Richards for their constructive comments on a first draft of the paper prior to its presentation at the Canberra workshop. I also wish to thank those who offered comments on that occasion, most notably, of course, Douglas Husak.]
(1) Douglas Husak, Overcriminalization: The Limits of the Criminal Law (New York: Oxford University Press, 2008).
(2) Ibid., 45.
(3) "Introduction," In this issue, 26.
(4) That is, those acts deemed wrong in virtue of their prohibition.
(5) Husak, Overcriminalization, 119 and 168f., respectively.
(6) Ibid., 119.
(7) Antony Duff, "Crime, Prohibition and Punishment," Journal of Applied Philosophy 19 (2002): 97-108; Stuart Green, "Why It's a Crime to Tear the Tag Off a Mattress: Overcriminalization and the Moral Content of Regulatory Offenses," Emory Law Journal 46 (1997): 1533-1615, and Stuart Green, "Cheating," Law and Philosophy 23 (2004): 137-85. Both the latter papers are included in Green's Lying, Cheating, and Stealing: A Moral Theory of White-collar Crime (Oxford: Oxford University Press, 2006).
(8) Husak, Overcriminalization, 106-19.
(9) See, for example, ibid., 76, 121.
(10) Ibid., 104.
(11) Ibid., 119.
(12) Ibid, 105.
(13) Ibid., 40.
(14) Ibid., 76.
(15) See ibid., 106-12 and 113-19 respectively.
(16) Ibid., 119.
(17) It is not fanciful to see a similar concern at work in the way in which lengthier sentences have often been given (e.g. in both England and Wales and the U.S.) to those criminals who both commit predicate crimes and manage or coordinate associated money laundering offenses.
(18) It might be contended that it is unreasonable to focus on professional money laundering (despite my having argued that an act of money laundering performed by a criminal on his own behalf is an act of the same type as that performed by a professional money launderer). Indeed, in his response to my commentary at the workshop in Canberra, Husak gave as an example of money laundering that of a person who sold (illegal) recreational drugs to a small circle of acquaintances as a means of financing his day-to-day living. He expressed puzzlement as to why such conduct should be thought to warrant criminalization. Though he did not do so, he could have sought to make the example more persuasive by adding that the seller was thereby able to avoid relying on welfare support and hence was indirectly benefiting society. Clearly his example was intended to portray money laundering in the most favorable light. Given the 2008 finding by the Supreme Court in United States v. Santos, et al. (No. 06-1005) 461 F. 3d 886 that the federal statute outlawing money laundering applies only to criminal "profits" and not to criminal "proceeds," his example might be thought persuasive. (It is worth noting, however, that in England and Wales it is criminal proceeds not criminal profits that are subject to confiscation--see Peter Alldridge, "The Moral Limits of the Crime of Money Laundering," Buffalo Criminal Law Review 5 (2001): 279-319, especially 284 n. 15). Be that as it may, I think Husak's counterexample is not sufficiently representative of money laundering to be relied upon in efforts to determine the proper scope of the criminal law. Of course, notwithstanding the Supreme Court's Santos decision, there is no incompatibility in thinking that someone who uses his profits from dealing drugs to friends to cover personal day-to-day living expenses commits a (second) criminal offense but deserves only the mildest of punishment for money laundering.
(19) See, for example, Husak, Overcriminalization, 73-76.
(20) Joel Feinberg, Harm to Others (New York: Oxford University Press, 1984), 31 36.
(21) Ibid., 113.
(22) Ibid., 222-25.
(23) Husak, Overcriminalization, 135-39.
(24) See, for instance, Donato Masciandaro, Elod Takats, and Brigitte Unger, Black Finance: The Economics of Money Laundering (Cheltenham, UK: Edward Elgar, 2007), which includes a useful bibliography.
(25) See, for instance, Alldridge, "The Moral Limits of the Crime of Money Laundering."
(27) Ibid., 282. In a revealing remark (287) he says that the argument of those who believe money laundering should be a distinct offense is weakened to the extent that confiscation provisions operate ideally. Those who believe the offense is, and should be, distinct, consider it of great significance that the operation of provisions for confiscation is very far from ideal.
(28) Ibid. 285f.
(29) Ibid. 316.
(30) Ibid. 317.
(31) Ibid. 317f.
(32) Ibid. 305.
(33) Ibid. 307.
(34) See, especially, Husak, Overcriminalization, 82-91.
(35) Ibid., 83.
ROBERT YOUNG *
* Robert Young was, until his recent retirement, Reader in Philosophy, La Trobe University, Victoria, Australia. Email: Robert. Young@latrobe.edu.au
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|Publication:||Criminal Justice Ethics|
|Article Type:||Critical essay|
|Date:||May 1, 2009|
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