Proposals to Reform the Federal Money Laundering Statutes
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Cases of unfair application of the money laundering laws are legion. Individuals and businesses who handle dirty money with no actual knowledge of the underlying offense are branded money launderers. 4 This is because courts have interpreted the knowledge requirement to include the concept of “ willful blindness ” or “ conscious avoidance. ” Some courts have gone so far as to hold that willful blindness is shown where the defendant has suspicions and does not take action to confirm or disprove their truth; thus, the burden is on the defendant to investigate a suspicious situation, or be judged criminally culpable for her failure to inquire into the source of the funds. 5 Compounding the statutes ’ over-breadth is the prosecutorial practice of piling on money laundering charges that are incidental to or virtually indistinguishable from the underlying offense. For example, prosecutors have charged money laundering where the defendant has done no more than deposit the proceeds of some “ specified unlawful activity ” (see footnote 1) into his bank account, even though the bank account is clearly identifiable as belonging to him. 6 Spending illegal proceeds, even without any attempt to obfuscate their source, likewise may trigger money laundering charges — against the drug dealer and the unfortunate merchant who knowingly accepts his money.
Piling on money laundering charges to an alleged crime other than drug trafficking often results in a sentence almost four times what would ordinarily be incurred. 7 In white collar criminal
4 Federal law permits juries to infer guilty knowledge from a combination of suspicion and indifference to the truth. See, e.g., United States v. Campbell, 977 F.2d 854, 856-59 (4 th Cir. 1992) (reinstating the money laundering conviction of a real estate agent based upon the agent ’ s “ willful blindness ” that her client was a drug dealer attempting to conceal proceeds by buying a house, when the client drove a Porsche, used a cellular telephone, and paid $60,000 in cash under the table). 5 See United States v. Kaufman, 985 F.2d 884 (7 th Cir. 1993) (upholding car dealer ’ s money laundering conviction based on willful blindness theory, even though the undercover agents in the sting operation never told the defendant that the car purchase money was drug proceeds). 6 Such “ receipt and deposit ” cases may be prosecuted under 18 U.S.C. § 1956 based on the contrived theory that the defendant “ concealed ” the proceeds. See, e.g., United States v. Sutera, 933 F.2d 641 (8 th Cir. 1991) (holding that deposit of three checks identified as gambling proceeds into business bank account, which bore the name of its owner, constituted concealment).
7 Teresa E. Adams, Tacking on Money Laundering Charges to White Collar Crimes: What Did Congress Intend, and What Are the Courts Doing?, 17 Ga. St. U. L. Rev. 531, 558-59 (2000).
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