The meaning of “money laundering” is exactly what it sounds like: it is the process of cleaning up “dirty” money.

This is accomplished by channeling money earned from criminal or other illicit conduct into bank accounts or other legitimate uses, making it impossible to trace its source.

The money laundering law in California is divided into two sections:

• Health and Safety Code 11370.9 HS, which only deals with money generated from drug offences; and 
• Penal Code 186.10 PC, which includes money related to any form of crime activity.

Examples of Penal Code 186.10 PC Money Laundering Activity

Here are some people who could face charges under one of California’s anti-money laundering laws:

• A woman is aware that her husband, a doctor, has been making a substantial profit via health-care fraud. She deposits huge checks into their joint personal bank account that she knows are the proceeds of the fraud.
• The thousands of dollars in cash earned from selling narcotics are used to stock the cash registers of a chain of food trucks owned by a prominent drug dealer.  His theory is that this will clean up his “dirty” money.

Penalties on Conviction on Penal Code 186.10 PC Money Laundering Charges

Both types of money laundering, as defined under PC 186.10 and HS 11370.9, are considered “wobblers” under California law.

This implies that, depending on the defendant’s prior history and the details of the case, prosecutors may charge money laundering as a misdemeanor or a felony.

Up to one (1) year in county jail and/or a fine of up to one thousand dollars are possible misdemeanor penalties.

Felony money laundering, on the other hand, entails a term of at least sixteen (16) months to four (4) years in prison, as well as a fine of up to two hundred fifty thousand dollars ($250,000), or double the amount of money laundered (whichever is greater).

Legal defenses to Penal Code 186.10 PC Money Laundering Charges

Money laundering is a challenging crime to prove. If you are accused with this crime, one of the following legal defenses may be able to help you beat the charges:

• You lacked criminal intent or knowledge that you were laundering illegal proceeds;
• The quantity of money you handled did not meet the legal requirement for a money laundering conviction; and/or
• You were a victim of police misconduct.

Our California criminal defense lawyers at Spodek Law Group discuss the following in this article:

1. California’s Money Laundering Laws: History and Philosophy
2. California’s Legal Definition of Money Laundering
3. Sanctions for Money Laundering in California
4. Legal Rebuttals to Charges of Money Laundering
5. Federal Anti-Money Laundering Legislation

If you have any questions after reading this post, please do not hesitate to contact Spodek Law Group.

1. California’s Money Laundering Laws: History and Philosophy

You might be wondering what the purpose of anti-money laundering legislation is. 

Isn’t it enough to prosecute people for the crime from which the money was obtained? 

Why does depositing the proceeds of a crime in a bank have to constitute a distinct crime?

The solution can be found in the history of California’s anti-money laundering legislation. 

The law was passed in 1986 by the California legislature in order to combat money obtained from the transportation and sale of illegal substances.

Large-scale organized crime networks were frequently involved in drug trafficking. 

The “workers” in the crime rings were in charge of the actual transportation and sale, while the “bosses” were in charge of the money.

Making it illegal to handle money gave prosecutors an avenue to target higher-ranking members of the group.

However, California’s anti-money laundering statute has resulted in the arrest of a large number of people who are far from being organized crime lords. 

Because of the way the laws are structured, you could be charged if you have a financial relationship with a family member or acquaintance who makes money through unlawful conduct, even if you don’t participate in it.

2. California’s Legal Definition of Money Laundering

General money laundering (Penal Code 186.10) 

The more general California money laundering statute, California Penal Code 186.10, defines money laundering as follows:

1. Using a bank to accomplish, or attempting to conduct, a transaction (this can include depositing or withdrawing money, or writing a check);
2. When a transaction or sequence of transactions has a total value of more than $5,000 in a seven-day period or more than $25,000 in a thirty-day period;
3. With either:
   1. Intention to encourage criminal action; or
   2. The knowledge that the funds used in the transaction were obtained through illicit conduct.

3. Sanctions for Money Laundering in California 

Money laundering under PC 186.10 and HS 11370.9 are both deemed “wobblers” under California law.

This implies that, depending on the defendant’s previous history and the details of the case, prosecutors may charge either form of money laundering as a misdemeanor or a felony.

If money laundering is charged as a misdemeanor, the following fines may be imposed:

• a maximum of one year in county jail; and/or
• A fine of up to $1,000 may be imposed.

Money laundering as a felony under Penal Code 186.10 carries the following penalties:

• Under California’s realignment program, a sentence of 16 months, 2 years, or 3 years in county jail; and/or
• A fine of up to $250,000 or twice the amount of the money that was laundered (whichever amount is greater).

If this is not your first money laundering conviction, the maximum fine increases.

Furthermore, if the amount of money laundered exceeds fifty thousand dollars ($50,000), the maximum prison sentence for money laundering increases.

The following are the felony penalties for money laundering with prohibited substances under Health and Safety Code 11370.9:

• a sentence of two, three or four years in state prison; and/or a sentence of two, three or four years in federal prison; and/or
• A fine of up to two hundred fifty thousand dollars ($250,000) or double the amount laundered is possible (whichever is greater).

4. Legal Rebuttals to Charges of Money Laundering

If you’ve been charged with money laundering in California, a qualified criminal defense lawyer can assist you present legal defenses that could lead to a “not guilty” finding. 

Here are a few examples:

“Lack of knowledge or lack of intent” defense

To be convicted of money laundering under Penal Code 186.10 PC, you must have either planned to promote or facilitate illegal behavior, or you must have known that you were handling money obtained through criminal activity.

Similarly, you must have meant to conceal the source or owner of drug proceeds to be prosecuted under Health and Safety Code 11370.9 HS.

You cannot be found guilty if the prosecutor cannot prove that you intended or knew these things:

• There isn’t enough money coming in from unlawful activity.
• As previously stated, you cannot be convicted of money laundering in California unless the transactions involved money in excess of specific threshold quantities

There’s more to it than that! The District Attorney must be able to demonstrate not only that the laundering transactions exceeded these thresholds, but also that a portion of the money laundered came from illicit sources.

The “Misconduct by the police” defense

Money laundering arrests are frequently made through sophisticated covert operations. 

Occasionally, these activities result in police misbehavior, such as searches conducted without a valid California search warrant or without reasonable cause.

If this happens, your lawyer may be able to file a motion to suppress evidence obtained through an illegal search and seizure.

6. Federal Anti-Money Laundering Legislation 

Money laundering is both a federal and a state felony in California. 

Engaging in one of two types of money laundering is illegal under federal law.

The first involves engaging in a financial transaction with the proceeds of criminal activity with the goal to EITHER promote the illegal behavior OR hide the illicit source of the funds.

If you are convicted of this felony, you could face a term of up to twenty (20) years in federal prison, a fine of up to $500,000, or double the amount laundered (whichever is greater), or both.

The other sort of federal money laundering is intentionally engaging in (or attempting to engage in) a transaction worth more than $10,000 with funds obtained through illegal activity.

This somewhat less significant crime is punishable with a fine, up to ten (10) years in federal prison, or both.

Call us for help with your case…

Please do not hesitate to contact us at Spodek Law Group if you have any concerns concerning California’s money laundering laws or if you would want to discuss your case privately with one of our California criminal defense attorneys.