Criminal Defense Lawyers

Federal Money Laundering Charges

Your bank already reported you to FinCEN. Every cash transaction over $10,000 generates a Currency Transaction Report filed automatically with the federal government. Every unusual pattern in your account triggers a Suspicious Activity Report. The FBI runs automated searches against all SAR filings, matching investigation targets to banking activity. By the time federal agents contact you about money laundering, they’ve already mapped your entire financial life – every deposit, every withdrawal, every transfer. And here’s what makes money laundering prosecution so devastating: it’s almost never a standalone charge. You’re charged with the predicate offense – fraud, drug trafficking, tax evasion – AND money laundering. Each statute has separate penalties. Each financial transaction can be a separate count. The 62-month average sentence doesn’t account for the predicate offense sentences running consecutively.

This is how federal money laundering works as a sentence multiplier. You commit a crime that generates money. Then you do something with that money – deposit it, transfer it, spend it, invest it. Every one of those financial transactions becomes a potential money laundering count under 18 U.S.C. § 1956 or § 1957. Mark Scott got 10 years for laundering $400 million from the OneCoin fraud. Sam Bankman-Fried’s 25-year sentence included money laundering conspiracy. The Binance CEO got 4 months personally while the company paid $4.3 billion in penalties. Money laundering turns a fraud sentence into double the time, a drug sentence into triple exposure, a tax case into decades of potential incarceration.

Understanding federal money laundering charges means understanding that the banking system is designed to report you. FinCEN – the Financial Crimes Enforcement Network – collects reports from over 45,000 financial institutions. Banks don’t wait for subpoenas. They file Currency Transaction Reports automatically for cash transactions over $10,000. They file Suspicious Activity Reports whenever they detect unusual patterns. And the FBI has direct access to query this database through Section 314(a) requests. Your financial history is sitting in a federal database before any investigation officially begins.

The Two Statutes That Create Different Exposure

Heres where federal money laundering gets complicated – and were most defendants get confused.

There are two primary money laundering statutes, and prosecutors choose strategicaly based on the evidence they have. Section 1956 is the heavy hitter – 20 years maximum per count. Section 1957 is the backup – 10 years maximum but easier to prove. Most defendants face charges under § 1956 because prosecutors want the leverage that comes with higher exposure.

18 U.S.C. § 1956 covers transactions designed to promote criminal activity, conceal the nature of proceeds, or evade reporting requirements. The government has to prove you knew the money came from criminal activity and conducted the transaction with specific intent related to that criminal activity.

18 U.S.C. § 1957 is simpler – it just prohibits monetary transactions over $10,000 involving criminally derived property. No specific intent to conceal or promote. Just the transaction itself with knowledge that the money was dirty.

77.5% of federal money laundering convictions fall under § 1956 with its 20-year maximum per count.

Heres the trap that catches defendants. You dont actualy have to know the money was illegal. Willful blindness – deliberatly avoiding learning the truth – satisfies the knowledge requirement. If you should have known the money was dirty but chose not to ask questions, thats enough for conviction.

The Predicate Offense Problem

OK so heres something that shocks most defendants when there lawyers explain it.

You can be convicted of money laundering even if your aquitted of the underlying crime. The predicate offense – the crime that generated the money – dosent need to result in conviction for the laundering charges to stick. Prosecutors just have to prove that the money came from some form of criminal activity, not that you were the one who commited that specific crime.

This creates a devastating strategic problem for defendants. You might beat the fraud charges at trial but still get convicted on money laundering. The jury might have reasonable doubt about wheather you actualy committed fraud but be convinced that you knew the money in your account came from somewhere illegal. Different elements, different standards, same defendant facing years in prison.

And heres were conspiracy makes everything worse. Money laundering conspiracy under § 1956(h) dosent require an overt act. Simply agreeing to launder money – even if you never actualy conduct a transaction – is a federal crime carrying the same 20-year maximum as the substantive offense.

How Your Bank Became a Federal Informant

Heres the system working against you before you even know theres an investigation.

The Bank Secrecy Act requires financial institutions to file two types of reports with FinCEN:

Currency Transaction Reports (CTRs): Filed automaticaly for any cash transaction over $10,000. Deposit $12,000 in cash? CTR filed. Withdraw $15,000? CTR filed. Exchange currency totaling $11,000? CTR filed. The bank dosent ask wheather the money is legitimate. They just file the report.

Suspicious Activity Reports (SARs): Filed whenever the bank detects unusual patterns. Large round-number transactions. Multiple accounts with similar activity. Wire transfers to high-risk jurisdictions. Rapid movement of funds. Transactions inconsistent with your stated business. Banks file over 4 million SARs annually – and you never know when your filed about.

The FBI dosent need to subpoena these records. FinCEN provides direct access through Section 314(a), allowing federal agents to query 45,000+ financial institutions simultaneously. The Targeted SAR program automaticaly matches search terms against all SAR filings. Your being monitored before any investigation officialy begins.

And heres the irony that catches people. Structuring – breaking deposits into chunks under $10,000 to avoid CTR reporting – is itself a federal crime. Even if the money is completly legitimate. Even if you earned it legaly. The act of trying to avoid the reporting threshold is criminal, regardless of wheather the underlying funds are dirty or clean.

The Sentencing Math That Creates Decades of Exposure

Heres how federal money laundering sentences actualy get calculated.

The average sentence for federal money laundering is 62 months – over 5 years. But thats just the average. The range spans from probation in rare cases to decades when enhancements stack.

Under the sentencing guidelines, loss amount drives everything:

• $15,000 – $40,000 in laundered funds: add 4 levels
• $95,000 – $150,000: add 8 levels
• $250,000 – $550,000: add 12 levels
• $1,500,000 – $3,500,000: add 18 levels
• Over $9,500,000: add 22 levels

Additional enhancements pile on:

• Sophisticated laundering scheme: add 2 levels
• Leadership role in the offense: add 2-4 levels
• Obstruction of justice: add 2 levels
• Connection to drug trafficking: significant enhancement

Each financial transaction can be charged as a seperate count – move money 10 times, face 10 potential 20-year counts.

But heres what actualy devastates defendants. Money laundering is almost always charged alongside the predicate offense. Your not facing 62 months for laundering. Your facing 62 months for laundering PLUS whatever the underlying crime carries. Fraud plus laundering. Drug trafficking plus laundering. Tax evasion plus laundering. The sentences run consecutively, not concurently in most cases.

The Investigation You Didnt Know Was Happening

Heres how federal money laundering investigations typicaly develop – and why your already behind by the time you find out.

The investigation often starts with a SAR. Your bank notices unusual patterns and files a report with FinCEN. FBI agents running database searches flag your name. They pull your CTR history – every large cash transaction youve made. They request records from other banks through 314(a). They trace wire transfers. They analyze account patterns.

All of this happens before any subpoena, before any search warrant, before any indication that your under investigation. The banking system is designed to inform on customers. Thats not conspiracy theory – thats the explicit purpose of the Bank Secrecy Act.

By the time agents approach you for an interview or execute a search warrant, they already have:

• Complete CTR history for all your accounts
• SAR filings from any bank that flagged you
• Wire transfer records showing money movement
• Analysis of transaction patterns over years
• Often, cooperation from co-conspirators who are already talking

The investigation that took 18-24 months is presented to you as a fait accompli. There not fishing. There confirming what they beleive they already know.

The Named Cases That Show What Sentences Look Like

Heres what federal money laundering sentencing actualy produces in high-profile cases.

Changpeng Zhao – the founder and CEO of Binance, the worlds largest cryptocurrency exchange – pleaded guilty to willfully failing to maintain an effective anti-money laundering program. Personal sentence: 4 months in federal prison. But the corporate penalty told the real story: $4.3 billion, the largest corporate resolution in Treasury Department history. Individual exposure stayed low because Zhao cooperated and the charges focused on program failures rather then substantive laundering. Most defendants dont get this treatment.

Mark Scott was an attorney who laundered approximately $400 million from the OneCoin cryptocurrency fraud through a series of fake investment funds. He claimed he beleived he was handling legitimate proceeds from trading activities. The jury didnt buy it. Sentence: 10 years federal prison.

Sam Bankman-Fried recieved 25 years for fraud and money laundering conspiracy related to the FTX collapse. The laundering charges were part of a broader scheme that moved billions in customer funds. His sentence reflects the full conspiracy exposure rather then standalone laundering.

These arent outliers. These are what happens when federal prosecutors take money laundering cases to judgment. The 62-month average includes pleas with cooperation – defendants who provided substantial assistance get sentences reduced. Trial defendants face the full weight of the guidelines.

The Structuring Trap That Catches Legitimate Money

Heres the crime you can commit with completly legal money.

Structuring – also called “smurfing” – means breaking up transactions specificaly to avoid the $10,000 CTR reporting threshold. You deposit $9,500 on Monday, $9,800 on Wednesday, $9,200 on Friday. Each transaction is under the threshold. No CTR gets filed.

Except the bank notices the pattern. They file a SAR. And now your facing federal structuring charges under 31 U.S.C. § 5324 – up to 5 years per violation, plus whatever money laundering charges prosecutors want to add.

Heres what catches people. The underlying money can be completly legitimate. You can have tax returns proving you earned every dollar legaly. Dosent matter. The crime is structuring the transactions to avoid reporting, not having dirty money. Former Speaker of the House Dennis Hastert went to federal prison partly for structuring withdrawals of his own legitimate funds.

Banks train employees to detect structuring patterns. Multiple deposits just under $10,000. Round numbers that suggest deliberate calculation. Timing patterns that indicate awareness of reporting thresholds. Once the pattern is detected, the SAR is filed, and federal prosecutors have another potential charge.

The Forfeiture Consequence That Takes Everything

Heres what happens to the money itself – regardless of wheather your convicted.

Asset forfeiture accompanies almost every money laundering prosecution. The government can seize funds that are proceeds of or involved in the alleged criminal activity. They can seize the property those funds were used to purchase. They can seize accounts, vehicles, real estate, businesses.

And heres what most defendants dont understand until its to late. Civil forfeiture operates on a lower standard then criminal conviction. The government can take your property even if your never convicted, even if charges are dismissed, even if you beat the case at trial. They just have to show by preponderance of evidence that the property was connected to criminal activity.

This creates leverage for prosecutors. Cooperate and maybe we let you keep your house. Fight the charges and we take everything while the criminal case is pending. The forfeiture action proceeds on a seperate track – your property can be gone before your trial even starts.

Money laundering convictions typicaly include forfeiture orders totaling the amount of funds laundered. Not just the profit. The entire amount that moved through the scheme. Laundered $2 million but only kept $200,000 in profit? You owe the full $2 million in forfeiture, plus any property purchased with those funds.

The Cooperation Calculation That Changes Everything

Heres were the system creates incentives that shape every money laundering case.

Money laundering charges are designed to create cooperation. The 20-year statutory maximum per count generates enormous exposure. Multiple counts stack quickly. The predicate offense adds additional years. Suddenly a defendant facing 40-60 years of theoretical exposure finds cooperation very attractive.

Substantial assistance departures under Section 5K1.1 let prosecutors recommend sentences below the guidelines – even below mandatory minimums when present. A defendant looking at 15 years might get 5 years by providing information about larger players in the scheme. Someone facing 10 years might get probation for testifying against the organizers.

This creates a race to cooperate. The first defendant to provide substantial assistance gets the best deal. Later cooperators have less to offer because the government already knows what they know. Defendants who wait too long find there cooperation is worthless – everyone else already talked.

Thats why money laundering investigations produce so many guilty pleas and so much cooperation. The sentencing exposure is calibrated to make fighting the charges extremly risky. A defendant who beleives they might be aquitted still faces the catastrophic downside of conviction – decades in federal prison with no parole.

The No Parole Reality of Federal Prison

Heres what distinguishes federal money laundering sentences from state charges.

Theres no parole in the federal prison system. Whatever sentence you recieve, your serving at least 85% of it. The only reduction comes from good time credit – a maximum of 54 days per year. Thats aproximately 15% off your sentence. Nothing more.

The 62-month average money laundering sentence means aproximately 53 months of actual incarceration. But remember – thats just the laundering. The predicate offense sentence often runs consecutively. A defendant convicted of fraud plus money laundering might face 8 years for fraud and 5 years for laundering – 13 years total, serving around 11 years actual time.

Compare this to state financial crimes were defendants might serve 30-40% of there sentence with good behavior and parole. Federal defendants serve 85% minimum. The 5-year difference in sentence length between state and federal prosecution becomes 3+ years of additional actual incarceration.

And supervised release follows incarceration. After serving your sentence, your released under supervision for 3-5 years typicaly. Violations of supervised release – failing drug tests, missing check-ins, commiting new offenses – result in additional incarceration. The sentence dosent end when you walk out of federal prison. It continues until supervised release is complete.

The Questions You Should Be Asking

“The money was legitimate” is the wrong response when facing money laundering investigation.

The right questions are:

• What financial transactions have I conducted that could be characterized as proceeds of criminal activity?
• What did I know about the source of funds when I conducted those transactions?
• Is there evidence that I structured transactions to avoid reporting thresholds?
• What predicate offense might prosecutors connect to any laundering charges?
• How many seperate transactions could be charged as individual counts?
• Who else was involved in these transactions and are they cooperating?

These questions lead to realistic exposure assesment. The “my money is clean” perspective ignores how federal money laundering prosecution actualy works – were the banking system has already reported your transactions, were willful blindness satisfies the knowledge element, and were each transaction multiplies your exposure.

Your bank already filed the CTRs and SARs. The FBI has access to FinCEN databases before any warrant is signed. 77.5% of convictions fall under § 1956 with 20-year maximums. 62 months average sentence – on top of the predicate offense. Asset forfeiture that takes everything even before conviction. Mark Scott got 10 years for laundering fraud proceeds. Sam Bankman-Fried got 25 years total exposure. Changpeng Zhao got 4 months personally but $4.3 billion in corporate penalties. The structuring trap catches even legitimate money. Cooperation credit that creates a race to talk. This is federal money laundering prosecution – were your bank became a federal informant, were the add-on charge doubles your sentence, and were the investigation was running for years before you knew you were a target. Thats the reality for anyone facing charges under 18 U.S.C. § 1956.