Money laundering is charged under two distinct statutes, and the difference matters. 18 U.S.C. § 1956 reaches conducting a financial transaction knowing the property represents the proceeds of unlawful activity, where the transaction in fact involves the proceeds of specified unlawful activity. 18 U.S.C. § 1957 is narrower in intent but broader in reach. It addresses knowingly engaging in a monetary transaction in criminally derived property. Laundering counts are frequently added to an underlying fraud case, which is why the movement of money after the alleged conduct becomes its own battleground.
Waxman Litigation acts for companies and their boards. Seth B. Waxman spent 13 years as an Assistant United States Attorney in the District of Columbia, roughly eight of them on fraud and public corruption.
§ 1956 — laundering of monetary instruments
Section 1956 requires a financial transaction in the proceeds of specified unlawful activity, undertaken either to promote that activity or to conceal the nature, source or ownership of the proceeds.
Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity , conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity— (A) (i) with the intent to promote the carrying on of specified unlawful activity ; or (ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986 ; or (B) knowing that the transaction is designed in whole or in part— (i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity ; or (ii) to avoid a transaction reporting requirement under State or Federal law, shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction , whichever is
18 U.S.C. § 1956§ 1957 — monetary transactions in criminally derived property
Section 1957 requires no purpose of promotion or concealment at all, only a knowing monetary transaction in criminally derived property worth more than $10,000, punishable by up to ten years.
(a) Whoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity , shall be punished as provided in subsection (b). (b) (1) Except as provided in paragraph (2), the punishment for an offense under this section is a fine under title 18, United States Code, or imprisonment for not more than ten years or both. If the offense involves a pre-retail medical product (as defined in section 670 ) the punishment for the offense shall be the same as the punishment for an offense under section 670 unless the punishment under this subsection is greater. (2) The court may impose an alternate fine to that imposable under paragraph (1) of not more than twice the amount of the criminally derived property involved in the trans
18 U.S.C. § 1957The practical difference is the mental element and what must be shown about the transaction. Both are separate offenses from the predicate conduct.
Why laundering counts get added
Because they attach to what happened after the alleged fraud, moving, depositing or spending the proceeds. That can extend the timeline, the parties involved and the exposure well beyond the original conduct. Where the underlying allegation is fraud, see bank fraud, securities fraud and health care fraud.
How do the money laundering statutes differ, and what do they carry?
Section 1956 and section 1957 are different offenses with different proof and very different maximums. Section 1956 requires a financial transaction involving the proceeds of specified unlawful activity plus a prohibited purpose; section 1957 reaches simply spending criminally derived property over the statutory threshold.
| Provision | Official heading | Maximum term |
|---|---|---|
| 18 U.S.C. § 1956 | Laundering of monetary instruments | 20 years, and a fine up to $500,000 or twice the value of the property involved, whichever is greater |
| 18 U.S.C. § 1957 | Engaging in monetary transactions in property derived from unlawful activity | 10 years |
| 18 U.S.C. § 1343 | Fraud by wire, radio, or television (a common predicate) | 20 years (30 if a financial institution is affected) |
| 18 U.S.C. § 1344 | Bank fraud (a common predicate) | 30 years |
Frequently asked questions
What is the difference between § 1956 and § 1957?
They are separate offenses with different elements. § 1956 concerns transactions involving proceeds of specified unlawful activity with particular knowledge and intent, while § 1957 addresses monetary transactions in criminally derived property.
Can a company be charged if it did not commit the underlying fraud?
Laundering offenses turn on knowledge and the nature of the transaction. Whether they apply is fact-specific.
Does moving money between our own accounts count?
That depends on the character of the funds and what was known. It is not a question to answer from a web page.
Why are these counts added?
Because they concern conduct after the alleged offense, and they can broaden the case considerably.
Who can be charged without knowing where the money came from?
Almost anyone in the chain. 18 U.S.C. § 1957(c) provides that in a prosecution under that section the Government is not required to prove the defendant knew that the offense from which the criminally derived property came was specified unlawful activity — knowledge that it was criminal proceeds is enough.
When does a single transaction cross the statutory line?
It crosses the line above $10,000. The provision reaches a knowing monetary transaction in criminally derived property worth more than that amount and derived from specified unlawful activity — a threshold one ordinary payment can meet, with no structuring or concealment needed. See 18 U.S.C. § 1957(a).
Where does the conduct have to occur?
Inside the United States, or outside it if the defendant is American. 18 U.S.C. § 1957(d) sets the circumstances as the offense taking place in the United States or its special maritime and territorial jurisdiction, or taking place outside that jurisdiction where the defendant is a United States person.
What does a laundering conviction cost beyond the sentence?
It can cost everything the transaction touched. On conviction the court must order forfeiture of any property, real or personal, involved in the offense, or any property traceable to it — which reaches clean funds that were commingled with the proceeds. See 18 U.S.C. § 982(a)(1).
Sources and legal authorities
General information about federal law, not legal advice, and not a prediction of any outcome. Federal criminal exposure turns on facts this page cannot assess. If your company has been contacted by investigators or has received a subpoena, take advice before gathering documents or interviewing staff.
Related: White-Collar Defense · Bank Fraud · Securities Fraud · Government Subpoenas. Call (301) 901-3109 or use the contact page.