Craft & Sheppard's Supreme Court Review

Money Laundering 

Prosecutors have long charged drug lords and corporate executives with money laundering.  In two cases however, the Court narrowed the money laundering statute, 18 U.S.C. § 1956(a). In U.S. v. Santos, by plurality, the Court held that the word “proceeds” in the money laundering statute, § 1956(a)(1), meant “profits”, not mere  “receipts”.  Section  1956(a)(1)(A)(i), prohibits transactions that promote criminal activity and uses “proceeds” to mean (1) a transaction involved proceeds of specified unlawful activity (the proceeds element) and (2) a defendant knew the property involved in the transaction was proceeds of unlawful activity (the knowledge element). The law does not define proceeds, a word meaning receipts or profits.  Applying the rule of lenity to resolve the ambiguity and finding that “profits” was more defendant-friendly than “receipts”, to convict, a defendant must obtain “profits”, not just receipts. Another subsection, § 1956(a)(2)(B)(i), bars international transportation of proceeds of unlawful activity, but does not require an “appearance of legitimate wealth”.  A violation required proof that defendant (1) tried to transport funds abroad from the U.S., (2) knew the funds were proceeds of  unlawful activity, and (3) knew the  transportation’s design was to “conceal or disguise the nature, the location, the source, the ownership, or the control” of the funds.  The Court focused on the third issue: the defendant knew that taking the funds abroad was “designed” to conceal or disguise their nature, location, source, ownership, or control.  Hiding funds during transportation is not a violation.  Concealing money to transport it differs from transporting money to conceal it; how an individual moves money is distinct from why he moves it. In Regalado Cuellar v. U.S., though the defendant went to great lengths to hide money, the government did not show an unlawful “why”.  Broadly reading the money laundering statute would raise questions about legitimate transfers of funds.