Money laundering is a sophisticated process used to disguise the origins of illegally obtained money, making it appear as if it has come from legitimate sources. Understanding the money laundering stages—placement, layering, and integration—provides insight into how criminal enterprises try to legitimize their illicit funds. This knowledge is crucial for legal defense and compliance, as allegations of involvement in money laundering can have severe legal repercussions.
At Griffin Durham Tanner & Clarkson LLC, our Atlanta white-collar crime defense lawyers specialize in defending clients facing money laundering charges, helping them understand the allegations, and building a strong defense. In this blog, we will break down the three stages of money laundering and explore the relevant statutes that guide prosecution in Georgia and at the federal level.
Stage 1: Placement
Placement is the first stage of money laundering, where illicit funds are introduced into the financial system. The objective is to distance the funds from their illegal source. This step is often considered the most vulnerable part of the laundering process, as it involves moving large amounts of cash, which may attract scrutiny.
Common placement methods include:
- Cash deposits: Breaking down large sums into smaller amounts to avoid detection (a practice known as “smurfing”).
- Purchasing assets: Buying valuable assets such as vehicles, real estate, or art that can be sold to generate legitimate income.
- Gambling: Launderers may use casinos to convert illicit funds into chips, gamble minimally, and then cash out, claiming winnings as legitimate funds.
Relevant statutes for placement
The placement stage often involves violating federal and state regulations. The Bank Secrecy Act (31 U.S.C. § 5311) requires financial institutions to report transactions over $10,000. Failing to comply or deliberately evading this threshold can result in charges under Georgia’s money laundering laws (O.C.G.A. § 16-14-1), which address fraudulent financial transactions involving illegally obtained funds. Violations in the placement stage often lead to additional charges under federal and state statutes if concealment attempts are detected.
Stage 2: Layering
Layering is the second stage, where criminals attempt to hide the origin of the illicit money by creating complex layers of financial transactions. This step makes tracing the money back to its illegal source more difficult, adding a layer of protection against detection by law enforcement and financial institutions.
Common layering techniques include:
- Wire transfers: Moving funds between accounts in different countries or shell companies to create a convoluted money trail.
- Shell companies and offshore accounts: Using entities with minimal operational presence to hold or transfer funds, obscuring their true ownership.
- Investment in high-value goods: Purchasing luxury items, such as jewelry or real estate, to further distance the money from its illegal origin.
Layering often involves multiple countries and transactions, increasing the complexity of prosecution. Each transfer and movement of funds adds to the difficulty of tracking the source of the money, which is why prosecutors must build detailed cases to prove the illicit origins of funds.
Relevant statutes for layering
Layering can lead to federal charges of wire fraud (18 U.S.C. § 1343), as it often involves the interstate transfer of funds via electronic means. Additionally, using international accounts or foreign shell companies may trigger violations under the Foreign Corrupt Practices Act (FCPA) or other anti-money laundering statutes. In Georgia, individuals involved in layering schemes may be prosecuted under the Georgia RICO Act (O.C.G.A. § 16-14-4), as the scheme constitutes a pattern of illegal financial activities.
Stage 3: Integration
Integration is the final stage of money laundering, where illicit funds are fully assimilated into the legitimate economy, often through purchases and investments that make the money appear legally earned. At this point, funds are difficult to distinguish from lawful earnings, as they have passed through various transactions and businesses.
Typical integration methods include:
- Real estate investments: Using laundered money to purchase and profit from real estate properties.
- Business investments: Placing illicit funds into a legitimate business venture, such as a restaurant or retail store, where profits can be commingled with legitimate revenue.
- Loans and repayments: Setting up complex loan structures where illicit funds are circulated through multiple entities, making it challenging for investigators to track the money.
The integration stage is when laundered money can be used with minimal suspicion, which is why it is crucial for prosecutors to prove the money’s criminal origins before it entered the legitimate economy.
Relevant statutes for integration
Integration may involve further violations of the Bank Secrecy Act if large transactions are not reported or if funds are used to finance additional criminal activities. At this stage, charges under 18 U.S.C. § 1956, the primary federal money laundering statute, are often brought. This statute addresses financial transactions involving proceeds of specified unlawful activities and applies broadly to anyone attempting to disguise illegal funds. Georgia’s state laws align with federal statutes, allowing for prosecution under the Georgia RICO Act, especially if integration is part of an ongoing criminal enterprise.
How Griffin Durham Tanner & Clarkson LLC can defend against money laundering charges
Money laundering charges carry severe penalties, from fines to imprisonment. At Griffin Durham Tanner & Clarkson LLC, we tailor defense strategies to each stage of money laundering, focusing on:
- Challenging evidence: We rigorously scrutinize the prosecution’s evidence, seeking inconsistencies or errors that could weaken their case.
- Disputing intent: Our attorneys work to show a lack of intent, especially for clients unknowingly involved in suspicious transactions.
- Navigating complex regulations: With expertise in federal and state financial laws, we identify compliance gaps or misunderstandings that may support our client’s defense.
Protecting your future in money laundering cases
Money laundering cases are complex, often involving intricate financial transactions across multiple jurisdictions and legal layers. At Griffin Durham Tanner & Clarkson LLC, we understand the complexities of the money laundering stages and are dedicated to defending our clients against these challenging charges. Whether you are facing accusations in the placement, layering, or integration stage, our team has the knowledge and experience to develop a strong, strategic defense.
If you or your business is under investigation for money laundering, contact Griffin Durham Tanner & Clarkson LLC at (404) 891-9150 to discuss your options and protect your rights.