Author: My Rights Law Editorial Team
Key Takeaways
The three stages of money laundering are placement, layering, and integration. Criminals move through these three stages to hide where illegally obtained money actually came from, so that the money finally looks like ordinary and lawful income.
My Rights Law defends people facing money laundering charges in Rancho Cucamonga and across California, and our team can review your situation today. Call (909) 330-3880 to speak with us.
Placement is the first stage of money laundering, and it happens when illegally obtained money first enters the financial system. Because large amounts of cash can attract attention, people accused of money laundering may try different methods to make the money appear less suspicious before moving it further through the financial system.
One common method involves depositing cash into one or more bank accounts over time. Large deposits may trigger reporting requirements, so investigators often examine unusual banking activity when building a money laundering case.
Cash may also be used to buy money orders, cashier's checks, or similar financial instruments. These items can then be deposited elsewhere, making the movement of money harder to follow.
Businesses that regularly receive large amounts of cash, such as restaurants or convenience stores, may sometimes be used to mix illegal money with legitimate business income. Federal investigators often review financial records to determine whether reported earnings match actual business activity.
Structuring means breaking large financial transactions into many smaller ones to avoid federal reporting requirements. Even if each individual transaction appears legal, intentionally dividing deposits to avoid reporting can itself violate federal law.
If you have been accused of structuring transactions or money laundering, My Rights Law can review your case and explain your legal options before you make statements that could be used against you.
Layering is the second stage of money laundering and is designed to make the source of money much harder to trace. During this stage, funds often move through multiple accounts, businesses, or financial transactions before reaching their final destination.
Money may be transferred through several domestic and international bank accounts. Multiple transfers can make it more difficult for investigators to identify where the money originally came from.
Shell companies may be created to receive or transfer funds without conducting meaningful business activities. Financial records involving these entities often become important evidence during federal investigations.
Digital assets and cryptocurrency can sometimes be used to move funds quickly across different platforms or wallets. Although blockchain transactions can be complex, federal agencies have developed advanced methods to trace many cryptocurrency transfers.
Funds may also move through purchases of vehicles, artwork, jewelry, or other valuable assets that are later sold again. These transactions can create additional layers that investigators must examine.
Integration is the final stage of money laundering, where money is returned to the economy and appears to come from legitimate sources. At this point, the goal is to make the funds look like lawful income that can be used without raising suspicion.
Real estate purchases can make funds appear to come from legitimate property investments. Authorities often review purchase records, financing documents, and ownership history during investigations.
Expensive vehicles, watches, jewelry, boats, and other luxury items may be purchased using funds that appear legitimate after earlier laundering activities. These purchases can become evidence if investigators connect them to unlawful conduct.
Money may be invested in legitimate companies or used to start new businesses. Once profits begin to flow through the business, distinguishing legal income from illegal funds can become more complicated.
Funds may eventually appear as salaries, consulting fees, dividends, or business profits. Prosecutors must still prove that the original money came from unlawful activity before obtaining a conviction.
Money laundering charges are often connected to another alleged crime because prosecutors usually claim the money originated from illegal activity.
Some of the offenses most commonly linked to these charges include:
Federal money laundering penalties are severe, and they are often harsher than the penalties for the underlying crime that produced the money. Two federal statutes control most prosecutions, and California adds its own state law on top of them.
Under 18 U.S.C. § 1956, a conviction can bring up to twenty years in federal prison, along with a fine of up to $500,000 or twice the value of the money involved, whichever amount is greater.
Under 18 U.S.C. § 1957, which covers monetary transactions above $10,000 in criminally derived property, a conviction can bring up to ten years in federal prison, and the court may impose an alternate fine of up to twice the property involved.
California charges money laundering under Penal Code 186.10 as a wobbler, meaning prosecutors may file it as a misdemeanor carrying up to one year in county jail, or as a felony carrying a fine of up to $250,000 or twice the value transacted.
The government can seize bank accounts, homes, vehicles, and business assets that it claims are connected to laundered money, and it can do this before any conviction happens. Forfeiture proceedings run on a separate track from the criminal case, which means a person can lose access to the funds they need for daily living. Fighting forfeiture quickly is one of the most urgent things our team does when a new client calls.
Money laundering charges are not automatic simply because someone handled large amounts of money. Prosecutors must prove every element of the offense beyond a reasonable doubt, and several defenses may apply depending on the facts.
The government must prove that you knew the money came from criminal activity. If you reasonably believed the funds came from a lawful source, prosecutors may not be able to establish this essential element of the case.
Federal prosecutors must connect the money to unlawful activity and show that you knowingly participated in the transaction. Weak financial records, missing evidence, or an incomplete paper trail can create reasonable doubt.
Money obtained through lawful business income, property sales, gifts, loans, or inheritances is not considered criminal proceeds. Financial records and supporting documents can help demonstrate that the funds were legally obtained.
Evidence obtained through unlawful searches, seizures, or interrogations may be challenged in court. If key evidence is excluded, it can significantly weaken the prosecution's case.
Financial crimes often involve multiple people, businesses, and accounts. Being connected to a transaction does not necessarily mean you knowingly participated in money laundering, and prosecutors must prove your personal involvement.
Most money laundering cases are prosecuted under federal law because financial transactions often involve banks, interstate commerce, or international transfers. As a result, agencies such as the FBI, IRS Criminal Investigation, and Homeland Security Investigations frequently handle these cases.
Two federal statutes apply to most prosecutions:
Financial institutions must report certain cash transactions and suspicious activity under the Bank Secrecy Act. These reports often help investigators identify unusual financial patterns and can lead to a money laundering investigation.
To obtain a conviction, prosecutors must prove beyond a reasonable doubt that the money came from criminal activity and that the defendant knowingly participated in the illegal transaction. The government must support these allegations with evidence rather than suspicion alone.
Yes, under 31 U.S.C. § 5324 you can face federal structuring charges for breaking deposits into smaller amounts to avoid reporting, even when the funds came from an entirely lawful source.
Both are possible because California prosecutes under Penal Code 186.10 while federal prosecutors use Sections 1956 and 1957.
Yes, forfeiture proceedings can begin before any conviction, and the government may seize property it claims is connected to laundered funds.
Facing up to twenty years in federal prison over how money moved through your accounts is a terrifying place to stand, and you should not stand there alone. Attorney Bobby Shamuilian and the team at My Rights Law understand the three stages of money laundering and how prosecutors build these cases.
We serve Rancho Cucamonga and communities throughout California. Call (909) 330-3880 today for a free case evaluation.
This page was written by the My Rights Law Editorial Team and reviewed for legal accuracy by Bobby Shamuilian.
Attorney Shamuilian is the founder and managing partner of My Rights Law and is widely recognized as a legal authority, frequently appearing as a legal analyst and TV pundit on national news outlets.
He has earned a perfect “10.0 – Top Attorney” rating on AVVO and a “10.0” rating on Justia, and has been named among the “Top 40 Under 40” and the “Top 100 Trial Lawyers” by The National Trial Lawyers.
With his proven expertise and dedication, Mr. Shamuilian is committed to protecting your rights and achieving the best possible outcome for your case.
The last modified date shows when this page was most recently reviewed.
schedule a free confidential consultation
