U.S. SUPREME COURT RULES ON MONEY LAUNDERING

27 June 2008

Jurists clarify the difference between laundering and moving money


The Supreme Court of the United States blog includes an interesting entry regarding a finding on money laundering which was handed down in the cases of Cuellar v. United States and United States v. Santos on June 2 this year.

Essentially, the finding is that merely smuggling concealed money in bulk does not constitute "money laundering" (although it may contravene some other law). To secure a conviction on money laundering, there must be an attempt to hide or disguise the nature of the transaction that involves an attempt to present the monies involved as originating in a legal enterprise.

The blog outlines the Cuellar case, describing how the accused was stopped whilst driving a car erratically in Texas, some 100 miles from the Mexican border. The suspicions of the police officers involved were aroused by Cuellar's attitude and body language, resulting in a detailed search of the vehicle.

In a secret compartment US currency to the value of $81 000 was found concealed.

Cuellar was convicted at trial of international money laundering under section 1956(a)(2)(B)(i), which prohibits transportation of illicit funds. He was not charged with bulk cash smuggling, and he subsequently sentenced to 78 months imprisonment and three years supervised release. This was eighteen months more prison time than the maximum punishment available under the bulk cash smuggling statute.

The Supreme Court reversed the money laundering conviction in a unanimous decision written by Justice Thomas, holding that the statute under which petitioner was convicted requires proof that the transportation was "designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control" of the funds.

Although this element does not require proof that the defendant attempted to create the appearance of legitimate wealth, neither can it be satisfied solely by evidence that a defendant concealed the funds during their transport. In this case, the only evidence introduced to prove this element showed that the petitioner engaged in extensive efforts to conceal the funds en route to Mexico, and thus his conviction cannot stand.

Justice Alito, joined by the Chief Justice and Justice Kennedy, concurred, clarifying that the government could have proved that once the cash got to Mexico that had the effect of being concealed, but in this case the government failed to produce such evidence beyond a reasonable doubt.

The ruling will perhaps influence US Department of Justice officials who seek to use the more serious offence of money laundering in the prosecution of - for example - those accused of running online sportsbetting operations in the United States which are in themselves illegal in most states.

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