Under Texas law, the crime of laundering money is prosecuted under Penal Code Section 34.02. The definition of money laundering requires the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses. In both federal and state court, the purpose of the money laundering statute is to criminalize the means criminals use to cleanse their ill-gotten gains.
The legislative history of the original Money Laundering statute shows that when it was enacted in 1993, the legislature anticipated that the statute would primarily apply to the cash proceeds of drug crimes and other criminal activity. According to the House of Representatives’ Committee on Criminal Jurisprudence: “H.B. 354 recommends a distinctive strategy that shifts the emphasis on following the drugs to one that follows the money.” This shift was recommended because of the “[a]pproximately $150 billion from illegal drug sales that is laundered each year—all of it cash.” House Comm. on Criminal Jurisprudence, Bill Analysis, Tex. H.B. 354, 73d Leg., R.S. (1993).
The analysis reasoned: “By taking a few money launderers out of circulation, H.B. 354 would effectively paralyze drug ring operations and create bottlenecks in the flow of illegal funds.” Id. By enacting the statute, the legislature’s intent in adopting the original money laundering statute was to combat illicit drug trade by focusing on the cash involved in the transactions. The money laundering statute has been expanded since it was originally enacted.
Attorney for Money Laundering Crimes in San Antonio, Texas
If you are charged with a white collar crime in San Antonio, Texas, then contact an experienced criminal defense attorney. Don Flanary is experienced in representing clients charged with a variety of serious white collar crimes including money laundering and conspiracy to commit money laundering.
Don Flanary represents clients throughout San Antonio, Bexar County, and the surrounding areas in Texas. Call (210) 319-4385 today to discuss your case.
Elements of Money Laundering under Section 34.02
Under Penal Code Section 34.02, the crime of money laundering requires proof beyond all reasonable doubt that the defendant knowingly:
- acquires or maintains an interest in, receives, conceals, possesses, transfers, or transports the proceeds of criminal activity;
- conducts, supervises, or facilitates a transaction involving the proceeds of criminal activity; or
- invests, expends, or receives, or offers to invest, expend, or receive, the proceeds of criminal activity or funds that the person believes are the proceeds of criminal activity.
Penalties for Money Laundering
The penalties for Money Laundering under Penal Code Section 34.02 depend, in part, on the amount of money laundered. Those penalties include:
- a state jail felony if the value of the funds is $2,500 or more but less than $30,000;
- a felony of the third degree if the value of the funds is $30,000 or more but less than $150,000;
- a felony of the second degree if the value of the funds is $150,000 or more but less than $300,000; or
- a felony of the first degree if the value of the funds is $300,000 or more.
If the proceeds of criminal activity are related to one scheme or continuing course of conduct, whether from the same or several sources, the conduct may be considered as one offense and the value of the proceeds aggregated in determining the classification of the offense. Under the money laundering statute in Texas, funds on deposit at a branch of a financial institution are considered the property of that branch and any other branch of the financial institution.
Defenses to Money Laundering
The statute in Texas that prohibits money laundering includes several defenses. For instance, it is a defense to prosecution for money laundering under Penal Code Section 34.02 if the person acted with intent to facilitate the lawful seizure, forfeiture, or disposition of funds or other legitimate law enforcement purpose under the laws of this state or the United States.
Texas law also provides for a defense to money laundering if the transaction was necessary to preserve a person’s right to representation as guaranteed by the Sixth Amendment of the United States Constitution and by Article 1, Section 10, of the Texas Constitution or that the funds were received as bona fide legal fees by a licensed attorney and at the time of their receipt, the attorney did not have actual knowledge that the funds were derived from criminal activity.
Definitions Under the Texas Money Laundering Statute
Under the money laundering statute in Texas, the term “criminal activity” is defined to mean any offense, including any preparatory offense, that is:
- classified as a felony under the laws of this state or the United States; or
- punishable by confinement for more than one year under the laws of another state.
For purposes of the Texas statute prohibiting laundering of money, the term “funds” is defined to include:
- coin or paper money of the United States or any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issue;
- United States silver certificates, United States Treasury notes, and Federal Reserve System notes;
- an official foreign bank note that is customarily used and accepted as a medium of exchange in a foreign country and foreign band drafts; and
- currency or its equivalent, including an electronic fund, a personal check, a bank check, a traveler’s check, a money order, a bearer negotiable instrument, a bearer investment security, a bearer security, a certificate of stock in a form that allows title to pass on delivery, or a stored value card.
The term “Stored Value Card” means a record, including a record that contains a microprocessor chip, magnetic chip, or other means of storing information:
- that evidences a promise made for monetary consideration by the seller or issuer of the record that goods or services will be provided to the owner of the record in the value shown in the record;
- that is pre-funded; and
- the value of which is reduced on redemption; and includes a gift card or gift certificate.
“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
“Proceeds” means funds acquired or derived directly or indirectly from, produced through, or realized through an act.
“Peace Officer” means a person who is elected, appointed, or employed by a governmental entity and who is a peace officer under Article 2.12, Code of Criminal Procedure, or other law.
Presumptions under the Money Laundering Statute in Texas
For prosecutions under subsection (3), prosecutors will often use presumptions to try and prove their case. In some cases, Texas law presumes that a person believed that funds are the proceeds of criminal activity if a peace officer or a person acting at the direction of a peace officer represents to the person that the funds are proceeds of criminal activity, regardless of whether the peace officer or person acting at the peace officer’s direction discloses the person’s status as a peace officer or that the person is acting at the direction of a peace officer.
The presumptions under the Texas money laundering statute requires that the facts giving rise to the presumption of intent to defraud or harm another must be proven beyond a reasonable doubt.
The Money Laundered Must be Proceeds of Criminal Activity
The crime of money laundering contemplates that the act that criminalizes the proceeds need not be completely unrelated to the act that “launders” the money but may also be a completed phase of an ongoing transaction. For example in United States v. Morelli, 169 F.3d 798, 804, 807–08 (3d Cir.1999), the court found that criminal proceeds may derive from completed offense or completed phase of ongoing offense even if the the money laundering transaction can also be considered a part of the continuing specified unlawful activity.
Nevertheless, the money laundering statute required the State to prove that the funds involved in the transaction were the “proceeds of criminal activity.” See Tex. Penal Code § 34.02(a)(2). Essentially, if the funds were not “proceeds of criminal activity,” the subsequent transaction was not money laundering.
For example, in King v. State, 254 S.W.3d 579, 580–85 (Tex.App.-Amarillo 2008, no pet.), the court held that the evidence legally insufficient to uphold a money laundering conviction where there was not a nexus between the money and some criminal activity that had previously taken place. The same rules apply in Federal Court. In United States v. Butler, 211 F.3d 826, 830 (4th Cir.2000), the court found that the laundering of funds cannot occur in the same transaction through which those funds first become tainted by crime.
Conspiracy To Commit Money Laundering under Federal Law
The crime of conspiracy to commit money laundering requires proof that the defendant did unlawfully, willfully and knowingly combine, conspire, confederate and agree together and with each other, to commit one of the following offenses under Title 18, United States Code, Sections 1956 and 1957.
Those offenses for money laundering under federal law require proof that the defendant did conduct and attempt to conduct a financial transaction affecting interstate commerce, which transaction involved the proceeds of specified unlawful activity that is:
- with the intent to promote the carrying on of such specified unlawful activity; and
- with the intent to engage in conduct constituting a violation of [26 U.S.C. § 7201], [26 U.S.C. § 7206]; and
- knowing that the transaction was designed in whole or in part to conceal and disguise the nature, location, source, ownership, and control of the proceeds of said specified unlawful activity; and
- knowing that the transaction was designed in whole and in part to avoid a transaction reporting requirement under state or federal law, and that while conducting and attempting to conduct such financial transaction knew that the property involved in the financial transaction, represented the proceeds of some form of unlawful activity, in violation of 18 U.S.C. § 1956(a)(1); and
- knowingly to transport, transmit and transfer and attempt to transport, transmit and transfer a monetary instrument and funds from a place in the United States to and through a place outside the United States with the intent to promote the carrying on of specified unlawful activity, in violation of 18 U.S.C. §1956(a)(2)(A); and
- knowing that the property involved in a financial transaction represented the proceeds of some form of unlawful activity, to transport, transmit and transfer and attempt to transport, transmit and transfer a monetary instrument and funds from a place in the United States to and through a place inside the United States knowing that such transportation was designed in whole or in part to conceal and disguise the nature, the location, the source, the ownership and the control of the proceeds of specified unlawful activity, and to avoid a transaction reporting requirement under federal law, in violation of 18 U.S.C. §1956(a)(2)(B); and
- knowingly to engage, attempt to engage and cause and aid and abet others in engaging in monetary transactions in criminally derived property that was of a value greater than $10,000, in violation of 18 U.S.C. 1957.
Money Laundering Unit – Under the leadership of Greg Abbott, the Office of the Attorney General in Texas established the Money Laundering Unit to investigate complex money laundering efforts of organized criminal enterprises. The AG’s Money Laundering Unit is focused on tracing illegal proceeds by analyzing banking records and transaction reports including transactions frequently used by drug traffickers. Texas law enforcement agencies use the Money Laundering Unit to access data under the Bank Secrecy Act via a secure web connection. The unit considers the Financial Crimes Enforcement Network (FinCEN) Gateway System vital to law enforcement efforts to combat money laundering crimes in Texas.
FBI Investigations into Money Laundering – Learn more about the ways that criminals to launder money and illicit proceeds from their crimes including throughout financial institutions, precious metals, third party service providers, real estate, and virtual currency. Find information on the three most important steps in the money laundering process—placement, layering, and integration.
Finding a Lawyer for Money Laundering Offenses in Texas
If you were charged with the offense of money laundering, then you should seek out the services of an experienced criminal defense attorney in San Antonio, Texas. Don Flanary is experienced in representing clients throughout San Antonio, Bexar County, and the surrounding areas in Texas, who are charged with serious white collar crimes including money laundering.
This article was last updated on Friday, May 12, 2017.
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