Money Laundering/Asset Forfeiture

Question 1

What is title 18 USC 1956(a)(1)

Answer 1

Makes it a crime to knowingly conduct or attempt to conduct a FINANCIAL TRANSACTION with the proceeds of specified unlawful activity with the purpose or specific INTENT to

1. Promote the carrying on of specified unlawful activity (SUA)
2. conceal or disguise the nature, location, source, ownerships or control of the proceeds (concealment = layering)
3. avoid a currency transaction reporting requirement (structuring)
4. evade taxes

Question 2

sentencing for 1956(a)(1)

Answer 2

20 year felony, up to 500k fine

Question 3

Title 18 USC 1957 (“spending statute”)

Answer 3

Proceeds of Specified Unlawful Activity
→ Know property is criminally derived
→ MONETARY TRANSACTION (involving financial institution)
→ With a value greater than $10,000 for a single transaction

Question 4

sentencing for 1957 violation

Answer 4

10-year felony, up to 2x amount of crim-derived property

Question 5

asset forfeiture

Answer 5

taking of property by the gov. without compensation b/c it was used in a manner contrary to the law

Question 6

Proceeds of Crime theory

Answer 6

“fruits of the crime” directly or indirectly traceable to illegal activity - can only take what is directly traceable; can take interest, dividends, appreciation in value, etc.

Question 7

Facilitation of Crime Theory

Answer 7

“makes the crime less difficult” substantial connection

Question 8

Enterprise Theory

Answer 8

forfeit interest or control of any enterprise that a person has conducted or operated in conjunction w/ criminal offense
“Enterprise” includes any partnership, corporation, association or other legal entity if enterprise is involved in RACKETEERING activity**

Question 9

civil forfeiture

Answer 9

“in rem” (against the property) property is the defendant, and no criminal charge against owner is necessary

Question 10

criminal forfeiture

Answer 10

brought as part of criminal prosecution of a defendant

“in personam” - against persons action & requires that the gov indict/charges & have to be found guilty

Question 11

administrative forfeiture

Answer 11

taking asset without going through traditional judicial process
Still need probable cause, and a seizure warrant; make proper notification (60 days); 35 days for property owner to file a claim and admin. Forfeiture stops.
person does not need to be charged

Question 12

What can you seize with admin forfeiture?

Answer 12

any amount of $$, personal property valued at $500k or less, includes cars, boats, guns, etc.; hauling conveyances of unlimited value

Question 13

originator

Answer 13

initiator of funds transfer - person or business

Question 14

beneficiary

Answer 14

ultimate party to receive the funds

Question 15

fedwire

Answer 15

owned and operated by federal reserve and is primary domestic electronic funds transfer system

Question 16

Funds Transfer Rule

Answer 16

from BSA- applies to all funds transfer over $3,000; requires banks to get certain info depending on role in transfer - generally must get name and address of originator, date of payment order, account # for originator

Question 17

What does Fedwire do?

Answer 17

handles both message transfer traffic & actual funds transfers
FIs have correspondent accounts at Fed. Reserve that allow access to Fedwire - only domestic FI can have accounts at Fed. Reserve
Transfers are processed in real time, not batched meaning wire goes from inception to completion with no significant delays

Question 18

When tracing wire transfers, what documents should be obtained and analyzed:

Answer 18

Originators account statement - monthly deposit acct statement shows amount of funds transferred out
Beneficiary’s account statement - monthly deposit statement will show funds wired in