Mark Motivans, Ph.D.BJS Statistician

During 2001, 1,477 defendants werecharged in U.S. district courts withmoney laundering as the most seriousoffense filed. These defendantscomprised 1.8% of all cases filed in U.S. district courts.

Of cases concluded in 2001, 1,243defendants were convicted of a moneylaundering offense.1 Federal defen-dants sentenced for money launderingin 2001 were convicted of launderingamounts ranging from less than $2,000to more than $100 million.2 About 20%of the cases involved over $1 million.

Offenders convicted of money launder-ing face prison terms of up to 20 years,fines up to $500,000 or twice the valueof the property involved, and possiblecriminal and civil forfeiture related to thevalue of the property or funds involved.

Federal money laundering statutesdifferentiate between monetary recordand reporting offenses requiring finan-cial institutions to maintain reports andrecords of financial transactions

• Between 1994 and 2001 about18,500 defendants were charged inU.S. district court with money launder-ing as any charge. Over this same7-year period, 10,610 were chargedwith money laundering as the mostserious offense filed; 9,169 moneylaundering defendants wereconvicted.

• Nearly half of all Federal moneylaundering matters were referred inthe six geographic areas defined asHigh Intensity Financial Crimes Areasby the U.S. Departments of Treasuryand Justice.

• About 60% of laundering/racketeer-ing (Title 18) offenses prosecutedinvolved an underlying property

offense (embezzlement or fraud);about 17% involved drug trafficking;and about 7% involved racketeering or violations of customs laws.

• About 9 in 10 defendants prosecutedfor money laundering were convicted,with 9 in 10 convictions occurring byguilty plea. Nearly 3 out of 4 convicteddefendants received a prison term, with the average sentence of just over 4 years.

• In 2001 the 22 commercial defen-dants charged with money launderingincluded auto dealerships, grocerystores, banks, furniture stores,construction firms, and beauty shops.They represented a small fraction of money laundering defendants.

HighlightsFrom 1994 to 2001 almost 18,500 defendants faced a moneylaundering-related charge filed in a U.S. district court

1994 1996 1998 20000

1,000

2,000

3,000

Number of defendants with money laundering

Laundering/

M onetary record and

2001

reporting (Title 31)

racketeering (Title 18)

as any offense charged

Source: Administrative Office of the U.S. Courts, criminal master file, fiscal year.

U.S. Department of JusticeOffice of Justice Programs

Bureau of Justice StatisticsSpecial Report

1Money laundering is defined as “the process bywhich criminals or criminal organizations seek todisguise the illicit nature of their proceeds byintroducing them into the stream of legitimatecommerce and finance.” 2000-2005, StrategicPlan. U.S. Department of the Treasury, page 1.2Monetary instruments include U.S. or foreigncoins and currency, travelers’ checks, personalchecks, bank checks, money orders, investmentsecurities and negotiable instruments (18 U.S.C. § 1956 (c)(5)).

July 2003, NCJ 199574Federal Justice Statistics Program

Money Laundering Offenders,1994-2001

involving more than $10,000 (originat-ing from the 1970 Bank Secrecy Act)3

and laundering/racketeering offenses inwhich financial transactions involve theproceeds of specified unlawful activities(originating from the Money LaunderingControl Act of 1986).4 The monetaryrecord and reporting statutes focus ontracking illicit assets via financial institu-tion reporting requirements while thelaundering/racketeering statutes focuson the conversion of illicit assets andtheir use to promote additional crimes.

The bulk of Federal money launderingenforcement focuses on the underlyingcriminal offenses that produce thefunds to be laundered. Law enforce-ment uses a ”follow-the-money”approach to trace illicit proceeds fromsuch crimes as drug trafficking, healthcare fraud, and terrorism.5 U.S. attor-neys may apply the laundering/racket-eering statutes when a financial trans-action involves the proceeds and/orconcealment of the source of proceedsfor any of over 250 offenses or “speci-fied unlawful activities” (SUA’s).6

This report uses data from the FederalJustice Statistics Program (FJSP) todescribe the criminal case processingof money laundering offenders in theFederal criminal justice system. Unlessindicated otherwise, the designations“lead charge”7 and “primary” or “mostserious filing offense”8 describe moneylaundering violators across prosecu-tion, adjudication, and sentencing. Theexception to these designations occurswhere money laundering is describedas any offense filed in U.S. districtcourt. (See Highlights figure.)

During 2001 the laundering/racketeer-ing statutes comprised the bulk ofdefendants charged with a moneylaundering offense as the most seriousoffense (84%). Three in five of theseTitle 18 money laundering violationswere associated with property-related SUA’s such as bank embezzlement,fraud, transportation of stolen property,and counterfeiting (63%). Drug traffick-ing offenses were the second mostcommon SUA’s (16%), followed bypublic-order (7%) (including racketeer-ing, witness tampering, customs laws,

and other offenses) and violentoffenses (4%).9

In 2001 monetary record and reportingoffenses made up the remaining 16%of defendants charged with a moneylaundering offense. Monetary recordand reporting offenses do not require aspecified unlawful activity or underlyingoffense. Rather, these Bank SecrecyAct (BSA) statutes, by requiringrecords of currency transactions,provide a paper trail which enablesenforcement agencies to uncover theillicit concealment of monetary instru-ments. In addition to financial institu-tions, BSA reporting requirementsapply to securities brokers and dealers,casinos, and money exchangebusinesses.10

Referrals to U.S. attorneys for prosecution

During 2001, 1,437 suspects werereferred to U.S. attorneys with moneylaundering as the lead charge (down34.4% from 2,191 referrals in 1994).These suspects comprised 1.2% of thetotal 121,818 referred. Money launder-ing included 1,073 defendants investi-gated for laundering/racketeering

2 Federal Justice Statistics Program

Money laundering offenses in this reportare defined according to Title 18 (Chapter95, Racketeering) and Title 31 (Chapter53, Monetary Transactions) of theFederal criminal code:

Title 18 statutes (Laundering/racketeering)Laundering of monetary instruments(18 U.S.C. § 1956) involves intending to transport or transfer monetary fundsknowing that property represents the proceeds of unlawful activity.

Engaging in monetary transactions in property derived from specified unlaw-ful activity (18 U.S.C. § 1957) involves knowingly engaging in a monetary transaction involving criminally derived property valued at more than $10,000.

Prohibition of unlicensed money transmitting businesses (18 U.S.C. § 1960) involves failing to comply with Treasury regulations (that is, businessregistration and other required informa-tion) pertaining to money transmittingbusinesses (that is, currency dealers andexchangers, check cashers, and moneytransmittal businesses).

Title 31 statutes (Monetary record and reporting)Reporting on exporting and importingmonetary instruments (31 U.S.C. §5316) involves the failure to file a Report of International Transportation of Curren-cy or Other Monetary Instruments (CMIR)when conveying such instruments ofmore than $10,000 at one time out of,into, or through the United States.

Structuring transactions to evadereporting requirement (31 U.S.C. §5324) involves causing a domestic finan-cial institution to fail to file a requiredreport or to file a report that contains anomission or misstatement of fact, or tostructure any transaction. Structuringinvolves conducting financial transactionswith the purpose of evading reportingrequirements (that is, “breaking down asingle sum of currency exceeding$10,000 into smaller transactions toevade reporting requirements”). See 31C.F.R. 103.11.

Failure to file a currency transactionreport (CTR) on cash transactionsinvolving more than $10,000 (31 U.S.C.§ 5313) .

Selected Federal money laundering statutes

7“Lead charge” is the substantive statute that is the primary basis for investigation by U.S.attorneys and is not necessarily the charge with the greatest potential sentence. 8“Most serious offense” is the filing offense thatyields the statutory maximum penalty. See themethodology section in the Compendium ofFederal Justice Statistics, 2000 (NCJ 194067).

331 U.S.C. §§ 5311-5332.418 U.S.C. §§ 1956, 1957, and 1960.5See Lester M. Joseph, “Money LaunderingEnforcement: Following the Money,” EconomicPerspectives: An Electronic Journal of the U.S.Department of State, 6, 2, 2001, and R.T. Nay-lor, Follow-the-Money Methods in Crime ControlPolicy, Nathanson Centre of Organized Crimeand Corruption, York University, Toronto, 1999.6See Money Laundering Statutes and RelatedMaterials, Asset Forfeiture and Money Launder-ing Section, U.S. Department of Justice, April2002.

9Title 18 money laundering counts generallyinvolve a SUA. Information on SUA’s wasmissing in 10% of cases due in part to stingcases in which an associated unlawful activitydoes not apply (18 U.S.C. § 1956(a)(3)) and/orinstances in which information was not recordedduring court processing.

10 31 C.F.R. 103.

Money Laundering Offenders, 1994-2001 3

Targeting money laundering enforcement efforts

High Intensity Financial Crimes Area (HIFCA) designations wereenacted as a part of the Money Laundering Strategy Act of 1998,(P.L. 105-310) to prioritize law enforcement efforts in areaswhere money laundering and related financial crimes present agreater need.

To date, the Secretary of the Treasury and the Attorney Generalhave named six HIFCA’s: • New York/New Jersey• San Juan/Puerto Rico• Los Angeles• the southwestern border including Arizona and Texas • the Northern District of Illinois (Chicago) • the Northern District of California (San Francisco). Of the 1,437 matters referred to U.S. attorneys where moneylaundering was the lead charge, 625 (44%) were referred fromjudicial districts associated with an HIFCA designation.

Related to HIFCA’s are the High Intensity Drug Trafficking Areas(or HIDTA’s). Congress established the HIDTA program tooperate under the direction of the Office of National Drug ControlPolicy (ONDCP) by the Anti-Drug Abuse Act of 1988 (P.L.100-690) and the ONDCP Reauthorization Act of 1998.HIDTA’s were created to counter drug trafficking in areas

where drug enforcement needs are greatest to include the moneylaundering-drug trafficking nexus. All six HIFCA’s were also desig-nated as HIDTA’s.

10 Federal judicial districts with largest number of matters referred with money laundering as most serious charge, 2001

1.21,437121,818All Federal districts

2.5451,769Northern District of California

1.4493,433Central District of California

3.4521,537District of New Jersey

1.0535,099District of Arizona

1.7553,237Middle District of Florida

1.1646,075Southern District of Texas

2.5712,838Eastern District of New York

4.5781,724District of Puerto Rico

2.6833,160Southern District of New York

2.7%1063,880Southern District of Florida

Moneylaunderingmatters asa percent ofall mattersreferred

Number of moneylaunderingmattersreferred

Totalnumber of mattersreferredJudicial district

Percent of money laundering matters referred by offense type

Laundering/racketeeringMonetary recordand reporting

75

74

76

83

53

87

78

46

63

84

75%

Title 18percentof total

Matters referred to U.S. attorneys with money laundering as most serious charge, by Federal judicialdistrict, 2001

New York/New Jersey

PUERTO RICO

VIRGIN ISLANDS

1 to 25

26 to 75

75 to 200

No referrals

Number referred

Source: Executive Office for the U.S. Attorneys, central system file

San Juan, PR

San Francisco

Los Angeles

Southwest Border

Chicago

0% 25% 50% 75% 100%

(down 33% from 1994) and 364 forrecord and reporting offenses in 2001(down 37% from 1994).

Half the money laundering-relatedreferrals to U.S. attorneys in 2001 were from 10 judicial districts. The U.S. attorney in the Southern District of Florida received the most referrals(106), followed by the Southern Districtof New York (83), Puerto Rico (78),and the Eastern District of New York(71).

Federal agency referral of mattersevaluated for prosecution

Multiple Federal agencies are involvedin investigating money laundering viola-tions and referring matters to U.S.attorneys for prosecution.11 In fiscalyear 2001 U.S. attorneys evaluated1,573 suspects for prosecution foralleged money laundering violations,representing 1.3% of the 118,977Federal matters concluded by U.S.attorneys in 2001. More than 30Federal, State, and local agenciesprovided referrals, with the majoritycoming from agencies of the Depart-ments of Treasury or Justice (table 1).

Referrals by agencies of Treasury

During 2001 the Treasury Departmentreferred 896 (57%) suspects to U.S.attorneys in matters with moneylaundering-related charges. Treasuryreferred more than three-quarters ofmonetary record and reportingsuspects.

From 1994 to 2001 the total of Treas-ury referrals decreased 46% from1,645. The largest part of the decreaseoccurred in monetary record andreporting violations (down 59% from663 matters referred in 1994 to 274 in 2001).

Of all referring agencies, the U.S.Customs Service (USCS) had the mostreferrals for monetary record andreporting offenses during 2001 (54%

or 192). Money laundering mattersreferred to U.S. attorneys comprised4.2% of all matters referred by theUSCS (not shown in table). Charged inpart with enforcing money launderinglaws at U.S. borders, the USCSaccounted for the bulk of importing/exporting monetary instrument viola-tions (31 U.S.C. § 5316) referred forprosecution in 2001. Of 178 mattersconcluded in which importing/exportingmonetary instruments was charged, theUSCS had referred 96% (171).

The Financial Investigations Division of the USCS conducts undercover drugmoney laundering operations. Since

the terrorist attacks of September 11,2001, the division has coordinated“Operation Green Quest” to “identifyand dismantle” the financial structureused to fund terrorist activity (U.S.Customs Service Annual Report, Fiscal Year 2001).

The Internal Revenue Service (IRS)referred 28% of suspects with a moneylaundering-related charge in mattersconcluded during 2001. IRS investiga-tors deal with complex financial crimes(including money laundering and taxevasion and asset forfeiture). Moneylaundering comprised 21% of allmatters referred by the IRS in 2001

4 Federal Justice Statistics Program

--Less than 0.5%. aReflects agency designations prior to the Homeland Security Act of 2002.bIncludes Alcohol, Tobacco and Firearms, Secret Service, and joint State/local task forces.cIncludes Immigration and Naturalization Service, U.S. Marshals Service, and jointState/local task forces.dIncludes U.S. Postal Service, Food and Drug Administration, Securities and Exchange Commission. Data source: Executive Office for U.S. Attorneys, central system file.

39.4%2560.3%3863Otherd

--0100.05252 All other Justicec 5.0795.0132139 Drug Enforcement Administration

11.14788.9376423 Federal Bureau of Investigation8.8%5491.2%560614Department of Justice

7.9692.17076 All other Treasuryb 17.17682.9368444 Internal Revenue Service51.119248.9184376 U.S. Customs 30.6%27469.4%622896Department of Treasury

22.4%35377.6%1,2201,573All agenciesPercent Number PercentNumber Totalagencya

Monetary records and reporting

Laundering/ racketeering

Referringlaw enforcement

Table 1. Matters concluded by U.S. attorneys with money laundering as lead charge, by investigating agency, 2001

1994 1996 1998 20000

200

400

600

800

Suspects referred for

U.S. Departm ent of Treasury

U.S. Departm ent of Justice

Title 31 offenses

2001 1994 1996 1998 20000

250

500

750

1,000

Suspects referred for

U.S. Departm ent of Treasury

U.S. Departm ent of Justice

Title 18 offenses

2001

From 1994 to 2001 the number of Treasury referrals declined 59% for record/reporting violations (Title 31) and 37% for laundering/racketeering violations(Title 18)

Note: The money laundering referral was the lead charge.Source: Executive Office for U.S. Attorneys, central system file.

Figures 2 and 3

11The provisions of the Homeland Security Act of2002 (P.L. 107-296), transferred the TreasuryDepartment's Bureau of Alcohol, Tobacco andFirearms to the Bureau of Alcohol, Tobacco,Firearms and Explosives in the Department ofJustice. Treasury’s Secret Service became apart of the Department of Homeland Security.

(not shown in table). The number ofsuspects whom the IRS referred formoney laundering offenses decreased59% from 1,077 in 1994 to 444 in2001. Reduction in referrals was great-er for monetary record and reportingviolations (-83%) than for laundering/racketeering offenses (-41%).

The Secret Service investigates finan-cial fraud schemes and currencycounterfeiting. During 2001 the SecretService referred 8 money launderingmatters, down from 19 in 2000. The

Bureau of Alcohol, Tobacco andFirearms referred 26 money launderingmatters to U.S. attorneys during 2001.

Referrals by Justice agencies

During 2001 law enforcement agenciesof the Department of Justice referred614 (39%) money laundering suspectsto U.S attorneys, the bulk of whichwere for laundering/racketeeringoffenses with specified unlawful activi-ties (91%). The number of Justicereferrals with a laundering/racketeering

violation peaked in 1995 with 725 refer-rals and decreased in 1998 (425)before increasing to 650 during 2001.

The FBI was the source of the largestnumber of Title 18 referrals (31%). TheFBI has primary or dual jurisdictionover most of the specified unlawfulactivities listed under the moneylaundering statutes. The FBI’s MoneyLaundering Unit uncovers moneylaundering schemes which are a part of drug trafficking, organized crime,violent crime, and white collar crime.

Money Laundering Offenders, 1994-2001 5

The Bank Secrecy Act of 1970 (BSA)gave Treasury authority to requiremonetary record and reporting by financialinstitutions. The intent was to preventcriminals from using financial institutionsto conceal or launder money generatedfrom crime. (See 31 U.S.C. §§5311-5332.) Initially used to deter taxevasion and money laundering by organ-ized crime, the BSA statutes are applied inthe investigation of an array of offensesranging from drug trafficking to financingterrorist acts.

BSA regulations enable the detection ofcriminal, tax, and regulatory violations byproviding a paper trail that follows the flowof money. Financial institutions arerequired to report transactions involving —• currency of more than $10,000(Currency Transaction Report) • transportation of more than $10,000 incurrency into or out of the United States(Currency or Other Monetary InstrumentsReport)• suspicious activity that may indicate alaw has been broken (Suspicious ActivityReport).

The Money Laundering Control Act of1986 criminalized money laundering,

creating the first Federal money launder-ing laws (18 U.S.C. §§ 1956, 1957). Theoffenses included knowingly helping tolaunder money from criminal activity,knowingly engaging in a monetary trans-action of more than $10,000 with propertyderived from criminal activity, and structur-ing transactions to avoid BSA reportingrequirements. The act also enumeratedSUA’s.

The Anti-Drug Abuse Act of 1988enhanced reporting requirements (stricteridentification and record keeping whenusing cash to buy monetary instruments)and expanded criminal and civil penaltiesagainst money laundering. It also providedthe Treasury with authority to requiregeographically targeted currency transac-tion reports.

The Money Laundering SuppressionAct of 1994 created more stringentrequirements on the procedures used byfinancial institution examiners andexpanded examiner training to improvedetection of laundering in financial institutions.

The Money Laundering and FinancialCrimes Strategy Act of 1998 focused oncounter-money laundering support at theState and local levels. The act created thefollowing: • The National Money Laundering Report.Treasury, together with Justice, set forth anational plan for all levels of governmentto coordinate anti-money laundering activi-ties. The 2002 objectives includedenhancing law enforcement of moneylaundering organizations and systems,improving State and local law enforcementefforts, and measuring the effectivenessof anti-money laundering activities. • Designation of areas at a high risk forfinancial crimes/money laundering activity(High Intensity Financial Crime Areas)• Financial Crime-Free Communitiessupport programs that provide “seedmoney” of up to $300,000 to State andlocal programs to counter moneylaundering.

The Strengthening America Act byProviding Appropriate Tools Requiredto Intercept and Obstruct Terrorism(USA PATRIOT) Act of 2001 toughenedaccountability of U.S. banks in theirdealings with foreign correspondentbanks, strengthened laws responding tothe problem of terrorist financing and itsconnection with money laundering, andstrengthened asset forfeiture laws inmatters involving funding of terrorist activi-ties.

In addition, the USA PATRIOT Act createda new money laundering statute: Bulkcash smuggling (18 U.S.C. § 5332). Thenew statute prohibits the concealment andtransfer of more than $10,000 across theborder with the intent to evade reportingrequirements. Convicted defendants aresubject to a greater sentence than areporting violation (that is, 18 U.S.C. §5316) and all property involved in bulkcash smuggling is subject to criminaland/or civil forfeiture.

MoneyLaundering andRelated FederalLegislation

.The MoneyLaunderingControl Act(1986)

The Anti-Drug AbuseAct (1988)

.

The MoneyLaunderingand FinancialCrimesStrategy Act(1998)

.

.BankSecrecy Act(1970)

USAPATRIOTAct (2001)

.The MoneyLaunderingSuppression Act(1994)

.

Of the 30,708 total matters referred bythe FBI for prosecution during 2001,1.4% had money laundering as thelead charge.

The Drug Enforcement Administration(DEA) often works in conjunction withother agencies in investigating moneylaundering as it pertains to drug offend-ing. During 2001 the DEA referred toU.S. attorneys 139 matters with moneylaundering as the lead charge. Thesecomprised about 1% of the 16,844DEA referrals.

Referrals by other agencies

As a money service business, though anon-banking institution, the U.S. PostalService (USPS) is required to complywith the Bank Secrecy Act reportingrequirements. The USPS also investi-gates the illicit use of postal financialproducts to include money laundering.The USPS referred 25 money launder-ing matters to U.S. attorneys for prose-cution (less than 1% the 4,010 referralsfor all matters referred by the USPS).

Matters prosecuted

Of money laundering mattersconcluded during 2001, 54% weredeclined for further prosecution. Fortypercent of laundering/racketeeringmatters were prosecuted in U.S. districtcourt, and 64% of monetary record andreporting violations were prosecuted.(Exporting/importing monetary instru-ments had the highest prosecution rate

of the component offenses thatcomprise money laundering: 87%.)From 1994 to 2001 the prosecutionrate for monetary record and reportingoffenses increased from 38% to 64%while the prosecution rate for

laundering/racketeering declinedslightly (from 46% in 1994 to 40% in2001).

• Of the 855 declinations for prosecu-tion, 13% were prosecuted by other

6 Federal Justice Statistics Program

Reporting of suspicious activity

From 1997 to 2001 the number of Suspicious Activity Reports submittedincreased 206%. States with the highestsuspicious activity reporting rates per100,000 persons in the general population were New York, Nevada, and California (derived from FinCEN,SAR Activity Report, 2002).

The New York metropolitan area had more than an estimated 14,000 Suspi-cious Activity Reports filed in fiscal years1998 and 1999, with a reported aggregateamount of over $33 billion (National DrugIntelligence Center, 2001). In the sameperiod, Los Angeles had the secondhighest number, 5,171, with an aggre-gated value of more than $7 billion.

Suspicious Activity Reports filed for money laundering violations,1997-2001

Suspicious Activity Reports filed formoney laundering violations per 100,000State residents, 2001

SAR filing rate per 100,000 population< 15

16-30

31-50

> 50Figure 4 Source: Financial Crimes Enforce- ment, U.S. Department of the Treasury, The SAR Activity Review, 3.

1997 1998 1999 2000 20010

40,000

80,000

120,000Number of SAR filings

April 1 March 31

--Less than 0.5%.

a630 defendants were charged with a money laundering-related offense as a secondary offense.bNot reported on indictment because cases were sting cases in which SUA did not apply or infor-mation was not recorded during court processing.

Source: Administrative Office of the U.S. Courts, criminal master file, fiscal year.

--3Failure to file Currency Transaction Report (CTR) (31 U.S.C. § 5313)6.494Structuring monetary transactions (31 U.S.C. § 5324)9.1135Exporting/importing monetary instruments (31 U.S.C. § 5316)

16.0%232Monetary record and reporting offenses (Title 31, Bank Secrecy Act offenses)

--5Illegal money changing business (18 U.S.C. § 1960)

1.217Unknown/not reportedb2.740Public-order

--2Drug2.639Property2.842Violent

Specified unlawful activity (SUA) associated with money laundering9.5140

Engaging in transactions using property derived from specified unlawful activities (18 U.S.C. § 1957)

8.9133Unknown/not reportedb5.175Public-order

11.8175Drug47.1693Property1.624Violent

Specified unlawful activity (SUA) associated with money laundering74.51,100Laundering of monetary instruments (18 U.S.C. § 1956)

84.0%1,245Laundering/racketeering offenses (Title 18 offenses)

100.0%1,477TotalaPercentTotalMost serious offense charged

Table 2. Defendants charged in U.S. district court with a money launderingoffense, by most serious offense charged, 2001

authorities or prosecuted on othercharges (not shown in table).

• 23% of matters were declined for lackof criminal intent, 19% due to insuffi-cient or weak evidence, and 17% at therequest of the referring agency (notshown in table).

Cases filed in U.S. district court

During 2001, 1,477 defendants werecharged with money laundering.Laundering/racketeering offensescomprised 84% (laundering ofmonetary instruments, 74.5% andengaging in monetary transactionsusing property derived from specifiedunlawful activity, 9.5%), and monetary

record and reporting 16% of cases(exporting/importing monetary instru-ments, 9%, structuring financial trans-actions, 6%) (table 2).

The principal money launderingstatutes (18 U.S.C. § 1956 and 1957)apply in cases where transactionsinvolved proceeds from a broad rangeof specified unlawful activities. During2001, 1,100 defendants were chargedwith laundering of monetaryinstruments.

Of these defendants, 63% were alsocharged with a property offense (forexample, bank fraud, embezzlement,and counterfeiting); 16%, with a drug

offense (for example, importing/export-ing controlled substance and selling ordistributing marijuana). Public-orderoffenses (for example, racketeering,bribery, and extortion) comprised 7% and violent offenses (includes kidnap-ing and bank robbery) 2% of cases inwhich money laundering was the mostserious offense filed. Specified unlaw-ful activities information was notindicated in 12% of cases.

Of the 140 defendants charged withengaging in monetary transactionsusing property derived from specifiedunlawful activity, the most commonSUA’s included bank robbery andkidnaping (30%) followed by public-order (29%) and property offenses(28%).

Adjudication of money launderingdefendants in U.S. district court

About 88% of 1,420 adjudicated defen-dants were convicted. Of the 1,243convicted defendants, 91% hadpleaded guilty, and 9% were foundguilty at trial (table 3).

Of the 177 cases that did not result in a conviction, most (82%) weredismissed. Ninety-four percent ofdefendants adjudicated forexporting/importing monetary instru-ments were convicted, and of thoseconvicted, 98% had pleaded guilty.Monetary reporting and recordingoffenses had a slightly higher convic-tion rate (92%) compared tolaundering/racketeering offenses(87%).

Money Laundering Offenders, 1994-2001 7

Matters concluded in fiscal year.

Source: Executive Office for U.S. Attorneys,

1994 1996 1998 20000%

25%

50%

75%

100%Percent of matters prosecuted

M onetary record and reporting

Laundering/racketeering

2001

central system file.

1994 1996 1998 20000%

25%

50%

75%

100%

Percent of cases convicted

2001

Cases terminated in fiscal year.Source: Administrative Office of the U.S.

Laundering/racketeering

M onetary record and reporting

Courts, criminal master file, fiscal year.

From 1994 to 2001 the percentageprosecuted of those suspected of monetary record and reportingoffenses (as lead charge) increasedfrom 38% to 64%. Prosecutions forlaundering/racketeering declined from46% to 40% of suspects considered.

In 1994, 77% of defendants adjudicated for monetary record andreporting were convicted; in 2001,92% were convicted. The percent oflaundering/racketeering defendantsconvicted rose from 81% to 87%.

Figures 5 and 6

Source: Administrative Office of the U.S. Courts, criminal master file, fiscal year.

01104480.05Failure to report currency transaction2792858790.696Structuring transactions189212913193.6140Exporting/importing monetary instruments31619421822292.1241Monetary record and reporting

000066100.06Prohibition of money exchange010101310712092.3130Engaging in transactions

291191489679989585.81,043Laundering of monetary instrument291291581099121,02186.61,179Laundering/racketeering

321451771131,1301,24387.5%1,420TotalTrialDismissedTotalTrialGuilty pleaTotalconvictedTotalMost serious offense filed

Not convictedConvictedPercentNumber of defendants in criminal cases terminating during 2001 who were —

Table 3. Disposition of cases adjudicated in U.S. district court, by money laundering as most serious offense, 2001

Case processing time

During 2001, the average processingtime from filing to disposition was 17months for money laundering defen-dants. Of money laundering casesadjudicated, trials took an average of

22 months (from case filing to disposi-tion), compared to an average of 15months for cases which were the resultof a guilty plea (of the 1,420 criminalcases terminating in U.S. district courtsin 2001). Laundering/racketeeringoffenses were processed on averagewithin 18 months, 7 months longer thanmonetary records and report violations.

Characteristics of defendantsconvicted of money laundering

Defendants sentenced for moneylaundering as the most serious filingoffense were primarily male (80%),U.S. citizens (77%), over age 35(70%), and white (52%) (table 4). Onein three defendants convicted of moneylaundering had a prior adult conviction.Defendants with a monetary record andreporting filing offense were less apt tobe U.S. citizens (52%) and compara-tively less likely to have a prior criminalhistory (21%) than laundering/racket-eering defendants. A greater share ofdefendants with a monetary record and

reporting offense were female (29%)and Hispanic (48%) than defendantsconvicted of laundering/racketeeringoffenses.

8 Federal Justice Statistics Program

Money laundering as a secondaryoffense

In addition to the 1,477 defendantscharged with money laundering as theprimary charge during 2001, moneylaundering was a secondary offense in630 cases. Of these 630 cases, the mostserious offense charged was drug-related(90%), followed by property (6%), public-order (4%), and violent offenses (1%). Between 1994 and 2001 the number ofdefendants with any money laundering-related charges filed in U.S. district courtreached a peak in 1998 at 2,712 cases(an increase of 42.5% from 1994),followed by a decrease to 2,107 cases in2001 (but an overall increase of 10.7% innumber of cases from 1994). The numberof defendants with money laundering as asecondary charge increased 11%, and thenumber of defendants with moneylaundering as the most serious offenseincreased 10%.

Ninety-two percent of the 623 defendantsadjudicated for money laundering as asecondary offense during 2001 wereconvicted. Of those convicted, 6% ofconvictions were obtained via trial verdicts.Drug trafficking had the highest rate ofconviction (92%).

About 90% of defendantsconvicted of money laundering as a secondary offense receiveda prison sentence. Rates ofimprisonment varied across thetypes of offenses (drug offenses,90%; property offenses, 73%; and public-order offenses, 72%).Defendants with a drug offense as the most serious offensereceived prison terms with anaverage 97 months, compared to 44 months for property offend-ers. Prison terms for public-orderoffenses (including racketeering/extortion) had an average of 70 months.

Note: Detail excludes observations missing a particular characteristic.--Not calculated, too few cases.

Source: Administrative Office of the U.S. Courts criminal master file, fiscal year.

69.5031884.025Public-order97.3183346592.1560Drug 43.8052588.334Property

--004100.04Violent93.5184151291.7%623Total

sentence (in months)Other

Probationonly

Anyprison

Percentconvicted

Totaladjudicated

Most seriousoffense filed

Mean imposedprison

Number of personssentenced to —

Most serious offense of defendants adjudicated and sentenced withmoney laundering as a secondary offense, 2001

Between 1994 and 2001 defendants chargedwith money laundering as either a primary orsecondary offense were most often chargedwith money laundering as their primary offense

1994 1997 20000

500

1,000

1,500

2,000

2,500

3,000

Number of defendants with m oney

Laundering/racketeering

Drug trafficking

Violent

Property

laundering as prim ary or secondary offense

Public-order

2001

reporting Monetary record and

Figure 7

During 2001, 80% of monetaryrecord and reporting offenses and about 50% of laundering/racketeering offenses weredisposed of in 1 year or less

0 12 24 36 480%

25%

50%

75%

100%Percent of cases disposed

Months from filing to disposition60

M onetary recordand reporting

Laundering/racketeering

Source: Administrative Office of the U.S.Courts, criminal master file, fiscal year.1994 1996 1998 2000

0

20

40

60

Average number of months

Laundering/racketeering

Monetary record and reporting

of prison imposed

2001

The average prison term for a Federalmoney laundering offense increasedfrom 44 months in 1994 to 48 monthsin 2001

Figure 8 Figure 9

Sentencing outcomes

During 2001, of the 1,243 defendantsconvicted for money laundering, 72%received a sentence to a prison term,and 24% received probation only (table5). Defendants convicted of laundering/racketeering (79%) were more likelythan defendants convicted of monetaryrecord and reporting violations (40%)to receive a term of imprisonment. Eighty percent of defendants convictedof laundering of monetary instrumentsor of engaging in transactions from

unlawful activity received a sentence toprison. Imprisonment was less likely for defendants convicted of exporting/importing monetary instruments (41%)and structuring illegal financial transac-tions (38%).

The average prison sentence imposed for defendants convicted of moneylaundering was 48 months. The 712defendants that received a prisonsentence for laundering of monetaryinstruments received a longer prisonterm, on average, than for other money

laundering offenses (53 months). Morethan half of defendants convicted ofstructuring financial transactionsreceived probation only as a sentence.

Probation terms imposed were great-est, on average, for laundering ofmonetary instruments (44 months) andleast, for structuring financial transac-tions (31 months). A total of 256 defen-dants with money laundering as themost serious offense of convictionreceived an average fine of $40,808.The median fine amount was $2,750.

Money Laundering Offenders, 1994-2001 9

Note: Detail excludes defendants for whom a particular characteristic was not reported.*A criminal record is limited to prior adult convictions. For some defendants in this table, it is further limited to the portion that is relevant for calculating sentences under the Federal sentencing guidelines.

Source: Administrative Office of the U.S. Courts, criminal master file was merged with Pretrial Services Agency (PSA) andU.S. Sentencing Commission (USSC) data files. These latter two files contain information on characteristics of defendants.

20.94336.233833.4381Prior adult convictions79.1%16363.8%59666.6%759No convictions

Prior criminal history*47.89718.116823.4265Non-U.S. citizen52.2%10681.9%76176.6%867U.S. citizen

Citizenship7.4159.5889.110360 or older

22.64631.228929.733545-59 yr31.46430.928631.035035-44 yr27.05525.023125.328625-34 yr11.8%243.4%314.9%5518-24 yr

Age4.9105.6525.562Other

48.39920.819325.8292Hispanic11.72417.516216.4186Black non-Hispanic35.1%7256.1%52152.3%593White non-Hispanic

Race/ethnicity29.16018.016820.0228Female70.9%14682.0%76680.0%912Male

Gender100.0%222100.0%1,021100.0%1,243Total

PercentNumberPercentNumberPercentNumbercharacteristics

Monetary record and reporting(Title 31 offenses)

Laundering/racketeering(Title 18 offenses)TotalDefendant

Table 4. Characteristics of convicted money laundering defendants, 2001

Source: Administrative Office of the U.S. Courts, criminal master file, fiscal year.

Note: Detail excludes observations for which a particular characteristic was not reported.--Not calculated, too few cases.

----0--30.0--8.50.050.050.04Failure to report currency transaction2,5007,0444136.030.910.013.48.054.037.987Structuring transactions2,0002,6942536.032.647.519.613.046.640.5131Exporting/importing2,0005,3976636.031.812.017.010.849.539.6222Monetary record and reporting

--1,4176--24.0----0.0100.00.06Prohibition of money exchange4,00033,9162736.040.133.041.61.719.279.2120Engaging in transactions3,00058,38615736.043.650.853.23.117.379.6895Laundering of monetary instruments3,00053,10919036.042.637.051.92.918.079.01,021Laundering/racketeering

$2,750$40,80825636.038.536.048.44.323.772.01,243TotalMedianMeanTotalMedianMeanMedianMeanOther

Probationonly

AnyprisonTotalMost serious offense filed

FineProbation (in months)

Imposed prisonsentence (in months)Percent

Table 5. Type of sentence imposed following a conviction for a money laundering offense, 2001

Defendants convicted of moneylaundering are also subject to criminalforfeiture (18 U.S.C. § 982). During2001, 85 defendants convicted of amoney laundering offense were alsocharged under the criminal forfeiturestatute. All property may be forfeitable,even legitimate funds that werecommingled with illicit assets.

All property associated with the moneylaundering offense is also subject tocivil forfeiture. Civil (and criminal)forfeiture penalties can be assessed for monetary record and reporting

violations (for conduct violating 31U.S.C. §§ 5313, 5316, or 5324)12 and inviolation of laundering/racketeeringstatutes (18 U.S.C. §§ 1956, 1957, or1960).13

Defendants sentenced under theU.S. Sentencing Commission’sMoney Laundering Guidelines

During 2001, 951 defendants weresentenced for money laundering under

the three money laundering sentencingguidelines.14

Sixty-five percent of defendants weresentenced for laundering of monetaryinstruments. Thirteen percent weresentenced for engaging in monetarytransactions using property derivedfrom unlawful activities, and 22% weresentenced for exporting/importingmonetary instruments, structuringtransactions to evade reporting require-ments, or failing to file a currency trans-action report.

10 Federal Justice Statistics Program

State activities against moneylaundering

In 1985 Arizona became the first State to adopt legislation against moneylaundering. Since then, 35 other Stateshave adopted similar legislation.

States follow four models to some degree:• the Federal statute (31 USC §§ 1956-1957) (used notably by New York) • the President’s Commission on ModelState Drug Laws (1993), including moneylaundering, money transmitting, assetforfeiture, and related provisions • the Money Transmitter RegulatorsAssociation, a State regulator group andpublisher of a model statute• the National Conference of Commission-ers on Uniform State Laws, modelstatutes. State legislation varies widely, covering a spectrum from specified unlawfulactivities, such as racketeering or corruptactivities and crime for profit, to anyfelony. The basis of culpability acrossStates with statutes is a transaction

involving the proceeds of a statutorilydefined unlawful activity.

Transactions involving criminal proceedswith the intent to conceal the source of theproceeds are frequently coupled with therequirement that the actor know that theproceeds were derived from specifiedunlawful activity. In some States the trans-action has to have taken place in a bank;in others, any transaction qualifies.Transportation is included in some Statestatutes to criminalize the movement ofproceeds without an intervening transac-tion.

Following the enactment of the USAPATRIOT Act, 10 States (Arizona, Califor-nia, Florida, Illinois, Indiana, Maryland,Michigan, Missouri, New Jersey, and NewYork) adopted new or amended legislationto regulate the money transmitter industry.In fiscal years 2000 and 2001, 17 siteswere awarded Financial Crime-FreeCommunity grants from a total of $2.9million allocated. This money is used toenhance intrastate efforts against moneylaundering — to include developingcapabilities to detect and prosecutemoney laundering.

36 States have adopted money laundering legislation since 1985

Adopted money laundering statutes

Commercial defendants andmoney laundering

Businesses comprised less than 2% of all money laundering-related defendantsadjudicated during 2001. The 22businesses charged with moneylaundering as the most serious offenseincluded auto dealerships, grocerystores, banks, furniture stores, restau-rants, physicians’ offices, constructionfirms, beauty shops, and research firms.

Of the 22 charged, 15 were convicted(68.2%); 13 received probation (with anaverage term of 38.8 months), and 8were fined (an average of $68,454).

Individuals comprised at least 98% of defendants charged with moneylaundering offenses, 1994-2001

1994 1997 20000

400

800

1,200

1,600Number of defendants

Businesses

Individuals

Money laundering was the most seriousoffense filed.Source: Administrative Office of the U.S.Courts, criminal master file.

1231 U.S.C. § 5317 1318 U.S.C. § 981(a)(1)(A)

14The primary guideline at sentencing is used for reporting money laundering defendantssentenced. The Sentencing Guidelines wereamended on November 1, 2001, effectivelyconsolidating sections 2S1.1 (laundering ofmonetary instruments) and 2S1.2 (engaging inmonetary transactions in property derived fromunlawful activity) and more closely tying moneylaundering violations to the underlying offense.

Figure 10

The guidelines permit a longersentence if a defendant organized,managed, or led the money laundering.Of defendants sentenced under themoney laundering guidelines, 84%received no upward adjustment; 5%received a sentence adjustment forplaying a role as manager, organizer,supervisor or leader; 4%, an adjust-ment for managing five or more partici-pants (not specifically organizing orleading); and 7%, an adjustment forleading or organizing five or morepeople (table 6).

Of the 951 defendants sentencedunder the money laundering guidelines,51% were convicted for laundering lessthan $200,000, 44% were convicted oflaundering between $200,000 and $10million, and 4% had laundered morethan $10 million (not shown in table).

Methodology

The source of the data used in thisreport is the BJS Federal JusticeStatistics Program (FJSP) database. The FJSP compiles comprehensiveinformation on individuals and corpora-tions processed through the Federaljustice system from source filesprovided by the Executive Office ofUnited States Attorneys (EOUSA), theAdministrative Office of the UnitedStates Courts (AOUSC), the U.S.Marshals Service (USMS), the DrugEnforcement Administration (DEA), theUnited States Sentencing Commission(USSC), and the Federal Bureau ofPrisons (BOP).

In this report, money laundering offend-ers were defined according to selectedFederal criminal statutes. (See page2.) For suspects in matters referredand concluded, the “lead charge” wasused to describe money launderingsuspects. This pool includes criminalreferrals for which the assistant U.S.attorneys indicated a money launderingstatute as the “lead charge” or primarybasis for investigation and for which atleast 1 hour of investigation time wasspent.

The AOUSC provided U.S. districtcourt data on money laundering defen-dants in criminal cases filed, adjudi-cated, and sentenced. The “mostserious offense” is the filing offensewith the statutory maximum penalty.Money laundering violations from alloffenses filed for a particular defendantwere also reported. Specified UnlawfulActivities (SUA’s) were aggregated toBJS offense categories as shown inAppendix table 1 and reported in table2.

Data from the USSC showing defen-dants with money laundering as the

primary sentencing guideline overlapswith, but does not represent the samepool of defendants described in the AOdata. Both datasets include defendantsfor whom the offense of moneylaundering resulted in the longestsentence though differences arise asdefendants could be sentenced undermore than one guideline. Checks weremade on the two data series for 2001, and money laundering defendantswere found to share a comparableprofile.

Money Laundering Offenders, 1994-2001 11

Racketeering-liquorExtortion-racketeering threats

Racketeering-robberyIntimidation of witnesses

Obscene materialOther Federal statutes

Gambling-lottery-transmit wagerTrading with the enemy

Custom lawsBribery

Marijuana-manufactureMarijuana-sell/distribute/dispense

Controlled substance-import/exportControlled substance-manufacture

Controlled substance-sell/distribute/dispenseNarcotics-import/export

Narcotics-substance-sell/distribute/dispense

Bank embezzlementEmbezzlement of public money

Bank fraudBankruptcy fraud

Postal-interstate wire-radio fraudCounterfeiting

Transportation of stolen propertyLarceny and theft-bank

Other interstate commerce

Bank robbery Kidnaping

Public-order offensesDrug offensesProperty offensesViolent offenses

Appendix table 1. Detail of BJS offense categories used to group specified unlawful activities in table 2

The Bureau of Justice Statistics isthe statistical agency of the U.S.Department of Justice. Lawrence A.Greenfeld is director.

Mark Motivans, BJS Statistician,wrote this report under the supervi-sion of Steven K. Smith. The follow-ing individuals reviewed this reportand provided substantive comments:Stefan Cassella, Alice Dery, JohnHyland, and Les Joseph of the AssetForfeiture and Money LaunderingSection of the Department ofJustice; Julie Samuels and ClaraDunn of the Department of JusticeCriminal Division; Lou Reedt, Court-ney Semisch, and Paula Desio of theU.S. Sentencing Commission; and,Pragati Patrick and Marika Litras ofthe Administrative Office of the U.S.Courts. William Adams, Avi Bhati,Barbara Parthasarathy, and JulietScarpa of the Urban Institute verifiedthis report. Thomas Judd, BJAconsultant, and Carol Ferguson, ofthe Office of the Arizona AttorneyGeneral compiled the information onstate money laundering statutes.Carolyn Williams and Tom Hesteredited the report.

July 2003, NCJ 199574

Note: In 2001, 951 defendants were sentencedwith money laundering as the primary sentenc-ing guideline. Detail excludes observationswhere a particular characteristic was notreported. Source: U.S. Sentencing Commission, FY 2001 datafile.

7.369Leader or organizer of 5

or more participants

3.836Manager of 5 or more

participants

5.451supervisor or leaderManager, organizer

83.6794No adjustment

100%951Total*PercentNumberRole in offense

Sentenceddefendants

Table 6. Sentencing adjustment formoney laundering defendantssentenced in 2001, by role in offense

Survey of State and Federal inmates

Of the more than 55,000 drug offenders inFederal prison during 1997, 4% indicatedthey had been laundering drug money atthe time of arrest, compared to 3% of the217,000 drug offenders in State prison.

Of State and Federal inmates serving timefor a drug offense, about half (144,364)indicated that at the time of their arrestthey were either selling to users or distrib-uting drugs to dealers.

About 11% of State and Federal inmateswho reported having sold drugs at the timeof arrest indicated that they had beeninvolved in running drug money. (Thirteenpercent of drug traffickers in Federalprisons and 11% of State traffickersreported having engaged in running drugmoney.)

Source: Bureau of Justice Statistics, Survey of Inmates in State and Federal Correctional Facilities, 1997.

10.7116,222 State inmates13.428,142 Federal inmates11.2%144,364All inmates

PercentTotalDrug traffickersTransported drug money

(Of inmates arrested for distributing drugs to users and/or dealers)“At the time of your arrest were you a money runner?”

2.9217,028 State inmates4.455,742 Federal inmates3.2%272,770All inmates

PercentTotalDrug offendersLaundered drug money

Questions posed to a 1997 sample of State and Federal inmates serving a drug sentence: “At the time of your arrest were you laundering drug money?”

Estimated percentage of drug offenders in State and Federal prisons reporting to have laundered and/or transported drug money

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Washington, DC 20531

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