Money Laundering

Money Laundering

Money Laundering is a criminal allegation that deals with the income, proceeds, or funds that arise or stem from any criminal activity. Money Laundering is a derivative crime, which means that it is a crime that arises from other alleged underlying crimes. These terms are defined and clarified below in detail. This charge begins at a felony charge and increases from there. A money laundering charge also usually comes with the police seizing or taking whatever cash they find on you. The government will then also try to take your money, alleging that you “forfeited” it. The police have come to rely on seizing money from its citizens so they can afford a lot of their high tech gear and gadgets. It is a pretty raw deal, and you will need an attorney to defend you on the criminal charge as well as the forfeiture. There is a federal money laundering crime as well, but this page deals with the Texas law. This page breaks down the Texas money laundering statute and discusses various aspects of both the criminal charge and the possible civil forfeiture as well.              

What Does the Texas Law Say on Money Laundering?     

The Money Laundering statute is in Chapter 34 of the Penal Code. The statute is about possessing or otherwise controlling money that is derived from some “criminal activity.” Criminal activity sounds vague, but it is specifically defined. We will discuss that in greater degree below. Here is the text of the law from the Penal Code:  

Section 34.02. Money Laundering.  

  • A person commits an offense if the person knowingly:
  • acquires or maintains an interest in, conceals, possesses, transfers, or transports the proceeds of criminal activity
  • conducts, supervises, or facilitates a transaction involving the proceeds of criminal activity;
  • 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; or
  • finances or invests or intends to finance or invest funds that the person believes are intended to further the commission of criminal activity.

This statute spans a wide spectrum and criminalizes a good number of activities involving the proceeds [1] or funds[2] from criminal activity. Criminal activity more often than not means the proceeds from the sale or manufacture of drugs and controlled substances. This law is aimed at netting different organizational levels of a given business—the law penalizes having or possessing money from criminal activity; in addition, the law penalizes supervising or facilitating others who are possessing these proceeds. Also, in 34.02(a)(3), the activities of anyone who is alleged to have invested or financed criminal activity can be charged with money laundering. This provision of the statute is both noteworthy and strange because of the phrase “funds that the person believes are the proceeds of criminal activity.” This means that it is irrelevant if it turns out that the proceeds in question did not come from criminal activity. It is only relevant if the person believes they were. This provision allows for police to set someone up to commit a money laundering crime, or use a confidential informant to set someone up.                         

What are the Penalties for Money Laundering?   

If you are facing this criminal allegation, you will be looking at a felony. This means your case will go through the indictment process and then, if indicted, will funnel to a District Court. In Tarrant County, this means your case will end up in one of ten District Courts. The lowest charge for Money Laundering is a state jail felony and it goes up much higher from there. Also, whatever the “criminal activity” turns out to be, that can likely result in another charge. This charge is often connected with a drug charge. So, a person could very easily be looking at facing Money Laundering charges as well as Possession of a Controlled Substance or Possession with Intent to Distribute a Controlled Substance. Here are the penalties from the statute:

(e) An offense under this section is:

(1) a state jail felony if the value of the funds is $2,500 of more but less than $30,000;

(2) a felony of the third degree if the value of the funds is $30,000 or more but less than $150,000;

(3) a felony of the second degree if the value of the funds is $150,000 or more but less than $300,000;

(4) a felony of the first degree if the value of the funds is $300,000 or more.    

The penalties are staggered based on the alleged amount and begin at the felony level. What do these penalties mean? A state jail felony has a range of between 180 days and 2 years in state jail. A third degree felony carries between 2 and 10 years in the Texas Dep’t of Corrections. A second degree carries between 2 and 20 years in TDC. And a first degree felony has a range of punishment between 5 and 99 years. All of these felonies carry a maximum fine of $10,000.  

What is “Knowledge”?

There is a requirement that a person’s conduct not only fall into one of the provisions of the statute, but do so knowingly. What does knowingly mean? The statute addresses what knowledge of money laundering means:  

(a-1) Knowledge of the specific nature of the criminal activity giving rise to the proceeds is not required to establish a culpable mental state under this section.

  • For purposes of this section, a person is presumed to believe that funds are the proceeds of or are intended to further the commission 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 the proceeds of or are intended to further the commission of criminal activity, as applicable, 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.

That is a convoluted series of words. This part of the statute deals with the setup scenario we discussed as part of 34.02(a)(3). This simply means that if a police officer or a confidential informant informs someone that the proceeds are the result of some criminal activity, then the knowingly requirement is satisfied. It does not matter if the police officer is working undercover or not.             

What is "Criminal Activity"?

Criminal Activity can mean a felony under federal law, the laws of Texas, or the laws of any other state: 

“Criminal Activity” means any offense, including any preparatory offense, that is:

  • classified as a felony under the laws of this state of the United States; or
  • punishable by confinement for more than one year under the laws of another state

The reason for the one-year requirement in (B) is that the laws of different states will vary and misdemeanors and felonies don’t always translate cleanly. The cutoff for a felony in Texas is one year. Anything that carries a range of punishment that could drag on longer than a year is a state jail felony. Interestingly, criminal activity also covers preparatory offenses such as criminal attempt and criminal conspiracy. It does not have to be a completed criminal offense to qualify as criminal activity.    

What about Civil Forfeiture?  

If you are accused of money laundering and the State of Texas seizes an amount of cash from you, they can then try and allege that that money should be forfeited because that money was obtained by illegal means. This often adds insult to injury if you are facing a money laundering criminal allegation; or rather, adds injury to injury. Unfortunately, the State only has to show that the property is subject to forfeiture by a preponderance of the evidence. This is a significantly lower burden than beyond a reasonable doubt, which is the standard of proof which the State has in criminal cases. Much of the time, forfeiture will be an issue in drug cases. Factors that courts may consider in determining forfeiture suits are

  • The amount of money
  • The connection of money to drugs
  • Any evidence of association or contact between drugs and money

If you are facing a civil forfeiture, if you are facing a money laundering charge, if you are facing any other related criminal charges, contact me and let’s discuss your options and strategize your defense. 

[1] “Proceeds” means funds acquired or derived directly or indirectly from, produced through, realized through, or used in the commission of (A) an act; or (B) conduct that constitutes an offense under Section 151.7032, Tax Code.  

[2] “Funds” includes (A) 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; (B) United States silver certificates, United States Treasury notes, and Federal Reserve System notes; (C) an official foreign bank note that is customarily used and accepted as a medium of exchange in a foreign country and a foreign bank draft; and (D) 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 as defined by Section 604.001, Business & Commerce Code. 

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