Frankencrime: America's Harsh Money Laundering Penalties
| Pages | 115-121 |
| DOI | https://doi.org/10.1108/eb027297 |
| Date | 01 April 2001 |
| Published date | 01 April 2001 |
| Author | Plato Cacheris,Eric Steven O'Malley |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 5 No. 2
Frankencrime: America's Harsh Money
Laundering Penalties
Plato Cacheris and Eric Steven O'Malley
Organised crime in the USA is a central threat to
economic growth and social stability. In this respect
the USA
is
no different from other free-market econo-
mies.
Meanwhile, sophisticated narcotics trafficking
cartels bring violence to streets and sickness to
youths. These problems are very real and difficult to
solve. But Americans are also showered with factual
and fictitious stories of hardened criminals 'getting
off easily because a judge was 'soft' or the law had a
technical loophole that did not pertain to the case's
merits. This atmosphere kindles public fear of organ-
ised crime and fuels criticism of the justice system to an
unwarranted degree. In reacting to this fear, the US
Congress has increasingly pushed the US Constitution
to its limits to thwart mechanisms that purportedly
allow these organisations to function.1 Unfortunately,
such legislation is often ill-conceived, the product of
reflexive reactions that can promote injustices when
the resulting laws are applied to situations never envi-
sioned by their drafters. The broadly written and
improperly exercised Money Laundering Control
Act 1986 (MLCA)2 is one such statute.
In theory, treating organised crime more severely
than individual crime makes good sense. If a criminal
enterprise is organised, it allows participants to better
coordinate their stories, corroborate their alibis, and
conceal evidence — making detection and successful
prosecution of their illegal acts nearly impossible. A
deterrence approach imposes an extra-severe punish-
ment, which, the theory goes, carries considerable
weight when a potential organised criminal does a
cost-benefit analysis. This approach may or may
not reflect reality, but it looks good on paper and
politicians and prosecutors certainly like it.
Unfortunately, the MLCA is not 'narrowly
tailored' toward accomplishing these purported
objectives. Instead, its glaring lack of precision has
enabled American prosecutors to create a statutory
monster, one that, when reinforced by a restrictive
sentencing regime, metes out penalties dispropor-
tionate to the underlying crimes and provides prose-
cutors with inordinate leverage when presenting
(read: coercing) defendants with plea bargains. This
paper illustrates how this regime works and discusses
some of the techniques used by American white-
collar defence lawyers in representing their clients.
Throughout, a hypothetical defendant named 'Big
Al'
is used to walk the reader through some compli-
cations and strategies associated with representing
defendants facing money laundering charges and
who,
upon guilty plea or conviction, are subject to
rigid sentencing guidelines.
SO YOU WANT TO WASH SOME
MONEY?
Money laundering refers to the 'process by which one
conceals the existence, illegal source, or illegal appli-
cation of income, and then disguises that income to
make it appear legitimate'.3 In its definition of illegal
source, the MLCA casts an extremely wide net,
covering both state and federal level crimes from
food stamp and health care fraud to kidnapping,
espionage, drug trafficking, and organised racketeer-
ing.4 The penalties imposed are more severe than
almost any other crime that does not involve drugs,
violence or treasonous activity. Theoretically, by per-
petually and severely criminalising all transactions
where parties know they are using or receiving illeg-
ally derived proceeds, secondary parties will be reluc-
tant to further the ablution and the primary party
will find it impossible to 'wash his hands' of a
criminal matter. In other words, dirty money may
infect anyone who touches it, so parties will avoid
risk-creating behaviour in the first place.
Unfortunately, there is no effective national level
oversight regulating how this tool is used, and
authority to bring money laundering charges rests
almost exclusively in the hands of local US
Attorney offices.5 More and more frequently,
money laundering charges are used not for combat-
ing drug trafficking or organised crime, as the sta-
tute was originally intended, but instead to
dramatically escalate the penalties for lesser indivi-
dual crimes such as embezzlement or simple theft.
Because the laundering statutes do not limit them-
selves to organised criminal activity, prosecutors
Journal of Money Laundering Control
Vol
5,
No.
2,
2001,
pp.
115-121
© Henry Stewart Publications
ISSN 1368-5201
Page 115
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