Money laundering charges

What does the law make illegal?

Both laws depend on "specified unlawful activity": a long list of crimes in 18 U.S.C. § 1956(c)(7), including drug trafficking, fraud, bribery and most crimes listed in the RICO law. "Proceeds" means any property obtained or kept, directly or indirectly, through unlawful activity, including gross receipts (§ 1956(c)(9)).

Laundering, 18 U.S.C. § 1956(a)(1)

For the most common form, the government must prove that the person:

• Conducted or tried to conduct a financial transaction, such as a deposit, transfer, purchase or cash exchange.
• With money that in fact came from specified unlawful activity.
• Knowing the money came from some kind of crime (not necessarily which one).
• And did it for a purpose the law lists: to promote the crime, to evade taxes, to conceal or disguise the money's nature, location, source, ownership or control, or to avoid a reporting requirement.

Section 1956 also covers moving money into or out of the country to promote a crime or to hide it (§ 1956(a)(2)), and transactions with money an undercover agent says is crime money (§ 1956(a)(3)). In Cuellar v. United States, 553 U.S. 550 (2008), the Supreme Court held that for cross-border concealment, the purpose of the transport must be to hide the money's nature, location, source, ownership or control. Hiding it during the trip is not enough by itself.

Spending over $10,000, 18 U.S.C. § 1957

It is a crime to knowingly engage in a monetary transaction of more than $10,000 through a bank or other financial institution using criminally derived property that came from specified unlawful activity (18 U.S.C. § 1957). No intent to hide anything is needed. The government doesn't have to prove the person knew which crime the money came from (§ 1957(c)). Transactions needed to preserve the Sixth Amendment right to a lawyer are excluded (§ 1957(f)(1)).

Conspiracy

A conspiracy to violate § 1956 or § 1957 carries the same penalties as the laundering itself (§ 1956(h)). The government doesn't need to prove an overt act (Whitfield v. United States, 543 U.S. 209 (2005)).

Related charges

Structuring cash deposits, bulk cash smuggling and running an unlicensed money transmitting business are separate federal crimes that are often charged with laundering or instead of it. Each is explained under Statutes covered on this page.

What are the penalties?

• § 1956: up to 20 years and a fine of up to $500,000 or twice the value of the property involved, whichever is greater.
• § 1957: up to 10 years and a fine, or an alternate fine of up to twice the amount of criminally derived property involved (§ 1957(b)).
• Mandatory minimum: none.
• Forfeiture: the court must order forfeiture of any property "involved in" the offense, or traceable to it (18 U.S.C. § 982(a)(1)). This can reach clean money mixed with dirty money, which is why forfeiture is often the biggest financial issue in these cases.
• Stacking with the underlying crime: the laundering count is usually charged on top of the fraud or drug count, and the sentences can be combined.
• Supervised release: up to 3 years after prison (18 U.S.C. § 3583(b)).

How does sentencing work for this charge?

Money laundering is sentenced under USSG §2S1.1. The base offense level depends on whether the person also committed the underlying crime:

• If they did (and its level can be determined): the base level is the offense level for that underlying crime, such as the fraud or drug level (§2S1.1(a)(1)).
• If they didn't (for example, someone who only moved the money): level 8 plus the levels from the §2B1.1 loss table for the value of the laundered funds (§2S1.1(a)(2)).

Then:

• +1 for a § 1957 conviction; +2 for a § 1956 conviction (§2S1.1(b)(2)).
• +6 if subsection (a)(2) applies and the person knew or believed the funds came from, or were meant to promote, drug crimes, crimes of violence, or offenses involving firearms, explosives, national security or the sexual exploitation of a minor (§2S1.1(b)(1)).
• +4 if subsection (a)(2) applies and the person was in the business of laundering funds (§2S1.1(b)(2)(C)).
• +2 for sophisticated laundering, such as layered transactions or shell companies, in a § 1956 case (§2S1.1(b)(3)).

Pending at the Supreme Court. In Beaird v. United States, No. 25-5343, set for argument on October 13, 2026, the Court agreed to decide whether Stinson v. United States (1993) still states the rule for how much weight courts must give the Guidelines’ commentary, the notes that follow each guideline. The answer could affect rules on this page that come from commentary rather than from the guideline text itself.

Guideline numbers on this page are from the Guidelines Manual in effect since November 1, 2025, which no longer uses “departures”: the judge calculates the range, then weighs the factors in 18 U.S.C. § 3553(a). For more depth, see Money laundering sentencing, at Sentencing.net, a Criminal Center site.

Statutes covered on this page

Each federal law this page covers, listed by how often it was a statute of conviction in fiscal year 2025 (U.S. Sentencing Commission data). For each one: the official section heading, what the government must prove, the penalties, and the sentencing guideline the Commission's Statutory Index assigns to it. See all statutes by title and section.

• 18 U.S.C. § 1956
• 18 U.S.C. § 1957
• 31 U.S.C. § 5332
• 18 U.S.C. § 1960
• 31 U.S.C. § 5324

How do these cases usually start and move?

Money laundering cases usually grow out of an investigation of the underlying crime. Agents from IRS Criminal Investigation, the FBI, the DEA or Homeland Security Investigations trace money through bank records, often starting from reports banks must file, such as currency transaction reports for cash over $10,000. Grand jury subpoenas for bank and business records are common, and so are seizure warrants that freeze accounts before any charge is filed.

Family members, bookkeepers and business partners who handled money are often contacted early. A target letter or a frozen account is a good time to talk with a lawyer (Justice Manual 9-11.151).

The usual stages of a federal case

1. 1Investigation. Agents gather records and interview witnesses, often using grand jury subpoenas. Someone the prosecutor views as a "target" may get a target letter before an indictment (Justice Manual 9-11.151, 9-11.153).
2. 2Charges. A federal felony is usually charged by indictment: a grand jury decides in private whether there is probable cause (Fed. R. Crim. P. 6, 7). Some cases start with an arrest on a criminal complaint.
3. 3First appearance and detention. After an arrest, the person goes before a magistrate judge without unnecessary delay (Fed. R. Crim. P. 5). The judge decides whether they are released or held until trial (18 U.S.C. § 3142).
4. 4Evidence and motions. The government must turn over certain evidence (Fed. R. Crim. P. 16). The defense can ask the court to suppress evidence or dismiss charges (Fed. R. Crim. P. 12).
5. 5Plea or trial. Many federal cases end in a guilty plea, which the judge must find knowing and voluntary (Fed. R. Crim. P. 11). At trial, the government must prove every element beyond a reasonable doubt, and a jury verdict must be unanimous (Fed. R. Crim. P. 31(a)).
6. 6Sentencing. A probation officer writes a presentence report, and each side can object in writing within 14 days of receiving it (Fed. R. Crim. P. 32). The judge then decides the sentence under 18 U.S.C. § 3553(a).

More on what to do at each stage: Facing federal charges? What to do now.

What defense issues come up in these cases?

• Knowledge. Did the person know the money came from crime? Willful blindness theories are common, and the facts behind them deserve close review.
• Purpose. For concealment under § 1956, was the transaction designed to hide something, or was it ordinary spending? Cuellar requires more than hiding money while moving it.
• Tracing and the $10,000 line. Under § 1957, can the government trace more than $10,000 in criminally derived property into the specific transaction, especially from a mixed account?
• Specified unlawful activity. Is the underlying crime on the list, and is the proof of it solid?
• Merger. When the "laundering" is just paying the expenses of the underlying crime, courts have looked hard at whether it is really a separate crime. After the 2009 change to the meaning of "proceeds," this argument is narrower than it was under United States v. Santos, 553 U.S. 507 (2008), and it depends on the circuit.
• Forfeiture. What property was actually "involved in" the offense, and can untainted funds be protected, including money needed for a lawyer?

Every case turns on its own facts. These are issues to look at, not predictions about how any case will turn out.

What happens after a conviction?

• Appeal. A notice of appeal is usually due within 14 days after the judgment is entered (Fed. R. App. P. 4(b)(1)(A)). Many plea agreements waive the right to appeal, but in Hunter v. United States (2026) the Supreme Court held that a waiver can’t be enforced when doing so would cause a miscarriage of justice, a high bar. See federal appeals at Sentencing.net.
• A § 2255 motion. A motion asking the sentencing court to vacate, set aside or correct the sentence, for example for ineffective assistance of counsel. It is usually due within one year after the conviction becomes final (28 U.S.C. § 2255(f)). See 2255motion.com.
• Compassionate release. A motion asking the judge to reduce a prison sentence for extraordinary and compelling reasons, filed after the person asks the warden and either exhausts BOP appeals or waits 30 days (18 U.S.C. § 3582(c)(1)(A)). It can’t be used to attack the validity of the conviction itself (Fernandez v. United States (2026)). See CompassionateRelease.com.
• Clemency. The President can pardon a federal offense or commute (shorten) a federal sentence (U.S. Const. art. II, § 2). See Clemency.com.