Money laundering and the three-step proof required for conviction
Prosecutors may charge individuals allegedly involved in money laundering after finding evidence of possible wrongdoing. A conviction, however, requires proof that money deposited in a defendant’s bank account came from the proceeds of an illicit activity.
As explained by Bankrate.com, money laundering is a three-step process. Without showing all three steps, a prosecutor may not have enough proof to convince a jury to convict.
Placing money into a financial institution
The first step of money laundering is “placement.” This is when an individual deposits cash from an illegal source into a bank account. By placing several small amounts of money into an account, a bank may not suspect it came from misconduct.
Layering cash deposited in an account
After depositing cash, an individual carries out the second step, known as “layering.” It may include sending wire transfers to another bank account or purchasing goods and services as part of a business. It may also involve purchasing valuable assets such as stocks or real estate.
Integrating transaction proceeds into the economy
The final step of money laundering is “integration.” The funds make their way back into the economy. The account owner, for example, sells the assets purchased with the illicit funds or breaks it up into an assortment of small transactions. Banks, however, may use software with sophisticated algorithms to detect transactions that may not have originated from a legitimate business activity.
A suspicious transaction may require a bank to contact law enforcement officials who may then begin an investigation. A prosecutor may not, however, have all of the necessary proof to convict a defendant. Because a white collar charge investigation typically comes with an advance warning, acting quickly provides an attorney with time to prepare a strong defense. See our page on white-collar crime charges for more details.