Money laundering is the act of taking illegally obtained funds and making them appear as if they came from a legitimate source.

Federal authorities treat these cases as serious financial crimes, and a conviction can lead to lengthy prison sentences, hefty fines, and the loss of property through forfeiture.

Money laundering allegations often show up alongside other federal offenses, including wire fraud, mail fraud, tax fraud, tax evasion, drug trafficking, and organized crime investigations. In many cases, the money laundering count becomes the government’s main leverage.

If you are facing money laundering charges in Los Angeles or Orange County, you need a defense strategy built for federal court. Robert M. Helfend is a seasoned federal defense attorney with decades of experience in complex federal cases. Call 800-834-6434 for a free, confidential case review.

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Overview of money laundering cases in the United States

At the federal level, money laundering is primarily prosecuted under 18 U.S.C. § 1956 and 18 U.S.C. § 1957. These laws were strengthened after Congress passed the Money Laundering Control Act of 1986, which formally established money laundering as a standalone federal crime.

While the details vary from case to case, most federal money laundering cases focus on one core claim:

The money involved in the transaction represented the proceeds of unlawful activity, and the defendant knew it.

That “knowledge” requirement is where many cases are won or lost.

What counts as “money laundering” under federal law?

Money laundering is broader than many people realize. It can include:

Depositing cash into a bank account in a pattern designed to avoid reporting requirements
Transferring money between accounts to make it harder to trace
Moving funds through multiple businesses or entities to hide the illegal source
Using real estate or high-value purchases to convert criminal proceeds into assets
Converting dollars into cryptocurrency and moving it across wallets and exchanges
Routing payments through third parties to create layers between the money and the underlying criminal activity

Money laundering can involve a financial institution, but it does not always require one. Some cases focus on private transactions and business records instead of traditional bank deposits.

How the government proves money laundering

Federal money laundering investigations are built around documents. Prosecutors usually rely on:

Financial records
Bank statements and deposit history
Transaction logs and payment processor data
Business ledgers, invoices, and tax filings
Phone extractions and email messages
Surveillance and witness statements
Data from digital platforms and crypto exchanges

From the government’s perspective, a money laundering case is not just about “where the money went.” It is about proving intent.

The prosecution must prove guilt beyond a reasonable doubt. If they cannot prove knowledge and intent, the case can fall apart.

The three stages of money laundering

Many prosecutors describe money laundering activities as a three-step process:

1. Placement

This is when money obtained from criminal activity enters the financial system. Examples include cash deposits, wire transfers, or funneling funds into a business.

2. Layering

This step involves complex financial transactions designed to obscure the trail. The goal is to make the money harder to trace back to an illegal source.

3. Integration

This is when the funds re-enter the economy as “clean” money, often through legitimate businesses, investments, payroll, or property purchases.

Not every case includes all three stages. Federal money laundering cases often focus on layering, because that is where concealment is easiest to argue.

18 U.S.C. § 1956 and § 1957 explained

Federal money laundering charges usually come down to one of two statutes.

18 U.S.C. § 1956

Section 1956 is the broader and more aggressive law. It targets financial transactions involving proceeds of unlawful activity when the government claims the purpose was to:

Promote illegal activity, or
Conceal or disguise the source, ownership, or control of the money, or
Evade federal reporting requirements

A 1956 allegation often includes language like “designed to conceal,” “intent to hide,” or “intent to promote.”

18 U.S.C. § 1957

Section 1957 is narrower. It focuses on spending or moving more than $10,000 in “criminally derived property” through a monetary transaction.

It is often charged when prosecutors believe the money came from unlawful activity, but they want an easier path than proving the full concealment intent they would need under 1956.

Federal statute	What it targets	Key issue prosecutors must prove	Maximum prison sentence	Common leverage points
18 U.S.C. § 1956	Transactions tied to concealment or promotion	Knowledge + intent to conceal or promote	Up to 20 years	Broad theory, multiple counts, conspiracy exposure
18 U.S.C. § 1957	Monetary transactions over $10,000	Knowledge money was criminally derived	Up to 10 years	Easier charging tool, lower intent burden

Penalties for a federal money laundering conviction

Federal money laundering penalties can be life-changing. A conviction may include:

Prison time
Up to 20 years for § 1956 and up to 10 years for § 1957
Hefty fines
In many cases, fines can reach $500,000 or twice the value of the property involved, whichever is greater
Asset forfeiture
The federal government can seize money, vehicles, accounts, and other property it claims was connected to the transaction involved
Supervised release
Restrictions after incarceration that can impact work, travel, and daily life

Even before trial, money laundering charges can trigger frozen accounts and financial pressure. That is often the government’s goal. A strong defense attorney can challenge seizure and forfeiture early in the case.

Why money laundering charges often come with other federal crimes

Money laundering is rarely charged alone. Many cases include allegations tied to:

Wire fraud and mail fraud
Bank fraud and fraud crimes involving businesses
Tax evasion and tax fraud
Drug crimes linked to illegal drug sales and drug trafficking
Organized crime investigations involving coordinated transactions

In many prosecutions, the underlying alleged offense becomes the “specified unlawful activity,” and the money laundering count is built on top of it.

This matters because the defense must often fight on two fronts:

Whether the underlying activity was criminal
Whether the money laundering theory is valid

If the prosecution cannot prove the money came from unlawful activity, the money laundering charge may collapse.

How money laundering cases move through federal court

Most clients are shocked by how quickly federal cases escalate. A typical money laundering case may involve:

A financial investigation and document collection
Subpoenas to banks and payment processors
Interviews and recorded communications
A target letter or “invitation” to speak with agents
Grand jury testimony and indictment
Arraignment in federal court
Discovery and motion practice
Negotiations or trial

Federal prosecutors also often add conspiracy allegations. That allows them to argue guilt based on association, communication, or indirect participation.

Early legal representation can prevent mistakes that damage your case. Once statements are made, they cannot be taken back.

Common money laundering schemes prosecutors investigate

Money laundering schemes vary, but common allegations include:

Structuring deposits to avoid reporting thresholds
Using shell companies to route payments through legitimate businesses
“Commingling” illegal funds with business revenue
Trade-based laundering through fake invoices or shipments
Real estate purchases used to convert cash into assets
Cryptocurrency movement across wallets, exchanges, and peer-to-peer networks
Third-party transfers through friends, employees, or relatives

The government often frames these as deliberate concealment. A defense lawyer’s job is to break that narrative and show the transactions were lawful, ordinary, or misunderstood.

Legal defenses against federal money laundering charges

A strong money laundering defense focuses on the weak links in the prosecution’s case. That usually means attacking knowledge, intent, and the supposed “money trail.”

Lack of knowledge

This is one of the most powerful defenses.

The prosecution must prove you knew the money was obtained from illegal activity. If the funds came through business operations, third parties, or complicated payment systems, the government may struggle to prove knowledge beyond a reasonable doubt.

Lack of intent to conceal

In § 1956 cases, prosecutors often claim a transaction was designed to conceal the illegal source of the money.

A viable defense may show the transaction was:

Ordinary business activity
A legitimate payment for goods or services
Transparent and properly documented
Not structured to hide ownership or control

The money came from legitimate sources

If the government assumes money is “dirty” without proof, the defense can challenge the foundation of the case.

Financial forensics can be used to trace funds, confirm income sources, and show legitimate revenue streams.

Challenging the prosecution’s money trail

Money laundering cases are built on connecting dots. A successful defense often involves showing those dots do not connect.

Common issues include:

Missing documentation
Bad assumptions in the investigative timeline
Overreliance on summaries instead of original records
Transactions that are legal but “look suspicious” without context

Identity theft or unauthorized use

Money laundering charges increasingly involve online transactions, fraud, and crypto.

If your identity, business accounts, or financial credentials were used without your knowledge, that can be a strong defense. The defense can build evidence showing you were not the person controlling the transaction involved.

Duress

Duress can be a defense if you were threatened into participating in unlawful activity. This is fact-specific, but it can apply in organized crime cases or situations involving coercion.

Illegal search and seizure

Federal agents must follow the rules. If evidence was obtained unlawfully, your defense attorney can file motions to suppress evidence and limit what the jury can see.

What to look for in a money laundering defense attorney

Choosing the right lawyer matters. These cases are technical and the stakes are high.

When hiring a money laundering defense attorney in Los Angeles, look for someone who has:

Real experience handling complex federal money laundering cases
Comfort in federal court, not just state court
The ability to work with forensic accountants and financial experts
Trial readiness, not just quick settlements
Fast communication and responsiveness
A clear fee structure and a written agreement

You should also confirm that the attorney you meet with will personally handle your case and not hand it off to a junior associate.

Why choose the Helfend Law Group

When you are facing money laundering charges, you need legal representation built for high-pressure cases.

Robert M. Helfend is a respected criminal defense attorney with decades of experience representing clients in serious criminal matters. He understands how the federal government builds financial cases, how prosecutors frame money laundering allegations, and how to attack the weak points in the prosecution’s case.

If you are under investigation or have been charged, the most important step is to act early. Call 800-834-6434 for a free consultation and case review.

Published January 22, 2013. Last updated January 18, 2026.

Frequently asked questions

What is money laundering?

Money laundering is the process of making money from unlawful activity appear legitimate. Federal prosecutors often claim the defendant moved or spent funds to conceal the illegal source or promote illegal activity.

What is the difference between 18 U.S.C. § 1956 and § 1957?

Section 1956 focuses on transactions involving concealment intent or promotion of illegal activity. Section 1957 focuses on monetary transactions over $10,000 involving criminally derived property.

Do prosecutors have to prove I knew the money was illegal?

Yes. Knowledge is a key element. The prosecution must prove beyond a reasonable doubt that you knew the money involved came from unlawful activity.

Can money laundering charges involve cryptocurrency?

Yes. Many modern money laundering cases involve digital transactions, crypto exchanges, and wallet transfers. Prosecutors often argue that crypto movement is evidence of concealment, but that can be challenged.

What penalties can money laundering carry?

A federal money laundering conviction can lead to up to 20 years in prison under § 1956, substantial fines, and asset forfeiture. Many cases also involve additional charges like wire fraud or conspiracy.

Can the government seize my assets before trial?

Yes. The federal government can freeze bank accounts and seize property it believes is tied to the offense. A defense attorney can fight seizure and forfeiture through early motions and litigation.

What should I do if I am being investigated?

Do not speak to federal authorities without counsel. Early involvement of a defense attorney can prevent damaging statements and help preserve evidence that supports your defense.

References

California Penal Code § 186.10. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=186.10&lawCode=PEN
18 U.S. Code § 1956. https://www.law.cornell.edu/uscode/text/18/1956
18 U.S. Code § 1957. https://www.law.cornell.edu/uscode/text/18/1957

Federal Money Laundering Defense Attorney