Money Laundering in Support of Terrorism in New York

Money Laundering Generally

The crime of money laundering refers to the use or movement of money acquired from criminal activity. Generally, criminal enterprises take in money from their illegal activities and in an effort to make the money look legitimate they move the money through different accounts to avoid detection by government agents.

Money Laundering in Support of Terrorism

Money laundering in support of terrorism is the same crime but is targeted to be money received from an act of terrorism or used in support of terrorism.

Anyone that has money that was once “dirty” from a criminal activity could be at risk of being charged with money laundering.

Examples

The following situations demonstrate the range of activities that may risk prosecution under the statute for money laundering in support of terrorism in New York:

A man and woman own a restaurant together, and they have an arrangement where they take money from a man as if contracted for private catering and the restaurant’s event space. Then, they pay the majority of the money back to the man under the guise of a contract for marketing services for their restaurant. If they know the man illegal explosives, they can be charged with money laundering in support of terrorism.

A woman transfers cryptocurrency to shell corporations in order to fund a terrorist organization overseas. She can be charged with money laundering in support of terrorism.

A man was paid to help carry out a kidnapping plot against a government official. The man uses the money to pay others that will carry out components of the kidnapping plot. The man who orchestrates the plot can be charged with money laundering in support of terrorism, as can the others involved who knew the money was the proceeds of a terrorist plot.

The Legal Definition of Money Laundering in Support of Terrorism in New York

New York Penal Law defines the crime of money laundering in support of terrorism. There are three general categories of money laundering crimes: transactions using money from terrorism, transportation of money from terrorism, and participation in the scheme to launder money.

For each crime, the following elements are applicable in some way:

1. Prior knowledge

2. Proceeds or monetary instrument

3. Transaction or transportation

4. Intended result or knowledge of the result

To better understand the crime of money laundering in support of terrorism, let’s examine each type of money laundering crime and how the elements must be met.

Transaction[2]

This type of money laundering makes it a crime for dealing with money from terrorist activities. The knowledge element is a requirement that the person knows the property is either proceeds from an act of terrorism or a monetary instrument that supports or is intended to support a violation of penal law provisions on terrorism.

The second element requires that, in actuality, the proceeds or monetary instrument are in fact from or in support of terrorism, respectively. The third element requires one or more financial transactions using the proceeds or monetary instrument.

The final element is the intended result of the financial transaction. In conducting the transaction, the person must:

Intend to help carry on some criminal conduct;
Intend to engage in behavior that amounts to a felony violation of certain tax law provisions;
Know the transaction or transactions are for the purpose of concealing the origin or background of the money; or
Know that the transaction or transactions are for the purpose of avoiding any relevant reporting requirements.

Transportation[3]

This type of money laundering makes it a crime to move money from terrorist activities. The prior knowledge element is the same as for the transaction type of money laundering crime. The second element is also the same. The third element requires moving (physically or electronically) the actual proceeds or monetary instrument.

The final element is the intended result of transportation. There are fewer options for meeting this element. In transporting the money, the person must:

Intend to help carry on some criminal conduct;
Know the movement is for the purpose of concealing the origin or background of the money; or
Know that the movement is for the purpose of avoiding any relevant reporting requirements.

Other Financial Transaction[4]

This type of money laundering criminalizes transactions, like the first version of money laundering. But, this crime focuses on participating in a money laundering scheme. There is no corresponding prior knowledge element for this money laundering crime as there were with the others.

The second element requires that the proceeds or monetary instrument only be represented as being from or in support of terrorism. The third element is the same as the first money laundering transaction crime described.

The final element is the intended result of the financial transaction. In conducting the transaction, the person must intend to:

Help carry on some criminal conduct;
Conceal the origin or background of the money; or
Avoiding any relevant reporting requirements.

Related Offenses

Money laundering in support of terrorism has several related crimes in New York and federal law. These crimes may be charged in conjunction with or instead of this money laundering crime. Related offenses include:

Money Laundering

In both state and federal statutes, there is a general money laundering crime that does not specify that the activity must be in support of terrorism. Under New York law, the elements of general money laundering are the same. It differs by only requiring that the proceeds be from any criminal conduct.

In addition, the threshold for the value of the proceeds that must be involved is $10,000, while money laundering in support of terrorism has a lower threshold of $2,000. Under federal law, money laundering follows the same configuration as the state-level crime.

The same elements are present, with a few adjustments to make it fall under the jurisdiction of the federal courts. For example, the transportation type of money laundering must cross in or out of the U.S. border.

Terrorism Crimes

Related to money laundering in support of terrorism is the actual crime of terrorism. State law sets out several crimes in this area. This includes the crime of terrorism, which seeks to impact or exert influence on a population or government through kidnapping, assassination, or murder.

This crime is the most relevant for money laundering as it coincides with the requirement that the proceeds come from an act of terrorism. Other crimes in this chapter, including terroristic threats and possessing a chemical or biological weapon, may be supported through the monetary instrument.

Important Cases on Money Laundering in Support of Terrorism in New York

The elements of money laundering in support of terrorism can be complicated with multiple components. There are court cases to help parse out how the law would apply in certain situations. The relevant cases help clarify the burden the prosecution must meet for these charges in New York. A few of the important cases that impact the charging and successfully prosecuting money laundering in support of terrorism are discussed here.

One important consideration for evaluating prior court cases is that New York looks to federal case law as well as state cases. The case if In re Fazio explained that, due to the similarities between the federal crime of money laundering and the state crime, federal cases that predate the passage of the money laundering statute may impact the interpretation of the state statute.

This is particularly important because it adds to the complexities of understanding prosecution but may also add potential strategies for defense against charges of money laundering in support of terrorism.

A core component of all types of money laundering is the need for proceeds or a monetary instrument. Several court cases expand on what can and cannot satisfy this element. U.S. v. Garcia clarified that in identifying the source of proceeds, the prosecution did not have to parse out a commingled bank account. They only need to show that some portion of the account was criminal proceeds.

In People v. Keller, the defendants were charged with money laundering, promoting prostitution, and falsifying business records. The alleged money laundering occurred from the proceeds of the prostitution business. The monetary instrument, in this case, was a personal business check.

The court rejected this because the purpose is to prevent money from illicit sources being converted into an anonymous form. The personal business check does not accomplish that. People v. Capparrelli also rejected the prosecution’s argument that exchanging money from the criminal activity for real estate satisfied the requirements of the statute.

The case of People v. Rozenberg considered an appeal of a money laundering conviction. There were two important pieces to this decision. First, the court reaffirmed that “proceeds” is limited in interpretation to being “profits” and not just any revenues.

Second, making a number of inferences to reach the conclusion that there was intent is insufficient to satisfy the burden of proof. As the intent element is critical to successfully prosecuting a money laundering charge, the conviction was overturned.

For two categories of money laundering in support of terrorism, there needs to be a financial transaction. U.S. v. Ramirez considered what rises to the level of being considered a financial transaction.

The court held that simply possessing the money that came from illegal activity, in this case, drug trafficking proceeds, is not alone sufficient to conclude that the defendant participated in a financial transaction.

Detection, Investigation, and Prosecution

Potential criminal activity is generally investigated first by local police unless it is part of a larger investigation. In addition, any money laundering charges would be prosecuted by the Attorney General’s office. If there are related crimes, they would likely be prosecuted altogether.

Money laundering is a crime that is often seen in connection with racketeering or organized crime situations. The New York Legislature established an Organized Crime Task Force that has a statewide scope. This task force is predominantly concerned with long-term investigations into money laundering, as well as the related crimes of gambling, loan sharking, and drug trafficking. The task force works with local, state, and federal law enforcement agencies and utilizes civil and criminal enforcement techniques.

Who is involved with investigating Money Laundering Cases?

Given that money laundering has a corresponding federal criminal statute, there are also relevant federal authorities for detection, investigation, and prosecution. The Federal Bureau of Investigation and Immigration and Customs Enforcement both have a role in investigating money laundering.

In addition, the Justice Department’s Criminal Division would prosecute these crimes. The Justice Department also created a team that was specifically interested in Hezbollah Financing. This team is tasked with investigating the individuals and networks that are supporting this organization. The investigation scope includes money laundering.

The U.S. Department of State has a Bureau of International Narcotics and Law Enforcement Affairs and a Bureau of Counterterrorism that also work to combat terrorism and related money laundering. Their focus is on global and regional cooperation to enhance these efforts.

Statutory Penalties for Money Laundering in Support of Terrorism

The statutory penalties in New York for money laundering include fines and imprisonment. The level of the penalty depends on the degree of the charge. The degree is based on the level of proceeds involved: $2,000 is fourth degree; $5,000 is third degree; $25,000 is second degree, and $125,000 is first degree.

As all charges are felonies, regardless of the degree of the charge, they carry a fine of $5000 or double the amount gained by committing the crime. The specific term of imprisonment varies by the degree of the charge. The possible imprisonment is:

A fourth-degree charge is a class E felony, which carries a prison sentence of up to four years.
A third-degree charge is a class D felony, which carries a prison sentence of up to seven
A second-degree charge is a class C felony,[15] which carries a prison sentence of
A first-degree charge is a class B felony,[16] which carries a prison sentence of up to 25 years.

Additional Consequences of Conviction

Any conviction, no matter the specific crime, can be stressful and create long-term issues for you. Money laundering in support of terrorism charges should not be taken lightly. The idea of a person being associated with an act of terrorism in any way would ensure you were never given the benefit of the doubt.

No matter what the specific situation was, your name would be associated with a terrorist act. That would certainly inhibit any future personal or professional endeavors.

First, any current employment will be jeopardized by any conviction and any time you have to spend away in prison. In addition, the nature of the crime will make it challenging for your employer to be willing to hire you back.

Second, if you have your own business or have a professional license, you will also face long-term issues. Clients may not feel comfortable coming to someone associated with terrorism and with any sort of mishandling of money.

They likely do not want their funds associated with that and have their own reputations and finances at risk. Also, if you have a professional license, the review board will possibly think your license should be revoked or at least suspended.

There will also be financial ramifications to a conviction. The cost of defending yourself, the lost income from time away and damaged reputation, and any fines that may need to be paid will all add up. The tangible and intangible consequences will add up in the time leading up to and after a conviction.

Legal Defenses to Money Laundering in Support of Terrorism

Mounting a defense to a charge of money laundering in support of terrorism may seem like a daunting process, especially because there are no statutorily specified affirmative defenses. However, with each of the elements of the crime, there are opportunities for a defense attorney to challenge the prosecution’s case.

If there is sufficient doubt about any one element, you should not be convicted of money laundering.

There is a factual question of whether the proceeds or monetary instrument are actually from or in support of terrorism. If you can show that they do in fact come from a legitimate source, there would be no money laundering crime.

All types of money laundering crimes require some knowledge of the source of the money or representation of where the proceeds or monetary instrument came from. If you are not clearly linked to the underlying criminal activity that generated the proceeds, a defense attorney could attempt to show that you did not and could not have known of the source of the funding.

As People v. Rozenberg discussed, a large number of inferences to lead to a conclusion of intent is insufficient. Similarly, an argument could be made to demonstrate that the inferences are not enough to conclude that there was the requisite knowledge.

An essential part of money laundering is to show an exchange of “dirty” money from illicit sources into anonymous consideration that could appear to be a legitimate source of money. While there are some clear options for monetary equivalents, there have been cases that reject a purported monetary instrument.

For example, providing a personal business check-in, People v. Keller did not satisfy the requirements of the statute. A defense attorney would attempt to show that whatever was used in the alleged crime did not meet the statutory definition for proceeds or monetary instrument.

Just as there may be inferential proof to demonstrate the requisite knowledge was present, there would likely be inferences drawn to show the intended result of the money laundering.

Again, an attorney would attempt to show that the inferences are either too much to be sufficient or do not reach the conclusion the prosecution is attempting to reach. A defense lawyer can provide an alternative interpretation of the facts that reach a different conclusion in which there should not be a conviction.

Finally, if there are any factual arguments to be made that show the action was not sufficient to meet the elements that would be another approach to the defense. Just as the U.S. v. Ramirez case held that simple possession of proceeds from an illegal activity was not proof of a transaction, a lawyer could try to show that whatever conduct had transpired, it was not a transaction or transportation as required.

Let Us Help You

There is no reason for you to deal with this stressful situation on your own. While nobody can completely take away the headache, a skilled attorney can lighten the load and make it easier to navigate.

You will be inundated with requests and steps in the process, but with a legal team by your side, you can figure out the best course of action for you. If you retain us at an early stage, we can help you through the preliminary process.

This includes helping to communicate with law enforcement in a way that best represents your needs, evaluating any plea deal offers, and strategizing.

Most importantly, if the best thing for you is to go to court, we are ready to advocate on your behalf. We will do everything we can to defend you against these and any other related charges. We have local criminal law offices and are ready to speak to you today.

[1] N.Y. Penal Law § 470.21, et. seq.

[2] N.Y. Penal Law § 470.21(1).

[3] N.Y. Penal Law § 470.21(2).

[4] N.Y. Penal Law § 470.21(3).

[5] N.Y. Penal Law § 470.05.

[6] 18 U.S.C. § 1956.

[7] N.Y. Penal Law § 490.25.

[8] N.Y. Penal Law § 490.20.

[9] N.Y. Penal Law § 490.37.

[10] N.Y. Penal Law § 80.00.

[11] N.Y. Penal Law § 470.21.

[12] N.Y. Penal Law § 70.00.

[13] N.Y. Penal Law § 470.22.

[14] N.Y. Penal Law § 70.00.

[15] N.Y. Penal Law § 470.23.

[16] N.Y. Penal Law § 470.24.

[17] N.Y. Penal Law § 70.00.