Federal Forfeiture Actions for Money Laundering

Any property, real or personal, which was involved in a transaction in violation of 18 U.S.C. §§ 1956 or 1957 or any property traceable to such property is subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(A).

18 U.S.C. § 1956(a)(1) makes it a crime to knowingly conduct or attempt to conduct a “financial transaction” with proceeds from “specified unlawful activity” (SUA) with specific intent to: promote the SUA, conceal or disguise the source, origin, nature, ownership, or control of the proceeds; or evade reporting requirements.

The purpose of “money laundering” as defined by 18 U.S.C. § 1956 is to disguise illicit nature of funds by introducing it into legitimate commerce and finance thereby making them “clean.” This financial process is most commonly conducted using the following three steps:

• the “placement” phase of this financial process takes place when proceeds from illicit sources are placed in a financial institution or business entity;
• the “layering” takes place when these funds are then used in seemingly legitimate commerce transactions which makes the tracing of these monies more difficult and removed from the criminal activity from which they are a source; and
• the “integration” phase is when these funds are then used to promote the unlawful activity or for the personal benefit of the money launderers and others.

An Assistant United States Attorney will file a civil asset forfeiture case when they have probable cause to believe valuable property is subject to forfeiture to the United States pursuant to 18 U.S.C. § 981(a)(1)(C) because the property constitutes or is derived from proceeds traceable to violations of 18 U.S.C. § 1343 or a conspiracy to commit such offense (18 U.S.C. § 1349). Wire fraud, for example, is an SUA.

Any property, real or personal, which constitutes proceeds or is derived from proceeds traceable to a violation of 18 U.S.C. § 1343 or 1349 is subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(C).

Under 18 U.S.C. § 984, for any forfeiture action in rem in which the subject property consists of cash, monetary instruments in bearer form, or funds deposited in an account in a financial institution:

• The government need not identify the specific funds involved in the offense that serves as the basis for the forfeiture;
• It is not a defense that those funds have been removed and replaced by other funds; and
• Identical funds found in the same account as those involved in the offense serving as the basis for the forfeiture are subject to forfeiture.

In essence, 18 U.S.C. § 984 allows the government to seize for forfeiture identical property found in the same place where the “guilty” property had been kept.

The Government might allege that the Defendants in rem are subject to forfeiture under 18 U.S.C. § 981(a)(1)(A) because such property was “involved in” money laundering or attempted money laundering, in violation of 18 U.S.C. §§ 1956 and/or 1957.”

18 U.S.C. § 1956 provides:

(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity—

(A)(i) with the intent to promote the carrying on of specified unlawful activity; or (ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or

(B) knowing that the transaction is designed in whole or in part—(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or (ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.

18 U.S.C. § 1957 prohibits individuals from “knowingly engag[ing] or attempt[ing] to engage in a monetary transaction” involving at least $10,000 in “criminally derived property.”

This article was last updated on Wednesday, December 30, 2025.