Money Laundering Defense: A Federal Defense Lawyer’s Guide

By Elizabeth Franklin-Best, Esq., and Christopher Zoukis, JD, MBA

Money laundering is rarely the first crime the government investigates — it is the charge prosecutors add to make a case bigger, longer, and harder to defend. If you face money laundering, structuring, or Bank Secrecy Act allegations, put a money laundering lawyer on your side early, because these statutes have demanding elements that an aggressive prosecution often glosses over. At Elizabeth Franklin-Best, P.C., we defend individuals and businesses against federal money laundering allegations nationwide.

Federal money laundering law is a cluster of statutes: the core money laundering offenses, the structuring and currency-reporting laws, the Bank Secrecy Act, and the unlicensed money transmitting statute. Each has its own elements and defenses, and a money laundering count can dramatically increase the exposure associated with an underlying offense.

Money laundering defense is statutory work, and statutory work is where our practice lives. Elizabeth Franklin-Best, our principal attorney, holds 2026 recognition from Best Lawyers in America in Appellate Practice along with a Chambers USA 2026 ranking for Litigation: White-Collar Crime & Government Investigations. She has handled more than 330 federal proceedings and over 100 federal appeals, appearing in all twelve federal circuits and at the United States Supreme Court, and she maintains a nationwide federal post-conviction practice that reaches the valuation and forfeiture fights at the heart of these cases. We map each count’s precise elements against the financial record and test whether the government can prove the knowledge and intent these statutes demand. If a money laundering investigation or charge has entered your life, schedule a paid, one-hour initial consultation with our team.

Money Laundering: Quick Answer

Question	Answer
What is money laundering?	Conducting financial transactions with the proceeds of crime to promote, conceal, or disguise that crime — prosecuted under 18 U.S.C. §§ 1956 and 1957.
What must the government prove?	That the property was criminal proceeds, that the defendant knew it, and that the transaction was meant to promote, conceal, or evade reporting — depending on the theory.
What penalties can apply?	Core money laundering carries up to 20 years per count; the related transaction offense up to 10 years; structuring up to 5 or 10 years.
Is money laundering a stand-alone charge?	It can be, but it is usually added to an underlying offense — and it requires its own separate proof.
What is the first step in a defense?	A paid, one-hour initial consultation with our team — reviewing the alleged transactions, the knowledge evidence, and any forfeiture or asset-freeze risk you face.

Key Takeaways

• Federal money laundering law is a cluster of statutes — the core offenses, structuring, the Bank Secrecy Act, and unlicensed money transmitting.
• Core money laundering under 18 U.S.C. § 1956 requires criminal proceeds, knowledge, and an intent to promote, conceal, or evade reporting.
• The related offense under 18 U.S.C. § 1957 applies to knowingly engaging in a financial transaction involving more than $10,000 in criminally derived property, with a lower intent requirement.
• Structuring under 31 U.S.C. § 5324 is breaking up cash transactions to evade currency reporting — and it is a frequent stand-alone charge.
• Money laundering requires its own proof; an underlying crime does not automatically establish it.
• The proceeds must come from a “specified unlawful activity,” and since a 2009 amendment the statute defines proceeds to include gross receipts — not just net profits.
• Money laundering counts carry severe penalties and aggressive forfeiture exposure.
• Knowledge and intent are the elements where money laundering cases are most often won.

What Is Money Laundering?

Money laundering, in the broadest sense, is the process of moving the proceeds of crime through transactions designed to make those proceeds appear legitimate, or to promote further crime. Federal law addresses it through several statutes, and the key point is that money laundering is a separate offense from the crime that generated the money.

That separateness is what makes money laundering such a powerful prosecution tool. A wire fraud, a drug offense, or a corruption scheme is one crime. The financial transactions that follow — moving the money, spending it, depositing it, transferring it — can be charged as additional, separate money laundering crimes, each carrying its own lengthy sentence. A money laundering count can double the exposure of an underlying case and substantially expand the government’s forfeiture reach.

But that same separateness cuts the other way for the defense. Because money laundering is an offense in its own right, it has its own elements, and the government must prove each of them. It is not enough to prove the underlying crime and point to some money moving afterward. The knowledge and intent requirements are real, and they are where money laundering cases are most often defended.

The Federal Money Laundering Statutes

Federal money laundering exposure runs through a cluster of statutes, each covered in depth in its own guide:

• Money Laundering Defense (18 U.S.C. §§ 1956 & 1957) — the core money laundering offenses: promotional and concealment laundering, and the related monetary-transaction offense.
• Structuring & Currency Transaction Violations (31 U.S.C. § 5324) — breaking up cash transactions to evade the currency reporting rules.
• Bank Secrecy Act Violations Defense — the anti-money-laundering recordkeeping, reporting, and compliance regime.
• Unlicensed Money Transmitting Business Defense (18 U.S.C. § 1960) — operating a money transmitting business without the required license or registration.

A single matter can implicate several of these statutes at once, and money laundering counts frequently accompany federal fraud, drug, and public corruption charges. Understanding how the statutes interact is essential to defending the whole case.

The Core Money Laundering Offenses

The two central statutes are 18 U.S.C. § 1956 and § 1957, and they work differently.

Section 1956 is the principal money laundering statute. It reaches a person who conducts a financial transaction, knowing the property involved represents the proceeds of unlawful activity, where the property in fact is the proceeds of a “specified unlawful activity,” and where the transaction is intended to promote further crime, or is known to be designed to conceal the nature, source, ownership, or control of the proceeds, or to avoid a reporting requirement. It also reaches the international transportation of criminal funds. Section 1956 carries a maximum penalty of 20 years per count.

Section 1957 is broader in one sense and narrower in another. It reaches a person who knowingly engages in a monetary transaction through a financial institution involving criminally derived property worth more than $10,000. It does not require an intent to promote or conceal — simply knowingly transacting with more than $10,000 of criminal proceeds can violate it. Section 1957 carries up to 10 years in federal prison per count.

Both statutes require that the proceeds come from a “specified unlawful activity” — a long statutory list of predicate offenses — and both require knowledge that the money was criminal proceeds. Importantly, the government generally need not prove the defendant committed the underlying crime; it must prove the defendant knew the money was dirty.

Applied Insight: Prosecutors often treat money laundering as automatic — underlying crime, then money moved, therefore laundering. It is not automatic. Section 1956 requires a specific promotional or concealment design, and merely spending criminal proceeds is not, by itself, concealment laundering. In Cuellar v. United States, 553 U.S. 550 (2008), the Supreme Court reversed a conviction on exactly this ground — hiding money during transport is not the same as transporting money in order to conceal its nature, source, ownership, or control. Insisting on proof of that design is one of the most effective money laundering defenses.

Knowledge and the “Proceeds” Question

Two elements deserve particular attention because they are so often contested.

The first is knowledge. The government must prove that the defendant knew the property involved represented the proceeds of unlawful activity. It need not prove the defendant knew exactly which crime, but it must prove genuine knowledge of the property’s criminal character. A person who handled funds without knowing they were criminal proceeds — a family member, an employee, a professional providing ordinary services — has not committed money laundering. Willful blindness can sometimes substitute for actual knowledge, but that, too, has limits the defense can press.

The second is the “proceeds” question. In United States v. Santos, 553 U.S. 507 (2008), a plurality of the Supreme Court read “proceeds” to mean net profits, warning that a gross-receipts reading would let ordinary expense payments “merge” every predicate offense into money laundering. Congress answered in 2009: 18 U.S.C. § 1956(c)(9) now defines proceeds to include the gross receipts of the unlawful activity. For conduct after that amendment, the gross-versus-net debate is largely settled — but the merger concern Santos identified survives as a defense argument, and tracing remains fully litigable. Once criminal funds are commingled with clean money, a transaction the government calls laundering may involve funds that cannot be traced to the predicate offense at all.

Crypto, § 1960, and the New AML Landscape (2023–2026)

The fastest-moving corner of money laundering enforcement involves digital assets. The government’s workhorse is 18 U.S.C. § 1960, which makes it a felony — punishable by up to 5 years — to operate an unlicensed money transmitting business. The statute reaches a business that lacks a required state license, one that fails to register with FinCEN, and one that transmits funds known to be derived from a criminal offense or intended to finance crime. No classic laundering design is required, which is precisely why prosecutors like it.

Federal prosecutors have applied § 1960 aggressively to the crypto economy: peer-to-peer traders, kiosk operators, unregistered exchange platforms, and mixing services have all been charged on the theory that converting or moving cryptocurrency for others is money transmission requiring registration, and these counts often travel alongside cryptocurrency fraud allegations. The defense questions are genuinely unsettled — what counts as “money transmitting” when software never takes custody of funds, what the government must prove the operator knew about licensing duties, and where criminal transmission ends and protected software development begins. We follow this case law closely because it is being written in real time.

Traditional Bank Secrecy Act enforcement has not slowed. In the largest resolution of its kind, TD Bank pleaded guilty to Bank Secrecy Act and money laundering conspiracy violations and agreed to pay $1.8 billion after years of compliance failures, as detailed in IRS Criminal Investigation’s fiscal year 2025 annual report — and the data trail from Suspicious Activity Reports continues to seed individual prosecutions.

The compliance rulebook, meanwhile, has been redrawn. The Corporate Transparency Act was poised to require most American companies to report their beneficial owners, but in March 2025 FinCEN issued an interim final rule removing that requirement for U.S. companies and U.S. persons, leaving only foreign reporting companies covered. Federal crypto-enforcement priorities were also narrowed in 2025. These shifts change the regulatory backdrop, not the criminal law: §§ 1956, 1957, and 1960 remain in full force, and conduct undertaken during a lighter-touch enforcement period can still be charged for years afterward.

Penalties and Forfeiture

Money laundering penalties are severe. Section 1956 carries a maximum sentence of up to 20 years per count and a fine of up to $500,000, or twice the value of the property involved, whichever is greater. Section 1957 carries up to 10 years per count. Structuring under § 5324 carries a penalty of up to 5 years, or up to 10 years if it is part of a pattern of illegal activity or another violation of law. Because each transaction can be charged as a separate count, money laundering indictments can carry extraordinary aggregate exposure.

Forfeiture is a defining feature of money laundering cases. The government routinely seeks forfeiture of the property involved in the laundering transactions, and it often moves to freeze or seize assets early — sometimes before trial — which can leave a defendant without resources to live on or to fund a defense. Restitution to victims of the underlying crime is also common. The scope of forfeiture is contestable: in Honeycutt v. United States, 581 U.S. 443 (2017), the Supreme Court held that forfeiture under a parallel statute reaches only property the defendant personally obtained and rejected joint-and-several liability among co-conspirators. The money laundering forfeiture statute, 18 U.S.C. § 982(a)(1), is written more broadly — it reaches property “involved in” the offense — and courts disagree about how far Honeycutt’s logic carries here, which makes the tracing and personal-nexus questions a live battleground in many cases.

In federal court, the advisory Guidelines drive the sentence through U.S.S.G. § 2S1.1. If the defendant committed the underlying offense, the laundering count borrows that offense’s level; otherwise the level starts at 8 and climbs with the value of the laundered funds. A § 1956 conviction adds 2 levels, sophisticated laundering — layering, shell entities, offshore accounts — adds 2 more, and a defendant “in the business of laundering funds” faces a 4-level increase. Two defense points matter here: commingled legitimate funds do not count toward the value where the criminal portion can be separated, and the sophisticated-laundering enhancement cannot rest on the same conduct already enhanced in the underlying offense. Contesting valuation and enhancements is an essential part of any sentencing defense.

Applied Insight: The forfeiture and asset-freeze side of a money laundering case can be as urgent as the criminal charge itself. Early, focused work to contest the seizure of untainted assets — and to preserve the funds a defendant needs to live and to retain counsel — is often a priority from the first days of the matter.

Defenses to Money Laundering Charges

No two money laundering cases are alike, and no lawyer can promise a result. But several defense themes recur, and matching them to the evidence is the core of building a strategy:

• Lack of knowledge. The defendant did not know the property represented the proceeds of unlawful activity.
• No promotional or concealment design. For a § 1956 charge, the transaction was not intended to promote crime or designed to conceal — it was ordinary spending or transfer.
• The funds were not “proceeds.” The money was not criminal proceeds, nor can it be traced to a specified unlawful activity.
• No specified unlawful activity. The underlying conduct does not qualify as an SUA predicate.
• Commingling. The transaction involved legitimate funds, not traceable criminal proceeds.
• No financial transaction or institution nexus. The conduct does not meet the statutory definition of a covered transaction.
• Innocent handling. The defendant provided ordinary services — banking, accounting, family financial help — without criminal knowledge or intent.
• Forfeiture and sentencing challenges. The government’s valuation and the scope of forfeiture can be contested.

The right combination depends entirely on the facts and the financial record. We pressure-test each element of the government’s theory, build the tracing and knowledge record that supports the defense, and press every legitimate argument from the first interview through trial and appeal.

How Money Laundering Investigations Begin

Money laundering investigations frequently begin with the financial system itself. Banks file Suspicious Activity Reports and Currency Transaction Reports, and that data feeds federal investigations. A money laundering case can also grow out of an investigation of the underlying offense — fraud, drugs, corruption — as agents follow the money. Whistleblowers, cooperating witnesses, and audits also play a role.

The early steps matter. Preserve all records, do not discuss the matter with anyone who may be a witness, decline to give an unprepared interview, and consult an experienced money laundering lawyer before saying anything substantive. Because money laundering turns on knowledge and intent, an early, careless explanation of a transaction can be recast as evidence — and the asset-freeze risk makes early counsel involvement especially important.

Why Work With Elizabeth Franklin-Best, P.C.

Money laundering cases are document-intensive and turn on knowledge, intent, and the tracing of funds. They reward defense lawyers who can hold the government to each element, who understand the proceeds and commingling problems, and who can fight the forfeiture side of the case as hard as the criminal side.

Elizabeth Franklin-Best, who leads our firm, wrote the book Reversing Your Criminal Conviction and maintains bar admissions before the U.S. Supreme Court, all twelve federal circuit courts of appeals, and several district courts, appearing pro hac vice where needed across the country. Across more than 330 federal matters — including over 100 appeals and a deep post-conviction and sentencing practice spanning First Step Act resentencings, Amendment 821 reductions, and compassionate-release litigation — she has spent her career on exactly the kind of statutory and Guidelines questions that decide money laundering cases. Christopher Zoukis, our Managing Director, devotes his work to federal sentencing and corrections — the phase of a laundering case where valuation fights are won or lost. We represent individuals and businesses at every stage of a money laundering matter, nationwide.

Promising results in federal court is something honest lawyers do not do. Our commitment is different: every transaction the government labels laundering gets examined against the statute’s actual elements, every tracing assumption gets stress-tested, and you receive a frank evaluation of the forfeiture risk alongside the criminal exposure. To begin that work, schedule a paid, one-hour initial consultation.

Talk With a Money Laundering Defense Lawyer

A money laundering count can multiply the exposure of an underlying case — and a pretrial asset freeze can drain your ability to fight back before trial ever begins. Acting early protects both your defense and the resources that fund it. Speak confidentially with a money laundering lawyer at our firm by booking your paid, one-hour initial consultation today.