By Deandra Grant, J.D., M.S. (Pharmaceutical Science), ACS-CHAL Forensic Lawyer-Scientist
Money laundering prosecutions are among the most technically complex criminal cases a defendant can face. The investigations are often long-running, the evidence is predominantly financial, and the charges can come from state authorities, federal prosecutors, or both simultaneously. Many people facing money laundering charges did not understand that what they were doing constituted a crime. Others are swept into investigations based on their proximity to someone else’s conduct rather than their own.
Understanding how these investigations work, what the prosecution must prove, and where the law actually draws the line is the starting point for any effective defense.
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Money Laundering Under Texas Law
Texas has its own money laundering statute (Penal Code §§34.01 through 34.03) separate from federal law. Under §34.02, a person commits money laundering if they knowingly acquire or maintain an interest in, conceal, possess, transfer, or transport the proceeds of criminal activity, or invest or receive proceeds of criminal activity in an enterprise. The statute also covers conducting or financing transactions that the defendant knows are designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds.
The key word throughout is “knowingly.” The prosecution must prove the defendant knew the funds were proceeds of criminal activity. This is where most money laundering defenses are won or lost: not on whether transactions occurred, but on what the defendant knew about the source of the money when those transactions were made.
Penalty tiers under Texas §34.02 are tied to the value of the funds involved:
- State jail felony — funds under $30,000; 180 days to two years in state jail and up to $10,000 fine
- Third-degree felony — funds $30,000 to under $150,000; 2 to 10 years in prison and up to $10,000 fine
- Second-degree felony — funds $150,000 to under $300,000; 2 to 20 years in prison and up to $10,000 fine
- First-degree felony — funds $300,000 or more; 5 to 99 years or life in prison and up to $10,000 fine
As with theft aggregation, prosecutors can aggregate multiple transactions from the same scheme to reach a higher penalty tier. A series of smaller transactions that individually fall below a threshold can be combined to reach first-degree felony exposure.
Federal Money Laundering — Where Most Serious Cases Land
The more significant legal exposure in money laundering cases is almost always federal. The primary federal statute is 18 U.S.C. §1956, which criminalizes financial transactions involving proceeds of specified unlawful activity with knowledge that the funds represent such proceeds. The statute has two main prongs: promotional money laundering (conducting transactions to promote the underlying criminal activity) and concealment money laundering (conducting transactions designed to disguise the source, ownership, or control of the proceeds).
A companion statute, 18 U.S.C. §1957, is often easier for federal prosecutors to prove. It covers simply engaging in a monetary transaction of over $10,000 involving property derived from specified unlawful activity, without requiring proof of concealment intent.
Federal money laundering carries up to 20 years in federal prison per count. Because the statute covers each individual transaction, a defendant involved in a money laundering scheme with multiple transfers can face dozens of counts, each carrying up to 20 years. Federal sentences can run consecutively.
Federal sentencing is governed by U.S. Sentencing Guidelines §2S1.1, which is driven primarily by the amount of laundered funds. The Guidelines produce advisory sentencing ranges that escalate sharply with the dollar amount. A defendant with no criminal history laundering over $1.5 million faces a Guidelines range that begins in the double-digit years even before enhancements for sophisticated means, leadership role, or obstruction.
At Deandra Grant Law, Of Counsel James Lee Bright is a federal defense attorney with extensive experience in the Northern and Eastern Districts of Texas. Money laundering investigations frequently begin as state matters and escalate to federal prosecution once the dollar amounts, the institutions involved, or the underlying criminal activity triggers federal jurisdiction. Having federal defense counsel engaged before charges are filed (while the investigation is still active) is often the most important step a defendant can take.
How Money Laundering Investigations Actually Work
Money laundering investigations are built on financial records. Understanding what investigators are looking for, and how they build their case, is essential to evaluating the evidence and identifying weaknesses.
Bank Secrecy Act reporting. Financial institutions are required by federal law to file Currency Transaction Reports (CTRs) for cash transactions over $10,000 and Suspicious Activity Reports (SARs) when transactions appear inconsistent with a customer’s profile or business. These reports flow to the Financial Crimes Enforcement Network (FinCEN) and are a primary intelligence source for money laundering investigations. Structuring (i.e. deliberately breaking up transactions to avoid the $10,000 CTR threshold) is itself a federal crime under 31 U.S.C. §5324.
Forensic accounting. Investigators use forensic accountants to trace funds through layers of transactions. They reconstruct financial flows, compare reported income to lifestyle and assets, and identify transactions that cannot be explained by legitimate sources. Bank records, tax returns, wire transfer records, and business financial statements are all examined.
Shell company and beneficial ownership analysis. A common money laundering technique is moving funds through entities (ex. LLCs, corporations, trusts) to obscure beneficial ownership. Investigators now have access to beneficial ownership databases under the Corporate Transparency Act and work to pierce the corporate veil by tracing signatories, registered agents, and financial flows between entities. International transfers are traced through correspondent banking relationships and foreign financial intelligence sharing agreements.
Digital evidence. Electronic communications (ex. emails, text messages, messaging applications) are central to most modern money laundering prosecutions. Investigators use search warrants, subpoenas, and in some cases Title III wiretaps to obtain communications that establish knowledge of the criminal origin of funds. Financial transaction records from cryptocurrency exchanges are increasingly part of the evidentiary picture in cases involving digital asset laundering.
Grand jury subpoenas. Federal money laundering investigations typically proceed under the cover of a grand jury. Subpoenas to financial institutions, accountants, attorneys, and business associates can be issued without the target’s knowledge. By the time a target learns they are under investigation, prosecutors may have been building the case for months or years.
Case Results
Defense Strategies in Money Laundering Cases
Challenging knowledge. The prosecution must prove the defendant knew the funds were proceeds of criminal activity. If the defendant received funds from a third party, conducted normal business transactions, and had no actual knowledge that the funds were tainted, the knowledge element may not be provable. The defense examines what the defendant actually knew and what a person in their position would reasonably have understood about the source of the funds.
Challenging the specified unlawful activity predicate. Federal money laundering requires that the funds be proceeds of a “specified unlawful activity” which is a defined list of predicate offenses. If the underlying criminal activity cannot be proven, or if the defendant’s transactions did not involve proceeds of a qualifying predicate offense, the money laundering charge fails. This is particularly relevant in cases where the government charges money laundering based on an alleged predicate that is itself disputed.
Challenging the financial analysis. The prosecution’s forensic accounting is not infallible. Investigators misattribute transactions, fail to account for legitimate income sources, and sometimes construct loss figures that do not survive scrutiny. An independent forensic accounting review can expose errors in the government’s financial narrative and reduce (or eliminate) the calculated amount of laundered funds, which directly affects both the charge level and any sentencing calculation.
Challenging the evidence’s admissibility. Financial records obtained through subpoenas, search warrants, or wiretaps must meet constitutional and statutory requirements. Evidence obtained through an invalid warrant or an overly broad subpoena may be suppressible. Digital evidence, particularly from messaging applications and cryptocurrency exchanges, involves additional legal questions about the scope of the government’s access authority.
The innocent conduit defense. Some defendants are prosecuted for money laundering because they processed transactions on behalf of a third party, accepted payment for legitimate services, or received funds that turned out to be of criminal origin. Where the defendant lacked knowledge that the funds were tainted, the innocent conduit defense (that they were used as a vehicle for laundering without awareness) directly attacks the knowledge element the prosecution must prove.
Speak With Deandra Grant Law
Money laundering investigations move quietly and build for a long time before charges are filed. If you have received a grand jury subpoena, learned you are a target of a financial investigation, or have been approached by law enforcement about financial transactions, the time to retain counsel is immediately and not after charges are filed.
Managing Partner Deandra Grant brings more than 30 years of criminal defense experience. Of Counsel James Lee Bright brings extensive federal defense experience in the Northern and Eastern Districts of Texas for cases where federal prosecution is the more significant risk.
Call (214) 225-7117 or visit texasdwisite.com to schedule a confidential consultation.
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