The U. S. Sentencing Commission comprehensively examined the operation of the money laundering guidelines in 1992 and 1995 in response to concerns that the guidelines failed to reflect appropriately offense seriousness. This Report Summary, second in a series highlighting Commission research activities, summarizes findings from the Money Laundering Working Group Reports relating to the operation of guidelines 2S1.1 and 2S1.2. The full reports are available on loan from the Commission or through the Depository Library System of the U.S. Government Printing Office, Superintendent of Documents. The 1995 report is available on the Sentencing Commission's electronic bulletin board, USSC OnLine, by calling (202) 273-4709.
Introduction
As part of the Anti-Drug Abuse Act of 1986, Congress created the federal offense of money laundering that prohibits financial transactions using proceeds from unlawful activity. See 18 U.S.C. 1956, 1957. In response, the U.S. Sentencing Commission developed guidelines 2S1.1 and 2S1.2 and included them in the initial set of sentencing guidelines that took effect November 1, 1987.
The Commission subsequently received public comment criticizing the application of the money laundering guidelines. Some commentators asserted that guideline sentences in money laundering cases were often disproportionately high relative to the seriousness of the offense and, because of inconsistent charging practices by the government, led to unwarranted sentencing disparity. In 1992, the Commission convened the Money Laundering Working Group to assess these concerns.The working group included members of the Commission's legal, policy analysis, and training staffs.
The working group analyzed relevant statutes, case law, and a sample of presentence reports from cases sentenced during fiscal year 1991 under the money laundering guidelines and issued a detailed report to the Commission in October 1992. The group updated that effort in February 1995 with case law and other relevant information, including case analyses, that had become available since the initial report.
Money Laundering Defined
Generally, "money laundering" is a phrase used to describe a broad category of offenses involving financial transactions with funds or monetary instruments gained through criminal activity. Title 18 of the U.S. Code establishes four different types of money laundering violations:
Subsection (a)(1) of 18 U.S.C. 1956 makes it illegal to conduct or attempt to conduct a financial transaction with proceeds known to be from specified unlawful activity with:
(1) intent to promote the carrying on of specified unlawful activity;
(2) intent to evade taxes; or
(3) knowledge that the transaction is designed to conceal or disguise the nature of the proceeds or to avoid a state or federal transaction reporting requirement.
Subsection (a)(2) of 18 U.S.C. 1956 makes it illegal to transport or attempt to transport monetary instruments or funds to or from the United States with:
(1) intent to promote the carrying on of specified unlawful activity; or
(2) knowledge that the monetary instruments or funds represent the proceeds of unlawful activity and that such transportation was designed in whole or in part to conceal or disguise the nature of the proceeds or to avoid a state or federal transaction reporting requirement.
Subsection (a)(3) of 18 U.S.C. 1956 makes it illegal to conduct or attempt to conduct a financial transaction involving property a law enforcement officer represents to be the proceeds of specified unlawful activity or property used to conduct or facilitate specified unlawful activity with the intent:
(1) to promote the carrying on of specified unlawful activity;
(2) to conceal or disguise the nature of property believed to be the proceeds of specified unlawful activity; or
(3) to avoid a state or federal transaction reporting requirement.
Section 1957 of title 18, U.S. Code, makes it illegal knowingly to engage or attempt to engage in a monetary transaction involving property valued at more than $10,000 if it is derived from specified unlawful activity.
When it initially drafted money laundering guidelines in 1987, the Commission did not have the benefit of settled judicial interpretations of key terms because the applicable statutes only recently had been enacted. The Commission established significant penalties,For example, the Commission established a base offense level of 23 (46-57 months) if the offense involved the promotion of specified unlawful activity. U.S.S.G. 2S1.1 (a)(1). expecting that 2S1.1 would be applied to cases in which financial transactions "encouraged or facilitated the commission of further crimes" and to offenses that were "intended to . . . conceal the nature of the proceeds or avoid a transaction reporting requirement." U.S.S.G. 2S1.1, comment. (backg'd).
However, over the years the relevant statutes have been applied to a broader range of conduct than the Commiss