​Federal Charges for Money Laundering in Narcotics Cases: Statutes and Penalties

Mon 4/28/2025 4:25 PM

Money laundering is a serious federal offense, particularly when linked to narcotics trafficking. In these cases, the U.S. government pursues aggressive prosecution under multiple statutes designed to dismantle drug operations and seize illicit profits. Understanding the legal framework and associated penalties is essential for anyone involved in or defending against such charges.

What Is Money Laundering?

Money laundering involves the process of making illegally obtained money—often referred to as “dirty money”—appear legitimate. In narcotics cases, this usually means concealing the source of funds generated from drug trafficking, often by funneling them through shell companies, offshore accounts, or cash-based businesses.

Relevant Federal Statutes

Several key federal statutes govern money laundering related to narcotics offenses:

1. 18 U.S.C. § 1956 – Laundering of Monetary Instruments

This is the primary federal money laundering statute. Under 18 U.S.C. § 1956, it is illegal to:

• Conduct a financial transaction with proceeds from specified unlawful activities (including drug trafficking), with the intent to promote the illegal activity, or
• Conceal or disguise the nature, location, source, ownership, or control of the proceeds, or
• Avoid transaction reporting requirements.

Penalties under this statute can include:

• Up to 20 years in federal prison per violation
• Fines of up to $500,000 or twice the value of the laundered funds, whichever is greater

2. 18 U.S.C. § 1957 – Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity

This statute prohibits knowingly engaging in a monetary transaction of more than $10,000 using criminally derived property from certain unlawful activities, including narcotics trafficking.

Penalties include:

• Up to 10 years in prison
• Fines up to $250,000 or twice the amount of the criminally derived property

3. 21 U.S.C. § 841 and § 846 – Drug Trafficking and Conspiracy

While these are not money laundering statutes per se, they often accompany laundering charges. § 846 addresses conspiracy to commit drug offenses, which may include schemes to launder drug proceeds.

Sentencing Enhancements and Asset Forfeiture

In narcotics-related laundering cases, additional penalties may apply:

• Sentencing Guidelines Enhancements: Based on the amount of money laundered, the sophistication of the operation, and involvement of shell companies or offshore entities.
• Asset Forfeiture: The federal government can seize any assets tied to the laundering scheme, including bank accounts, real estate, vehicles, and even legitimate businesses used to launder funds.
• RICO (Racketeer Influenced and Corrupt Organizations Act): If part of an ongoing criminal enterprise, money laundering charges may fall under RICO, bringing even harsher penalties and expanded forfeiture powers.

Prosecutorial Strategy

Federal prosecutors typically rely on financial records, wiretaps, surveillance, informant testimony, and forensic accounting to prove:

• The origin of the funds
• The defendant’s intent to conceal or promote criminal activity
• Knowledge that the transactions involved illicit proceeds

Conspiracy charges are common, allowing prosecutors to charge multiple defendants even if they didn’t personally handle the drugs or money.

Conclusion

Money laundering in connection with narcotics offenses is a high-priority target for federal law enforcement, often prosecuted alongside drug trafficking charges. Convictions carry lengthy prison terms, massive fines, and asset forfeiture. Given the complexity and severity of these cases, individuals facing such charges require experienced legal representation and a deep understanding of the federal legal landscape.

Matthew Galluzzo is a former Manhattan prosecutor and experienced federal criminal defense attorney who has successfully represented numerous individuals charged with money laundering in connection with narcotics. If you or a loved one are facing such charges, you should strongly consider engaging his services.