Is Money Laundering a Felony? Concealment, Structuring, and Penalties by State (2026)

Yes, money laundering is a felony under federal law and in most states. Federally, 18 USC 1956 carries up to 20 years and 18 USC 1957 carries up to 10 years. Structuring under 31 USC 5324 carries up to 5 years (10 if aggravated). States typically grade money laundering by dollar tiers, from low-level felonies for smaller amounts to first-degree felonies carrying decades of prison time for large-scale laundering. A few states without standalone statutes prosecute laundering conduct under theft, fraud, or RICO laws.

Money laundering is the process of making illegally obtained money appear legitimate. It typically involves three stages: placement (introducing illicit cash into the financial system), layering (moving funds through multiple accounts or transactions to obscure the trail), and integration (returning the cleaned money to the launderer in apparently legitimate form). The federal Money Laundering Control Act of 1986 criminalized this conduct directly, creating the first national money laundering statutes. Common laundering methods include structuring cash deposits below the $10,000 reporting threshold, using shell companies or cash-intensive fronts (salons, restaurants, plumbing), trade-based laundering, and international wire transfers through offshore accounts.

Federal money laundering requires that the laundered funds derive from specified unlawful activity (SUA). The definition in 18 USC 1956(c)(7) is extremely broad and incorporates by reference the RICO predicates in 18 USC 1961(1). SUA includes nearly all federal felonies: drug trafficking, murder, kidnapping, robbery, extortion, bribery, fraud (bank, wire, mail, health care, securities), embezzlement, forgery, counterfeiting, weapons trafficking, terrorism, espionage, smuggling, copyright infringement, environmental crimes, foreign corrupt practices, and many more. State and foreign felonies also qualify if they would be felonies under U.S. federal law. The government need not prove the defendant knew the specific predicate crime, only that the defendant knew the property represented proceeds from some form of felony unlawful activity.

18 USC 1956 is the primary federal money laundering statute. Subsection (a)(1) criminalizes domestic financial transactions conducted knowing the property represents proceeds of unlawful activity, with intent to promote SUA (promotional laundering) or knowing the transaction is designed to conceal the nature, location, source, ownership, or control of the proceeds (concealment laundering), or to avoid transaction reporting requirements. Subsection (a)(2) covers international transportation, transmission, or transfer of funds with the same intent. Subsection (a)(3) covers sting operations where law enforcement represents property as proceeds of SUA. The maximum penalty is 20 years imprisonment and a fine of up to $500,000 or twice the value of the property involved, whichever is greater. Conspiracy under 1956(h) carries the same penalties.

18 USC 1957 is the companion statute. It criminalizes knowingly engaging in a monetary transaction in criminally derived property of a value greater than $10,000, where the property is derived from SUA. The government does not need to prove the defendant knew the specific underlying offense. The maximum penalty is 10 years imprisonment and a fine under 18 USC 3571 (up to $250,000 for individuals, or twice the gain or loss).

Structuring, also known as smurfing, is the practice of breaking up a large cash transaction into smaller ones to avoid triggering the federal $10,000 currency transaction report (CTR) requirement. Under 31 USC 5324, it is illegal to structure or assist in structuring any transaction with a financial institution for the purpose of evading reporting requirements. The standard penalty is up to 5 years in prison and a fine under 18 USC 3571. If the violation occurs while violating another U.S. law or as part of a pattern of illegal activity exceeding $100,000 in 12 months, the enhanced penalty is up to 10 years and a fine up to $500,000. Structuring can be charged independently of money laundering, meaning a person can face both structuring and laundering charges for the same conduct. Importantly, structuring is illegal even when the underlying funds are completely legal, the crime is the intent to evade reporting requirements.

Forfeiture is a powerful consequence of money laundering convictions. Under 18 USC 981(a)(1)(A), the government may civilly forfeit any property, real or personal, involved in a transaction or attempted transaction in violation of 18 USC 1956, 1957, or 1960, or any property traceable to such property. Civil forfeiture can proceed even without a criminal conviction. Under 18 USC 982(a)(1), upon conviction of a violation of 18 USC 1956, 1957, or 1960, the court shall order the defendant to forfeit any property involved in the offense or traceable to such property. Criminal forfeiture is mandatory upon conviction. The government can seize bank accounts, real estate, vehicles, businesses, and any other assets connected to the laundering. Forfeiture proceedings are governed by 21 USC 853 (the Comprehensive Drug Abuse Prevention and Control Act procedural framework).

Most states have enacted standalone money laundering statutes modeled on the federal Money Laundering Control Act. These laws vary significantly in how they grade the offense and the penalties they impose. Many states use dollar-amount tiers. For example, Texas Penal Code 34.02 ranges from a state jail felony (under $30,000, 180 days to 2 years) to a first degree felony ($300,000 or more, 5 to 99 years or life). Florida Statutes 896.101 ranges from a third degree felony (under $20,000, up to 5 years) to a first degree felony ($100,000 or more, up to 30 years). New York Penal Law Article 470 has four degrees of money laundering, from Class E felony (up to 4 years) to Class B felony (up to 25 years). California Penal Code 186.10 is a wobbler that can be charged as a misdemeanor or felony, with felony exposure up to 3 years plus additional terms for higher amounts. A handful of states, including Alabama, Alaska, Kentucky, and Wyoming, do not have a standalone criminal money laundering statute. In those states, laundering conduct is charged under theft, receiving stolen property, fraud, or RICO statutes, or referred to federal prosecutors who have primary jurisdiction under 18 USC 1956 and 1957.

A money laundering conviction carries consequences beyond imprisonment and fines. Banking access: money laundering convictions trigger ChexSystems and other banking database flags, making it extremely difficult to open bank accounts or obtain credit. A felony record also bars employment in financial institutions and many licensed professions. Immigration: under 8 USC 1101(a)(43)(D), a money laundering conviction under 18 USC 1956 or 1957 is an aggravated felony for immigration purposes. Non-citizens convicted of money laundering are deportable and generally ineligible for asylum, cancellation of removal, or adjustment of status. Asset forfeiture: both civil and criminal forfeiture strip the defendant of property connected to the offense. Professional licenses: attorneys, accountants, real estate agents, and financial advisors face mandatory license revocation. Restitution: courts order restitution to victims of the underlying predicate offense. Tax consequences: laundered proceeds are taxable income, and failure to report them can lead to separate tax evasion charges under 26 USC 7201.

If you are charged with money laundering, seek an experienced federal criminal defense attorney immediately. Money laundering cases are complex and often involve parallel investigations by the FBI, IRS Criminal Investigation, DEA, and FinCEN. Key defense strategies include: challenging knowledge (the government must prove you knew the funds were proceeds of unlawful activity), challenging intent (for 1956, the government must prove specific intent to promote, conceal, or evade reporting), challenging the predicate offense (if the underlying conduct was not a felony, 1956 does not apply), challenging the transaction element (mere possession without a qualifying transaction may not constitute laundering), statute of limitations (5 years generally, 7 years for foreign predicate offenses), Fourth Amendment challenges to searches and seizures, and challenging the structuring charge (the government must prove purposeful intent to evade reporting, not merely making small deposits). Do not speak to investigators without counsel present. Exercise your right to remain silent. Do not attempt to move or hide assets, as this can lead to additional obstruction and forfeiture charges.