News & Developments
Supreme Court Offers New Guidance on Money Laundering Statute
On June 2, 2008, the Supreme Court decided Cuellar v. United States, narrowing the reach of the federal money laundering statute, 18 U.S.C. § 1956. At issue was the meaning of the statute's prohibition against transporting money from the United States to another country "knowing that the [funds] involved in the transportation . . . represent the proceeds of some form of unlawful activity and knowing that such transportation . . . is designed in whole or in part . . . to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity." Petitioner was convicted under this provision of the money laundering statute after being stopped in Texas driving toward the Mexican border; police discovered $81,000 in cash in his car's secret floorboard compartment. The Fifth Circuit, sitting en banc, affirmed the petitioner's conviction, holding that his actions in concealing the cash fell within the statute's ambit.
The Supreme Court, in an opinion written by Justice Thomas, unanimously reversed. The Court declined to adopt petitioner's argument that the money laundering statute requires creating an "appearance of legitimate wealth," and instead focused on the statute's "design" requirement. The Court noted that the Fifth Circuit had incorrectly favored a definition of "design" that could not be drawn from the statute's text and that Congress likely did not intend. Although the Fifth Circuit interpreted "design" to mean "aspects of the transportation" — the methods employed in hiding the funds — the Court held that, in the context of the money laundering statute, design means "purpose or plan." Thus, the design requirement can be met only if the government proves beyond a reasonable doubt that the defendant knew that the purpose of the transportation was to conceal one of the fund’s attributes (nature, location, source, ownership, or control) as listed by the statute. Adopting the Fifth Circuit's reading, in contrast, would make the statute "apply whenever a person transported illicit funds in a secretive manner;" the Court reasoned this would be both overinclusive (capturing individuals who had no criminal intent) and underinclusive (failing to capture those with criminal intent but who did not employ secretive means to transport funds). In this case, the Court held that the government did not present evidence that would allow a jury to infer beyond a reasonable doubt that the petitioner possessed the criminal intent required by the statute.
In a concurring opinion, Justice Alito (joined by Chief Justice Roberts and Justice Kennedy) noted that cross–border transportation of funds "would have the effect" of fulfilling the "design" requirement because, once the funds were in Mexico, it would be more difficult for U.S. law enforcement authorities to isolate the funds’ attributes. Had the government introduced evidence that it is"commonly known in the relevant circles" that transporting funds to Mexico would have had these effects, a jury would be permitted to infer both a design to conceal as contemplated by the statute, and that the petitioner had knowledge of the purpose of the design to conceal. The burden would have then shifted to the petitioner to demonstrate either that there was no design, or that he lacked knowledge of a design.
Cuellar was decided the same day as United States v. Santos, which concerned whether "proceeds" under the money laundering statute means "profits" or "receipts." Although the Court affirmed the conviction below, the Justices were split on the meaning of the term, with a plurality of the Court (Justices Scalia, Souter, Thomas, and Ginsburg) holding that, under the rule of lenity, the term means "profits."
