If you are reading a news article about someone being charged with armed robbery, a visual image of a fellow with a gun holding up a store or bank probably comes to mind. But if the article says someone has been arrested on a money laundering charge, no particular visual image will pop up.
The problem is that money laundering is a crime of intent, not action. So, two different people engaged in the same set of financial transactions will be treated differently based on the vague criteria of “intent.”
There are many definitions of money laundering, but Investopedia defines it as “illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictions with varying definitions.”
Money laundering became a federal crime only in 1986, when Congress passed the Money Laundering Control Act. The act prohibits individuals from engaging in a financial transaction with proceeds that were generated from certain specific crimes, known as “specified unlawful activities.” In addition, the law requires that an individual specifically intends in making the transaction to conceal the source, ownership or control of the funds.
Because the law is so vague and has been subject to so much prosecutorial abuse, including its weaponization for political purposes, there have been calls for its repeal. Just this past week, Republican Rep. George Santos was charged with money laundering, among other crimes, after only a couple of months of investigation by the FBI and the Department of Justice.
Meanwhile, there is apparently much more serious evidence of money laundering by members of the Biden family, which has been under investigation for years but has been subject to inaction by the Justice Department.
Banks have been charged with the responsibility of detecting and reporting any suspicious activity to the U.S. government by filing suspicious activity reports, or SARs. The U.S. Treasury reports that more than 150 SARs have been filed on President Biden’s son Hunter and the president’s brother Jim.
The government provides banks with an extensive checklist of customers and actions that should trigger a SAR. One is a customer who suddenly pays down a large problem loan with no reasonable explanation of the source of funds. It has been reported that Hunter Biden had a major tax liability paid off for him by an unnamed “friend.” The public should have the right to know if the “friend” has any business before the federal government, which could be helped or harmed by the Biden administration.
Another red flag is a customer who has no record of employment but makes frequent large transactions. A related red flag is a business that is reluctant to reveal details about its activities or provide financial statements, particularly if it receives funds from foreign entities, including foreign governments.
The House Oversight Committee just revealed bank records showing that members of the Biden family had received substantial payments from companies at least partially owned or controlled by government entities in China, Romania and Ukraine. To date, there has been no explanation as to what services were provided in exchange for those payments.
The Biden administration has been accused of being “soft on China” as a result of a number of its policy reversals after taking office. Did payments to the Biden family by Chinese entities affect the policy changes?
Money launderers have long used the art world because the value of a particular piece of art is so subjective. Many laugh that an unknown and inexperienced artist such as Hunter Biden can sell his paintings in the six-figure range. Since the buyers are kept secret, there is no way to know if the large payments were made for some “favor” or policy that the Biden family could bestow or if there is some art lover who has found some previously unrecognized talent in Hunter Biden.
The real purpose of many payments between individuals and other individuals, government, or business entities is difficult to prove, which is why so few “stand-alone” money laundering convictions are made.
Prosecutors typically add money laundering charges to criminal charges to bolster their case for the underlying crime. There is no evidence that the government’s crusade against money laundering has had any appreciable impact on drug dealing, terrorism, or government corruption. The few stand-alone convictions that have been obtained are, in almost all cases, of the “small fry.”
It does not take a criminal genius to figure out how to launder money. The big guys can afford to hire the expert lawyers and others to take care of the problem for them. The Biden family is under the gun for money laundering because they were sloppy and arrogant, thinking they were untouchable. Even so, they are more likely to be convicted for tax evasion and failure to register as foreign agents than they are for money laundering.
By any objective standard and given the massive cost per conviction in contrast to the few stand-alone convictions, the war on money laundering has been a colossal failure. It has hurt the taxpayers, financial institutions, and, most importantly, Americans’ civil liberties.
• Richard W. Rahn is chairman of the Institute for Global Economic Growth and MCon LLC.
https://www.washingtontimes.com/news/2023/may/15/should-money-laundering-laws-be-abolished/
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