Money Laundering: Statutes, Penalties, and Forfeiture

A federal money laundering conviction under 18 U.S.C. § 1956 carries up to 20 years in prison per count and a fine of up to $500,000 or twice the value of the property involved, whichever is greater.¹ Money laundering penalties don’t stop at that headline number. Related federal statutes add their own prison terms, each transaction in a scheme can be charged as a separate count, and the government can seize the property on top of everything else.

Penalties by Statute

Federal law treats laundering as a separate offense from whatever crime generated the money, which is why a single scheme routinely produces charges stacked on top of each other. Three statutes do most of the work, and the exposure depends on which one applies.

18 U.S.C. § 1956 — The Core Laundering Statute

Section 1956 reaches a person who conducts a financial transaction knowing the money represents proceeds of illegal activity, if they either intend to promote further criminal activity or know the transaction is designed to hide where the money came from.¹ A conviction carries:

Up to 20 years in prison per count.
A criminal fine of up to $500,000 or twice the value of the property involved, whichever is greater.
A civil penalty, which the government can pursue even without a criminal conviction, equal to the value of the property or $10,000, whichever is greater.¹

The predicate crime does not have to be drug trafficking. Fraud, bribery, smuggling, counterfeiting, human trafficking, terrorism, tax evasion, and dozens of other offenses all qualify as the underlying unlawful activity that can support a § 1956 charge.² That breadth lets prosecutors reach people who never touched the underlying crime but helped move or conceal the profits.

18 U.S.C. § 1957 — Transactions in Criminally Derived Property

Section 1957 targets anyone who knowingly engages in a monetary transaction of more than $10,000 in criminally derived property.³ A conviction carries up to 10 years in prison per violation, and the court can impose an alternative fine of up to twice the amount of the criminally derived property involved.

The important difference from § 1956 is what the government has to prove. Under § 1957, prosecutors do not need to show the person intended to disguise the money or promote further crime. Knowing the funds were dirty and engaging in a qualifying transaction over $10,000 is enough. That lower bar gives prosecutors a fallback when proving concealment intent would be difficult.

31 U.S.C. § 5324 — Structuring

Structuring means breaking a cash transaction into smaller pieces to keep any single deposit under the $10,000 threshold that triggers a bank’s reporting obligation.⁴ A violation of § 5324 carries up to 5 years in prison, rising to 10 years if the structuring was part of another federal crime or involved more than $100,000 over 12 months.⁵

One point surprises people repeatedly: structuring is a standalone federal crime even if the money is completely legal. The statute targets the act of deliberately breaking up transactions to evade reporting, regardless of the funds’ source. A small business owner who deposits lawful cash earnings in sub-$10,000 chunks specifically to keep the bank from filing a report has committed a federal offense.

How Counts Stack

Because laundering schemes typically involve many separate transactions, prosecutors can charge each transaction as its own count. A scheme with 15 transactions could produce 15 counts, and consecutive sentences across those counts can add up far beyond any single statutory maximum. Sentencing guidelines and judicial discretion shape the real-world outcome, but the paper exposure in a multi-count indictment is enormous.

Asset Forfeiture

Prison and fines are not the end of the financial loss. Federal forfeiture lets the government take the proceeds of the laundering and the property used to carry it out, and it comes in two forms.

Criminal forfeiture is imposed as part of the defendant’s sentence after a conviction. The court orders the defendant to surrender specific property tied to the offense, which can include bank accounts, vehicles, real estate, or a money judgment equal to the value of the proceeds. The government’s burden is a preponderance of the evidence that the property was connected to the crime.⁶

Civil forfeiture is a separate action brought against the property itself. No criminal conviction is required. The government still must prove the property was linked to criminal activity, but it can seize houses, vehicles, and accounts from people who are never charged.⁶ Prosecutors turn to it when the person who controlled the property is a fugitive, deceased, or otherwise beyond the court’s reach.

Penalties for Bank Secrecy Act Violations

Reporting failures by financial institution personnel carry their own criminal exposure. A bank employee or officer who willfully ignores Bank Secrecy Act reporting obligations faces up to 5 years in prison and a $250,000 fine. If the violation is part of a pattern involving more than $100,000 in a 12-month period, the penalty jumps to 10 years and $500,000.⁷

These penalties sit on top of whatever charges might attach to the underlying laundering. The BSA is why banks file Currency Transaction Reports on cash transactions over $10,000 in a single business day and Suspicious Activity Reports on transactions that lack an obvious business purpose.⁴ Deliberately failing those obligations is itself a crime.

Separate reporting regimes carry their own penalty structures. Any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must file IRS Form 8300 within 15 days.⁸ U.S. persons with foreign financial accounts whose combined value exceeds $10,000 at any point in the year must file an FBAR, and willful failure to file carries both civil and criminal penalties.⁹ Cryptocurrency exchanges and other virtual currency transmitters must register with FinCEN as money services businesses; operating without registering can result in criminal prosecution as an unlicensed money services business.¹⁰

Additions Under the Anti-Money Laundering Act of 2020

The Anti-Money Laundering Act of 2020 added penalty consequences on top of the existing statutes.¹¹ Anyone convicted of a BSA violation must now forfeit the profits gained from the violation. If that person was an officer or employee of a financial institution, they must also repay any bonus received during the year of the violation.⁷

The 2020 Act also created a whistleblower program that pays financial awards to individuals whose reports lead to enforcement actions with penalties over $1 million.¹² FinCEN published a proposed rule in early 2026 to finalize how those awards will be calculated and paid.

Civil Exposure Without a Conviction

Not every money laundering consequence requires a guilty verdict. Section 1956 authorizes a civil penalty equal to the value of the property involved or $10,000, whichever is greater, which the government can pursue independently.¹ Civil forfeiture, as described above, proceeds against property without any criminal charge against a person. FBAR civil penalties, adjusted annually for inflation, apply to willful failures to report foreign accounts regardless of whether a criminal case is filed.¹³ The practical result is that the government can impose significant financial losses on people and property it never convicts.

1
Office of the Law Revision Counsel. 18 USC 1956 – Laundering of Monetary Instruments
2
Office of the Law Revision Counsel. 18 US Code 1956 – Laundering of Monetary Instruments
3
Office of the Law Revision Counsel. 18 USC 1957 – Engaging in Monetary Transactions in Property Derived From Specified Unlawful Activity
4
FinCEN.gov. The Bank Secrecy Act
5
Office of the Law Revision Counsel. 31 USC 5324 – Structuring Transactions to Evade Reporting Requirement Prohibited
6
Asset Forfeiture Program. Types of Federal Forfeiture
7
Office of the Law Revision Counsel. 31 USC 5322 – Criminal Penalties
8
Internal Revenue Service. Form 8300 and Reporting Cash Payments of Over $10,000
9
FinCEN.gov. Report Foreign Bank and Financial Accounts
10
FinCEN.gov. Advisory on Illicit Activity Involving Convertible Virtual Currency
11
FinCEN.gov. The Anti-Money Laundering Act of 2020
12
FinCEN.gov. Whistleblower Program
13
Internal Revenue Service. Report of Foreign Bank and Financial Accounts FBAR