U.S. Anti-Money Laundering Laws in the Wake of U.S. v. Santos
Organized crime activities, such as drug trafficking, smuggling, prostitution rings, and illegal arms sales, can generate huge amounts of cash income. Seemingly legitimate business enterprises can also produce huge illicit profits though embezzlement, insider trading, bribery, and computer fraud schemes. The process by which one disguises illegal income to make it appear legitimate is an integral part of all proceeds-yielding crimes. Participants in illicit activities must create the illusion that their “dirty money” is actually clean, and thus, the moniker “money laundering” was coined.
In an attempt to combat this growing problem, Congress enacted the Money Laundering Control Act of 1986 to make money laundering a federal crime. More recently, in May of 2009, Congress amended the money laundering statute to provide clarity and uniformity in defining “proceeds” that fall under The Act. At the center of the 2009 Amendment was a case, United States v. Santos, argued before the United States Supreme Court in 2008.
Money laundering creates problems on many levels, the defense of which is no exception. Efrain Santos ran an illicit lottery operation in Indiana for over two decades. The Santos lottery operation involved runners who took a commission from the wagers, handed the remaining bet money over to collectors, who in turn delivered the money to Santos. Santos then used the bet money to pay salaries to his collectors and to pay off lottery winners. It was these salaries and payments to winners that landed Santos in federal prison on three counts of money laundering. And it was these payments that caused the court’s conundrum. Were “proceeds” receipts or net profits?
The Supreme Court, in attempting to define what exactly were proceeds in an illicit operation, in a plural decision, caused multiple interpretations in the lower courts when trying money-laundering cases. The Santos decision permitted individuals to defend themselves by claiming that their illegal activities did not yield any profit. However, according to critics, it made no sense to exempt money launderers from prosecution merely because the property involved in the transaction involved “receipts” rather than “net profits” of their illegal conduct. Regardless of whether the dirty money was categorized as receipts or profit, “the money launderer acted with a guilty mind, intending to disguise the nature, source, ownership, or control of funds derived from criminal activity.” Jimmy Gurulé, Does “Proceeds” Really Mean “Net Profits”? The Supreme Court’s Efforts to Diminish the Utility of the Federal Money Laundering Statute, 7 AVE MARIA L. REV. 339, 357 (2009).
The Fraud Enforcement and Recovery Act of 2009 (FERA), signed by President Obama on May 20, 2009, closed the alleged loophole created by the plural decision of the Supreme Court in 2008 on what constitutes “proceeds.” The Act of 2009 clarified the scope of the federal money laundering statute and demonstrates a congressional response to Santos. FERA legislatively overruled Santos by adding a new paragraph to the federal money laundering statute, 18 U.S.C. § 1956(c)(9), which now defines “proceeds” to include the gross receipts of an unlawful activity.
To the dismay of money laundering defendants, this recent statutory amendment to Section 1956 has limited their possible defenses.
Please link here to read a complete briefing of the issues involved and case and publications cited in this article.
Carlos F. Gonzalez is a partner in Diaz Reus & Targ, LLP’s Miami office where he concentrates his practice in international litigation and arbitration and white-collar criminal defense. Regan Kruse is a third year law student at the University of Miami School of Law.
The New DIFC Arbitration Law Opens Way
In today's current economic climate parties are increasingly turning away from the courts to resolve disputes in favor of alternative dispute resolution procedures such as arbitration. Businesses in Dubai, too, are seeing the advantages of arbitration over litigation. This demand has led to widespread arbitration law amendments in Dubai in order to align the country with the world's leading arbitration centers. Dubai now has two modern arbitral institutions; the Dubai International Arbitration Centre (the DIAC) and the newer DIFC-LCIA Arbitration Centre. As the name implies, the DIFC-LCIA Arbitration Centre is essentially a joint venture between the DIFC and the London Court of International Arbitration (LCIA), one of the leading players in the arbitration world.
To enhance and promote the DIFC as a venue for the settlement of international commercial disputes, the DIFC has recently amended its arbitration law. The DIFC now has its own courts of first instance and appeal with a team of international judges experienced in, and supportive of, international arbitration. It is therefore anticipated that the DIFC courts will implement the new arbitration law in accordance with standards of international best practice, will be slow to set aside arbitral awards, and will deal expeditiously with enforcement.
Of importance to note is that the new DIFC Arbitration Law 2008 will enable parties from anywhere in the world to select the DIFC-LCIA Arbitration Centre as their forum of choice. To learn more about the Amended DIFC Arbitration Law, please follow this link to the full article.
The Time Is Now: Chinese Investment in Latin American Infrastructure
Infrastructure is what most of us take for granted – roads, utilities, airports, and health care sites, and educational facilities. In Latin America, where
governments face the age-old problems of budget deficits and strained public debt markets, the trend over the past few decades has been to depend more and more on foreign investment to improve the amount and quality of such infrastructure. It is in this area that China could step into the market, especially given recent policy adoptions benefiting the infrastructure investments sector.
Although China has not traditionally been a major foreign investor in the region, with its $22 billion per year paling in comparison to the European Union’s $620 Billion, according to official Chinese data, its involvement in Latin America comprises about one-fourth of its total overseas investment.
A quick look at the projected growth of the infrastructure industry in Latin America shows how the time for Chinese investment is now. Follow this link to read the complete article and view cited publications about investing in Latin American infrastructure.
Diaz Reus: Firm News
Our commitment to our clients and our global community is framed by our desire to be the best we can be in every way. While our actions are not motivated by the desire to gain recognition, we are honored and delighted when others single us out for our achievements. In that spirit, Diaz Reus attorneys are pleased to announce that during the past year they were selected as a Finalist by the Daily Business Review for Most Effective Lawyer’s Award in the International Law Category and have been named Business Leader of the Year 2009 and a 2009 Power Player by Business Leader Media in the International Law Category.
In addtion, we have been selected as a Finalist by South Florida Business Journal for the Key Partners Awards in the International Law category, selected Finalist by Business Leader Media for the 2009 Movers and Shakers Awards, and the 2009 Top 100 Small Business Awards. Asian Legal Business Magazine named us to “The Strategist” ALB Hot 100: The hottest lawyers of 2009, and we were recognized by ALB China Magazine as “The Strategists” Hot 25 2009: The Legal High Flyers of the Year. It is with sincere gratitude that we acknowledge these nominations and it is an honor to be recongized by such quality organizations and publications.
