Money laundering is a serious criminal offense in California, designed to prevent the “cleaning” of money derived from illegal activities by channeling it through legitimate financial systems. California Penal Code Section 186.10 sets out the state-level legal framework for prosecuting money laundering. This article provides an overview of PC 186.10, covering its definition, elements, penalties, examples, defenses, and related laws.
What Is Money Laundering Under PC 186.10?
California Penal Code Section 186.10 defines money laundering as the act of conducting or attempting to conduct financial transactions involving monetary instruments through one or more financial institutions with the intent to promote criminal activity, or with knowledge that the funds come from criminal activity. The statute applies if a transaction or series of transactions exceeds $5,000 within seven days, or $25,000 within 30 days.
In essence, money laundering occurs when large sums of money are processed through financial institutions, and the person involved either knows the money comes from crime or intends to use it to support criminal activity.
Key Terms
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Monetary instrument: Includes cash, checks, money orders, wire transfers, and similar financial tools.
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Financial institution: Banks, credit unions, and other entities that handle monetary transactions.
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Criminal activity: Any unlawful act punishable by imprisonment or other sanctions.
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Series of transactions: Multiple transactions that collectively meet the statute’s monetary thresholds within specified timeframes.
Importance of the Statute
Money laundering laws are critical for disrupting organized crime, drug trafficking, fraud, and other illicit activities by preventing criminals from using the financial system to legitimize illegal proceeds.
Penalties Under PC 186.10
PC 186.10 is considered a wobbler, which means it can be charged either as a misdemeanor or a felony depending on circumstances such as prior offenses and transaction amounts.
Basic Penalties
Misdemeanor charges for a first offense can lead to up to 1 year in county jail and a fine up to $250,000 or twice the value of the laundered funds, whichever is greater. Felony charges carry state prison time plus the same or higher fines. Repeat or high-value offenses can trigger higher fines (up to $500,000 or five times the value of the funds) and additional prison terms.
Penalty Enhancements
California law allows additional prison time for high-value transactions:
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$50,000–$150,000: +1 year
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$150,000–$1,000,000: +2 years
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$1,000,000–$2,500,000: +3 years
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Over $2,500,000: +4 years
Even if the underlying crime is not prosecuted, laundering charges can proceed if the funds are proven to originate from criminal activity.
Elements of the Crime
To convict someone under PC 186.10, prosecutors must prove that the defendant conducted or attempted one or more financial transactions using monetary instruments through a financial institution. The transactions must meet the value and time thresholds: more than $5,000 in seven days, or more than $25,000 in 30 days.
Additionally, the defendant either intended to facilitate criminal activity or knew the funds were derived from criminal activity. For attorneys accepting fees related to criminal cases, additional requirements apply if the intent was to disguise the source of funds.
Why Intent Matters
Because PC 186.10 requires specific intent or knowledge, someone may not be guilty if they unknowingly processed criminal funds or had no intention of facilitating crime.
Common Scenarios
Examples of actions that could trigger PC 186.10 charges include depositing $6,000 into a bank within seven days, knowing the money came from illegal activity, aggregating multiple small deposits totaling $30,000 over 30 days to purchase real estate to conceal criminal proceeds, or a lawyer accepting a criminal defense fee from illicit funds with knowledge of its source.
Money laundering schemes often involve layering transactions through multiple accounts, shell companies, or offshore transfers to obscure the source of funds.
Defenses Against Money Laundering Charges
Several defenses can challenge PC 186.10 charges. One is lack of knowledge or intent, arguing the defendant did not know the money came from criminal activity or did not intend to promote crime. Another is below threshold transactions, showing that the amounts did not meet statutory limits.
Other defenses include demonstrating that there was no financial institution involvement, providing a legitimate explanation for funds, or pointing out procedural violations such as illegal searches, improper evidence handling, or constitutional violations.
Related Laws
California Laws
Certain statutes enhance penalties for fraud or embezzlement involving large amounts. Specific laws also exist for laundering proceeds from drug-related offenses.
Federal Money Laundering
Federal statutes criminalize money laundering with stricter penalties, including imprisonment up to 20 years and significant fines. Individuals involved in high-value or multi-jurisdictional transactions may face both state and federal charges.
What to Do if Facing a PC 186.10 Charge
If you or someone you know is under investigation for money laundering, it is essential to contact an experienced criminal defense attorney immediately. Avoid speaking to law enforcement without counsel. Collect financial records showing deposits, transfers, and legitimate sources of funds, and document legitimate explanations for the transactions. Evaluating the prosecution’s evidence for proof of intent, knowledge, and thresholds is critical, as is considering legal strategies including plea negotiations or defenses.
Why PC 186.10 Matters to Businesses and Individuals
Even legitimate businesses can unknowingly become involved in laundering if they accept illicit funds. Large or unusual financial transactions can trigger suspicion for individuals. While PC 186.10 does not create explicit monitoring duties for financial institutions, they must comply with federal reporting regulations.
Frequently Asked Questions
Does depositing $4,900 in one week violate PC 186.10?
Likely not, since the seven-day threshold is $5,000.
What if funds come from a lawful source?
The statute applies only to funds derived from criminal activity or used to promote crime.
Can multiple small transactions be aggregated?
Yes, if the total exceeds the $5,000 or $25,000 threshold within the relevant period.
Does this apply to all financial institutions?
Yes, including banks, credit unions, and other regulated financial entities.
Are lawyers treated differently?
Yes, attorneys accepting fees with the intent to disguise criminal funds may be specifically liable.
Key Takeaways
PC 186.10 criminalizes processing money derived from criminal activity through financial institutions above specific thresholds. It is a wobbler, meaning it can be charged as a misdemeanor or felony. Prosecution must prove transaction, threshold amount, and intent or knowledge. Defenses often focus on lack of knowledge, legitimate source of funds, or procedural errors. Violations carry severe fines, prison terms, and potential asset forfeiture.
Businesses and individuals should maintain careful financial records, perform due diligence, and avoid participating in transactions that could facilitate criminal activity, even unknowingly.
Call to Action
If you or a loved one is facing charges under California Penal Code § 186.10, it is critical to get experienced legal representation immediately. The defense attorneys at Southwest Legal specialize in defending clients against complex financial crime charges, including money laundering. Protect your rights and build the strongest defense possible — contact us today to schedule a confidential consultation.
