WHITE COLLAR & FRAUD LAW — CALIFORNIA
Money Laundering Laws in California — PC §186.10 and Federal 18 U.S.C. §1956
Money laundering — concealing the proceeds of criminal activity through financial transactions — is prosecuted under both California PC §186.10 and federal law. Federal money laundering carries up to 20 years in federal prison per count.
Reviewed by Daniel S. Rubin, CA Bar 302093 · Los Angeles Criminal Defense Attorney
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Quick Reference
Money Laundering California — At a Glance
- Law / Code
- PC §186.10 / 18 U.S.C. §1956
- Classification
- Felony (both state and federal)
- Maximum Penalty
- 16 months–3 years state / Up to 20 years federal per count
- Probation Eligible
- Limited
- Strike Offense
- No
- Related Codes
- PC §186.1018 U.S.C. §1956PC §550PC §186.22
What Is Money Laundering California Under California Law?
Legal Framework. California Penal Code section 186.10 makes it a crime to conduct, or attempt to conduct, a financial transaction involving money or monetary instruments when the transaction exceeds $5,000, or when a series of related transactions exceeds $5,000 within seven days, and the person knows the money represents proceeds of criminal activity. The prosecution must also prove the defendant acted with the intent to promote criminal activity or knew the transaction was designed, in whole or part, to conceal or disguise the source, ownership, location, or control of the proceeds. “Criminal activity” is defined broadly in PC §186.10(c) to include conduct punishable as a felony or conduct committed in another jurisdiction that would be punishable as a felony in California.
The Prosecution's Burden. A violation of PC §186.10(a) is generally a wobbler. Under PC §186.10(a), it may be punished as a misdemeanor by up to one year in county jail or as a felony by 16 months, two years, or three years under Penal Code section 1170(h), subject to the statute’s provisions and the facts of the case. Each qualifying transaction can be separately charged, and alleged loss, transaction volume, sophistication, and the alleged underlying crime often affect charging and sentencing exposure. PC §186.10 also contains separate provisions addressing reporting and recordkeeping misconduct by financial institutions and businesses; those provisions should not be conflated with the transaction-based offense in PC §186.10(a).
Potential Consequences. Federal prosecutors commonly rely on 18 U.S.C. §1956 when an alleged transaction involves interstate or foreign commerce, federally regulated financial institutions, wire transfers, shell companies, cash movement, or international accounts. Under 18 U.S.C. §1956(a)(1), the government generally must prove the defendant knew property represented proceeds of some form of unlawful activity and conducted a qualifying financial transaction with a specified prohibited intent, such as promoting unlawful activity, concealing the nature or ownership of proceeds, or avoiding reporting requirements. A conviction under §1956 can carry up to 20 years of federal imprisonment per count and a fine authorized by the statute. Related federal counts may include 18 U.S.C. §1957, which criminalizes certain monetary transactions over $10,000 involving criminally derived property.
05 — Defense Strategies
How Rubin Law Defends Money Laundering California Charges
Rubin Law, P.C. attacks the elements of PC §186.10 / 18 U.S.C. §1956 and drives outcomes that avoid conviction where possible.
No Knowledge That Funds Were Criminal Proceeds
Knowledge is a central element of both PC §186.10 and federal 18 U.S.C. §1956. Suspicion, poor business judgment, or a relationship with someone later accused of a crime does not automatically establish that the accused knew the money came from criminal activity. The defense examines invoices, contracts, banking records, due-diligence steps, communications, and the defendant’s ordinary business practices. A legitimate explanation for payment, investment, loan repayment, payroll, or asset sale can create reasonable doubt about knowledge. The prosecution may rely heavily on circumstantial evidence, so the defense must distinguish actual knowledge from hindsight and speculation.
U.S. Const. amend. IV
No Intent to Conceal or Promote Crime
For the core California transaction offense, PC §186.10(a) requires more than moving funds known to be criminal proceeds. The prosecution must prove an intent to promote criminal activity or knowledge that the transaction was designed to conceal or disguise the proceeds’ source, ownership, location, or control. Likewise, federal §1956 requires a particular prohibited purpose. Ordinary deposits, payments, transfers, or purchases may look unusual without being concealment. We analyze whether the transactions were transparent, documented, conducted through ordinary accounts, reported to financial institutions, and consistent with a legitimate commercial purpose. Lack of a concealment or promotion purpose can defeat an essential element.
17 CCR §1219.3
Challenge the $5,000 California Threshold
PC §186.10(a) applies only when a transaction exceeds $5,000 or when a series of related transactions exceeds $5,000 within a seven-day period. The prosecution cannot simply aggregate unrelated deposits, purchases, or transfers to reach the statutory threshold. A defense review traces each transaction, identifies its source and purpose, and tests whether transactions were actually related under the statute. It also examines whether the amount attributed to the accused includes funds not shown to be criminal proceeds. If the state cannot prove a qualifying transaction or a properly related series exceeding $5,000, the principal PC §186.10(a) charge fails.
NHTSA SFST
Attack the Proof of Underlying Criminal Proceeds
The government must prove that the property involved was proceeds of criminal activity, not merely unexplained money or funds connected to a person under investigation. PC §186.10(c) uses a felony-based definition of criminal activity, while federal law requires proof that the property derived from specified unlawful activity or from some form of unlawful activity, depending on the theory charged. The defense challenges the financial tracing, timing, source attribution, and assumptions linking deposits to an alleged predicate offense. Commingled accounts, legitimate revenue, cash-intensive businesses, and incomplete records can make the government’s tracing theory unreliable. A weak predicate-proceeds showing undermines the laundering case.
VC §23152
Suppress Unlawful Searches and Financial Seizures
Money-laundering cases frequently begin with searches of homes, offices, phones, computers, storage units, or financial records. The defense evaluates warrant affidavits, the scope of warrants, execution methods, subpoenas, consent claims, and any warrantless search. In California proceedings, unlawfully obtained evidence may be challenged through a Penal Code section 1538.5 motion. In federal court, suppression issues are litigated under the Fourth Amendment and Federal Rule of Criminal Procedure 12. If investigators exceeded the warrant’s scope, relied on materially false or reckless affidavit statements, or obtained statements in violation of constitutional protections, key transaction records or communications may be excluded.
17 CCR §1219.1
Separate a Peripheral Participant From the Transaction
Employees, relatives, bookkeepers, brokers, and business partners may be charged because they handled paperwork, made deposits, opened accounts, or followed instructions. But physical participation does not prove the required knowledge and intent. The defense identifies who controlled the accounts, who gave instructions, who communicated with financial institutions, who benefited, and what information the accused actually possessed. This is especially important where prosecutors pursue aiding-and-abetting or conspiracy theories. Evidence that a person performed a routine administrative task without awareness of criminal proceeds or a concealment design can support dismissal, acquittal, or a substantially reduced resolution.
VC §23103.5
Constitutional Sources: Fourth Amendment — U.S. Constitution
Questions
Frequently Asked — Money Laundering California
What are the penalties for money laundering under California Penal Code section 186.10?
Under PC §186.10(a), conducting or attempting a qualifying financial transaction involving criminal proceeds is a wobbler. A prosecutor may file it as a misdemeanor or felony. As a misdemeanor, the offense can carry up to one year in county jail. As a felony, the base term is 16 months, two years, or three years under Penal Code section 1170(h), unless another sentencing rule applies. The statute applies to a transaction over $5,000, or a series of related transactions over $5,000 within seven days. Exposure can increase significantly when prosecutors file multiple transaction counts or add charges based on the alleged underlying offense, conspiracy, fraud, theft, or false-record allegations.
Can I be charged if I did not commit the underlying crime that produced the money?
Yes. A person need not be the one who committed the underlying felony to be charged with money laundering. California PC §186.10 focuses on a qualifying financial transaction involving money or monetary instruments known to be proceeds of criminal activity, together with the required intent to promote crime or knowledge of a concealment design. Federal 18 U.S.C. §1956 likewise can apply to a person who handles another person’s criminal proceeds. But the prosecution still must prove the defendant’s own knowledge and required intent. Merely receiving money, performing bookkeeping, processing a payment, or being associated with the suspected offender is not enough unless the evidence establishes the statutory mental state beyond a reasonable doubt.
Is depositing cash into my own bank account automatically money laundering?
No. A cash deposit alone is not automatically money laundering. Under PC §186.10(a), the prosecution must prove the deposit involved criminal proceeds, exceeded $5,000 or was part of related transactions exceeding $5,000 in seven days, and was made with intent to promote criminal activity or with knowledge that it was designed to conceal or disguise the funds. Federal charges under 18 U.S.C. §1956 also require proof of criminal proceeds and a prohibited intent. Banks may file Currency Transaction Reports for cash transactions exceeding $10,000, but a report is not proof of a crime. Deliberately structuring transactions to evade reporting can create separate federal exposure under 31 U.S.C. §5324.
What is the difference between federal money laundering under 18 U.S.C. section 1956 and California PC section 186.10?
PC §186.10 is California’s principal transaction-based money-laundering statute. It uses a $5,000 threshold for one transaction or related transactions within seven days and requires knowledge of criminal proceeds plus an intent to promote crime or knowledge of concealment. Federal 18 U.S.C. §1956 reaches qualifying financial transactions affecting interstate or foreign commerce and contains several theories, including promotion, concealment, reporting-evasion, and international-transportation laundering. A §1956 conviction can carry up to 20 years in federal prison per count. Federal prosecutors may also charge 18 U.S.C. §1957 for certain transactions over $10,000 involving criminally derived property. The same conduct can draw state and federal attention, although prosecution decisions depend on the agencies and evidence involved.
Can the prosecution use bank records and wire transfers without my permission?
Often, yes. Financial records are commonly obtained through subpoenas, grand-jury process, search warrants, or requests made to financial institutions under applicable law. The fact that records came from a bank rather than directly from the account holder does not make them automatically inadmissible. However, the method and scope of collection still matter. A defense attorney can examine whether a warrant was supported by probable cause, whether a subpoena was proper, whether investigators exceeded the authorized scope, and whether the government can authenticate and accurately interpret the records. In a California criminal case, suppression issues may be raised under PC §1538.5 when evidence was obtained through an unlawful search or seizure.
Will a money-laundering charge affect my professional license or immigration status?
It can. A laundering allegation may create serious licensing, employment, immigration, and financial consequences even before a conviction, particularly for professionals who handle client funds, work in regulated industries, or hold fiduciary positions. For noncitizens, the immigration effect depends on the exact statute of conviction, the conduct admitted in a plea, the amount involved, the related offense, and federal immigration law. A conviction connected to fraud, theft, or other alleged criminal activity may carry consequences beyond the sentence imposed in criminal court. Do not accept a plea based only on the immediate jail or probation offer without evaluating those consequences. For a case-specific review, contact Rubin Law, P.C. at (213) 723-2337.
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