Fraud Enforcement and Recovery Act of 2009: Congress amends money laundering and criminal fraud statutes to expand their scope and penalties

Abstract

Purpose

The purpose of this paper is to explain the changes to the US federal money laundering and criminal fraud statutes contained in the Fraud Enforcement and Recovery Act of 2009 (“FERA”)

Design/methodology/approach

The paper explains how FERA extends the definition of “proceeds” under the statute to include gross receipts of illegal activity, how the definition of a financial institution is revised to include a mortgage lending business, and how the federal securities fraud statute is expanded to apply to frauds involving commodity futures and options.

Findings

Any prior ambiguity as to the meaning of “proceeds” has now been unequivocally resolved; alleged money launderers will no longer be able to defend themselves by arguing that they committed unprofitable criminal activities. The classification as a “financial institution” matters because a number of federal criminal statutes either only apply to financial institutions or set out different penalties or statutes when a financial institution is affected by a generally applicable crime. Under FERA, henceforth frauds involving options and futures in commodities will violate the securities fraud statute.

Originality/value

The paper presents practical guidance by an experienced white‐collar criminal defense lawyer.

Citation

Goldstein, H.W. (2009), "Fraud Enforcement and Recovery Act of 2009: Congress amends money laundering and criminal fraud statutes to expand their scope and penalties", Journal of Investment Compliance, Vol. 10 No. 3, pp. 37-40. https://doi.org/10.1108/15285810910995566