Federal Investigation Of My Money Transfer

Welcome to Spodek Law Group. Our goal is to give you the reality of what happens when federal investigators target your money transfer business - not the sanitized version other attorneys present, not the legal fiction that everything will be fine, but the actual truth about what happens when the government decides your business is a priority.

If you're reading this at 2am because federal agents showed up at your business or your bank account was frozen without warning, you need to understand something that most people discover too late. The investigation into your money service business likely began twelve to eighteen months before anyone contacted you. By the time you learned about it, prosecutors had already obtained your bank records, subpoenaed your customers' financial institutions, reviewed years of Currency Transaction Reports filed by banks you deposited cash into, and likely convened a grand jury. You are not at the beginning of this process. You are near the end of their preparation and the beginning of your nightmare.

Here is the most important thing Todd Spodek tells every MSB owner who calls us: the federal government does not need to prove you knew any money was dirty. Under 18 U.S.C. § 1960, they only need to prove you operated a money transmitting business without the proper license or registration. That's it. The Patriot Act of 2001 specifically eliminated the knowledge requirement. You don't have to know you needed a license to be convicted of operating without one. The paperwork you failed to file IS the federal felony.

What Federal Investigators Already Know About Your Business

When federal agents contact you about your money transfer operation, they are not starting an investigation. They are finishing one. Heres the thing that shocks every client who walks through our door - by the time you get that business card from an IRS-CI agent or FBI special agent, they have already compiled everything they need.

Think about what happens every time you deposit cash at your bank. The bank files a Currency Transaction Report for anything over $10,000. But heres were it gets more dangerous - they also file Suspicious Activity Reports for patterns of deposits just BELOW that threshold. If you deposited $9,500 three times in a week, thats not you being smart. Thats you committing structuring, which is a seperate federal crime that proves criminal intent. And your bank has already reported all of it.

Federal investigators have access to FinCEN databases that aggregate every CTR and SAR filed by every bank in America. When they pull your name, they dont just see what you deposited. They see patterns across every financial institution you touched. They see the SARs that Western Union filed when your customers used their services. They see reports from your competitors who noticed suspicious activity connected to your business address.

The investigation typically runs like this: First, automated systems at FinCEN flag unusual patterns. Second, a case is opened and assigned. Third, subpoenas go out to banks, money transfer companies, and sometimes your landlord and suppliers. Fourth, agents interview your former employees, your competators, and customers who got flagged elsewhere. Fifth, a grand jury is convened in secret. By month eighteen, they have everything they need. Then - and only then - do they contact you.

Every word you say from that point forward becomes evidence. The casual conversation where you try to explain yourself? Recorded and transcribed. The follow-up call where you provide documents to "clear things up"? You just handed them more exhibits for trial. If federal agents have contacted you about your money service business, do not speak to them without an attorney present. Not one word.

The Crime You Didnt Know You Committed

OK so heres the part that destroys most MSB owners who think their going to fight this: you dont have to launder a single dollar of drug money to be convicted of a federal crime. The crime is operating without proper licensing. Period.

18 U.S.C. § 1960 makes it a federal offense to knowingly operate an unlicensed money transmitting business. But heres the kicker - when Congress passed the Patriot Act in 2001, they added language that says prosecutors dont have to prove you knew your operation required a license. Let that sink in. They only have to prove you knowingly operated the business. They dont have to prove you knew you needed to be registered with FinCEN. They dont have to prove you knew your state required a license.

This is not like most crimes were ignorance of the law is no excuse but the prosecution still has to prove you knew what you were doing was illegal. Under 1960, as amended by the Patriot Act, the knowledge requirement was specifically eliminated. You could genuinely believe you were running a legal business. You could have consulted a lawyer who gave you wrong advice. It doesn't matter. If you operated without the proper registration and licensing, you committed a federal felony punishable by up to five years in prison.

Think about that for a moment. Consider the hairdresser who starts doing wire transfers for her immigrant community because the banks wont serve them. Or the bodega owner who cashes checks for his regular customers. Or the businessman who helps family members abroad recieve money from relatives in America. All of these people are potentially committing federal felonies without any idea they're breaking the law.

And it gets worse. The Bank Secrecy Act requires MSBs to implement anti-money laundering programs, file Suspicious Activity Reports for transactions above $2,000 that appear suspicious, maintain records for five years, and register with FinCEN. If you didn't do these things - and you probably didn't even know you had to - each failure is a separate violation. The government can stack charges like building blocks, turning what you thought was a minor paperwork issue into decades of potential prison time.

Why Your State License Wont Save You

Heres a mistake we see constantly at Spodek Law Group: business owners who obtained a state money transmitter license and assume there fully compliant with the law. There not. State and federal requirements are completly seperate obligations, and satisfying one dosent mean youve satisfied the other.

FinCEN registration is a federal requirement under 31 U.S.C. § 5330. Every money services business must register with FinCEN within 180 days of establishment. This is true regardless of whether you have a state license. It is true even if your state dosent require a license. Failure to register with FinCEN is a federal crime, and its also the basis for $10,289 in civil penalties - per day - for every day you operated without registration.

But wait. Even if you registered with FinCEN, you still need to comply with your state's requirements. Every state has different rules about money transmitter licensing. Some states require bonds of $100,000 or more. Some require fingerprinting and background checks of all owners. Some require audited financial statements. Many require a physical office in the state. If you only registered with FinCEN but never got your state license, you are still operating an unlicensed money transmitting business under federal law.

Now heres the trap that catches the most people. Sound familiar? You started a small operation helping your community send money to family overseas. Maybe you incorporated. Maybe you got a business license from your city. You assumed that was enough. Nobody told you about FinCEN. Nobody told you about state licensing. For years, you operated without any idea you were commiting a federal crime with every single transaction.

The government loves these cases becuase theyre easy to prove. They dont need confidential informants. They dont need wiretaps. They just need to show you operated the business and never registered. Your own bank records, your own advertisements, your own customer testimonials - all of it proves the case for them.

The Numbers That Destroy MSB Owners

Read that again. Let the numbers sink in because this is were most people realize just how serious there situation is.

The civil penalty for operating an unregistered MSB is $10,289 per day in 2024 inflation-adjusted terms. If you operated for three years without FinCEN registration - 1,095 days - the potential civil penalty is $11,266,455. Eleven million dollars in civil penalties before we even talk about criminal charges.

The criminal penalties under 18 U.S.C. § 1960 include imprisonment for up to five years and fines of up to $250,000. But that assumes your only charged with unlicensed operation. In reality, prosecutors almost never bring just one charge. They add money laundering under 18 U.S.C. § 1956, which carries up to 20 years. They add structuring charges. They add conspiracy charges. They add wire fraud if you ever used electronic communications. Each charge stacks, and sentencing guidelines calculate your exposure based on the total.

According to DOJ statistics, federal prosecutors maintain a conviction rate of aproximately 93%. Think about what that means. If your indicted for MSB violations, the government is almost certain to convict you. Trial is not really about determining guilt or innocence at that point - its about how much time youll serve.

Look at what happened to major institutions in 2024. TD Bank agreed to pay $3.1 billion - with a B - for BSA/AML failures. Thats the largest enforcement action in history. Brinks Global Services paid $42 million for failing to properly register as an MSB and transmiting $800 million for unregistered foreign MSBs. KuCoin was indicted for never filing a single SAR while processing over $4 billion in transactions.

If they will pursue billion-dollar companies with armies of lawyers, what chance do you think a small MSB owner has? The government is not making exceptions. They are making examples.

Consider the real cases that came through federal courts in 2024 and 2025. In Oakland, a money transfer business owner was sentenced to years in federal prison for laundering money that ended up with Mexican cartels. The owner maintained he was just providing a service to his community - sending money to families in Mexico. The government proved that some of those funds went to criminal organizations, and the business owner went to prison for it. In Oregon, the owner of an MSB operating in Woodburn and Hillsboro pleaded guilty to laundering drug money. Another family business destroyed. Another community member facing federal prison.

These are not cartel kingpins. These are small business owners who got swept up in the governments aggressive enforcement of BSA requirements. Some knew what they were doing. Many did not. It didnt matter to the prosecutors who charged them.

The Asset Forfeiture Trap Nobody Explains

Heres what your typical attorney wont tell you until its too late: the government can and will seize everything connected to your business BEFORE you are convicted of anything.

Civil asset forfeiture operates on a completly different standard than criminal conviction. Criminal conviction requires proof beyond a reasonable doubt - the highest standard in our legal system. Civil forfeiture only requires a preponderance of evidence - basically, more likely than not. Thats a much lower bar. And heres the kicker - the government can pursue civil forfeiture and criminal prosecution simultaneously.

When federal agents execute a search warrant on your money transfer business, they typically file for civil forfeiture the same day. All your business accounts are frozen immediatly. Your personal accounts - if they were ever used for business purposes - are frozen too. Any property you purchased with business proceeds is subject to seizure. Vehicles, real estate, equipment, inventory. Everything.

Now your in an impossible position. You cant operate your business because the accounts are frozen. You cant pay your employees. You cant pay rent. You cant even pay an attorney to defend you because your assets are frozen. The government knows exactly what there doing. They use asset forfeiture to ensure defendants cant mount an effective defense.

Were supposed to have a constitutional right to counsel. But if the government seizes all your assets before trial, how exactly are you supposed to pay for representation? Public defenders handle criminal cases, but they dont handle the civil forfeiture case happening in paralell. And by the time the criminal case resolves - often years later - the civil forfeiture has already been decided.

This is why early intervention matters so much. At Spodek Law Group, we've seen clients who contacted us at the first sign of investigation preserve assets that would have otherwise been seized. We've negotiated with prosecutors to unfreeze funds needed for legal defense and basic living expenses. But once that forfeiture order is signed, options narrow dramatically.

What If You're Not a Citizen?

For non-citizens, the consequences extend far beyond prison and financial ruin. Money laundering and operating an unlicensed money transmitting business are classified as aggravated felonies for immigration purposes. That classification triggers automatic deportation proceedings upon completion of your sentence.

It dosent matter if youve been in the United States for 30 years. It doesn't matter if your children are American citizens. It dosent matter if you've paid taxes and contributed to your community your entire adult life. A conviction for violating 18 U.S.C. § 1960 or 1956 means mandatory deportation with no discretionary relief available.

We've seen this destroy families in ways that prison alone cannot. A father serves three years, then is immediately detained by ICE and deported to a country he hasnt seen since childhood. His American children remain here. His American wife is left to raise them alone. He cannot return to the United States - ever - because the aggravated felony conviction bars reentry.

If your not a citizen and your facing federal investigation of your money transfer business, the stakes could not be higher. Every decision you make affects not just your freedom but your ability to remain in this country and with your family.

The immigration consequences are not theoretical. In the Southern District of Texas, an Iraqi citizen named Sameer Sami Rasheed Al Salman was convicted of operating an unlicensed money transmitting business from his home in Richmond. He ran informal hawala transactions, moving millions of dollars to China, Indonesia, and India. His defense argued he had authority to operate in Iraq. The jury didnt care. They deliberated for less than one hour before convicting him. Now he faces both prison and deportation to a country he barely remembers.

The prosecutor in that case said something that every MSB owner should hear: "Hawala operators pose a real threat to banking systems because they undermine the oversight and regulation of significant money transfers - transfers that when unregulated, often end up in the coffers of international criminal organizations." That quote explains exactly how federal prosecutors view your business. Not as a community service. As a threat to national security.

What You Must Do in the Next 72 Hours

The window for effective defense in federal MSB cases is smaller than most people realize. Once your indicted, 93% of defendants are convicted. Once assets are frozen, 90% cannot fund adequate defense. Once you talk to agents without an attorney, youve created evidence that cannot be uncreated.

If you have been contacted by federal agents about your money transfer business, these are your next steps:

First, do not speak to investigators. Not to clear things up. Not to explain your side. Not to provide documents that show your innocent. Every word becomes evidence. Exercise your right to remain silent and your right to counsel.

Second, contact a federal criminal defense attorney immediately. Not tomorrow. Not after you think about it. Today. Every hour that passes is an hour the government uses to build its case while you remain exposed.

Third, preserve all documents but do not destroy anything. Document destruction during an investigation is obstruction of justice - a seperate federal crime. But make sure your attorney knows exactly what documents exist and where they are located.

Fourth, prepare your family for what may come. This is difficult but necessary. If assets are frozen, your family needs to understand the financial situation. If deportation is a risk, conversations about contingency planning should happen now.

At Spodek Law Group, we understand that your reading this because everything youve built is at risk. We handle federal MSB cases across the country because we understand both the legal complexity and the human devastation these investigations cause. Todd Spodek has seen how the government builds these cases, and weve developed strategies for intervention at every stage.

The clock on your case is already running. By the time agents contacted you, they had been building there case for over a year. You cannot afford to give them another day of advantage.

Call us at 212-300-5196. The consultation is confidential. The first step toward protecting what you've built is understanding exactly what your facing - and that conversation starts now.