The United States criminalizes money laundering in part through 18 U.S.C. § 1957, which prohibits transactions of over $10,000 that are knowingly made using proceeds derived from specified illegal activities. The statutory requirement that transactions be more than $10,000 raises a complicated issue for courts. In many cases, potential launderers mix or “commingle” both legal and illegal funds in a single bank account. Once these funds are commingled, they become indistinguishable because money is fungible. In these cases, how can courts determine whether more than $10,000 of any particular transaction from the account in fact constituted illegal proceeds?

An enduring circuit split has emerged over this question. While the Fifth and Ninth Circuits require the government to trace the funds to a specific underlying crime, the majority of circuits simply assume that a transaction of over $10,000 from a commingled account falls within the reach of § 1957. This Note presents an original survey of the existing split, tracing how the doctrine developed in the decades following the enactment of § 1957. It then argues that courts should adopt an intermediate stance: the proportionality approach, which would apply the percentages of illegal and legal funds in an account to each targeted transaction. This approach has been used by courts in similar legal contexts, including asset-forfeiture cases. In making this argument, the Note further urges courts to consider how new financial realities—in particular, the rise of cryptocurrency and digital assets—will affect the level of tracing that should be demanded from prosecutors.

* J.D. Candidate, Stanford Law School, 2023. Deepest thanks to Professors David Mills and Robert Weisberg, without whom this Note would not exist. I am also grateful for the wonderful and insightful editors of the Stanford Law Review, especially Chris Huberty, Mariah Mastrodimos, Isaac Shapiro, Devin Flynn, Andrew Keuler, Jess Lu, Chico Payne, Garrett Wen, and Ashton Woods.