In this article, the sixth of Allen & Overy’s weekly coverage of political law issues designed to help in-house legal and compliance personnel manage risks, we’ll look at campaign money laundering. Federal campaign finance laws impose limits and prohibitions on contributions. In 2016, the limit for individuals is $2,700 per election to a candidate. Corporations, national banks, foreign nationals and federal contractors are always prohibited from making contributions to candidates in any amount, as explained in our March 9 article, “What Your Company Can Do—and Should Not Do—During the Election Campaign.” Pay-to-play laws impose even more stringent contribution restrictions on government contractors and lobbyists. To evade these restrictions, sometimes straw donor or campaign money laundering schemes are created to hide the true source of a contribution. In addition, even where contributions are unlimited, such as a contribution to a Super PAC, some contributors seek to evade reporting obligations by using a corporate LLC as a straw donor.

Federal campaign finance laws prohibit reimbursement of contributions. An improper reimbursement occurs where any individual, corporation or entity reimburses another person for making a political contribution. Reimbursement methods vary, and if corporate funds are used, it could take the form of a fake bonus or expense reimbursement designed to make the straw donor whole. Individuals who engage in this activity often ask family members, friends or subordinate employees to act as a straw donor.

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