Money Laundering There are three stages to make criminals run away from judgment
1-Placement
The first stage of money laundering is known as ‘placement’, whereby ‘dirty’ money is placed into the legal, financial systems. After getting hold of illegally acquired funds through theft, bribery and corruption, financial criminals move the cash from its source. This is where the criminal money is ‘washed’ and disguised by being placed into a legitimate financial system, such as in offshore accounts.
2-Layering
The second stage in the money laundering process is referred to as ‘layering’. This is a complex web of transactions to move money into the financial system, usually via offshore techniques.
Once the funds have been placed into the financial system, the criminals make it difficult for authorities to detect laundering activity. They do this by obscuring the audit trail through the strategic layering of financial transactions and fraudulent bookkeeping.
Layering is a significantly intricate element of the money laundering process. Its purpose is to create multiple financial transactions to conceal the original source and ownership of the illegal funds.
3-Integration
The third of the stages of money laundering is ‘integration’. The ‘dirty’ money is now absorbed into the economy, for instance via real estate. Once the ‘dirty’ money has been placed and layered, the funds will be integrated back into the legitimate financial system as ‘legal’ tender. Integration is done very carefully from legitimate sources to create a plausible explanation for where the money has come from.
This money is then reunited with the criminal with what appears to be a legitimate source. At this stage, it is very difficult to distinguish between legal and illegal wealth. The launderer can use the money without getting caught. It is extremely challenging to catch the criminal if there is no documentation to use as evidence from the previous stages.
It is important to note that, in reality, there is often an overlap in these three stages of money laundering. As in some cases of financial crimes, there is no requirement for the illegal funds to even be ‘placed’.
