What are the steps in the money laundering process?

The process of money laundering typically consists of three distinct stages: placement, layering, and integration.

In the placement stage, illicit funds are introduced into the financial system. This could involve depositing cash into banks, purchasing assets, or using other means to obscure the source of the funds. The goal here is to separate the money from its illegal origins as quickly and inconspicuously as possible.

The layering stage follows placement and involves conducting a series of transactions to further obscure the origin of the funds. This may include transferring money between various accounts, making complex financial transactions, or using shell companies. The primary aim during this stage is to create confusion and make it difficult to trace the funds back to their original illegal source.

Finally, the integration stage sees the laundered money re-entering the economy in a form that appears legitimate. This can include investing in legal businesses, purchasing real estate, or other means that allow the criminal to use the money freely without drawing attention.

This structured approach to money laundering is crucial for criminals who aim to protect their wealth and avoid detection by law enforcement, making the understanding of its stages essential for combating financial crimes.