Identifying the Three Steps of Money LaunderingApril 24, 2012 — 1,713 views
Money laundering is the act of hiding funds that were illegally acquired so they can be used without being detected as illegal. Identifying money laundering requires knowing the three steps involved in the process.
Criminals typically make the money in the form of cash but use banks and financial institutions so the money appears to be part of their wealth and cannot be traced back to the source of income. The first step is placement. This involves the physical act of depositing the illegal money somewhere.
The second act is layering, the process of doing several transactions in order to make it difficult to trace the original, illegal money. Transactions are sometimes simple but can be very complex, involving currency changes and depositing funds across borders.
Finally, integration is when the criminal uses the money to make purchases. AntiMoneyLaudering.org explains these are often large purchases such as homes, art or cars so the money appears to be more legitimate.
Understanding each of these three steps is essential in preventing money laundering. Suspicious activity should be reported to the proper authorities so criminals can be stopped.