By 
How does dirty money, in reality, get laundered? To cover up bad-getting cash and convert it into legal tender involves a multi-step complicated process called money laundering. “Money laundering is the lifeline of the shadow economy,” says Robert Mazur, a retired DEA agent.
The necessity for criminals lies in finding a way to get rid of the disgustingly illegally earned money in such a way that no red flags are raised.
Wondering what more you can cover in three stages of money laundering? Read this article till the end.
Three Stages of Money Laundering
The goal of the steps, which are also known as the money laundering life cycle, is to make money obtained through illegal means appear to be clean and legitimate. Each one gets the funds a little further from their criminal source.
Placement
What first stage Placement is money laundering? It’s a process where the laundering of tainted money passes through the formal banking system and financial institutions.
Some standard tactics to launder money include routine depositing of vast volumes of cash into bank accounts by either depositing cash or buying something that a little later will turn into clean money.
How Theft Enters Banks and Other Financial Establishments?
There are some techniques that are applied in money laundering layering such as depositing or exchanging cash in a bank or using cash to buy money order, wire transfer of funds or purchasing gambling chips in a casino. This gets the money that has been criminally derived into the financial system in terms of official actions.
Bonus: Want to learn more about best practices for anti-money laundering placement? Go to amlwatcher.com for the in-depth guides and all resources.
Layering
In the AML layering stage, people engage in complicated transactions to make sure that no conceivable audit trail could lead back to a criminal source.
The point is to disengage the dirty money from the source by pushing it through a series of transactions until it is moved or deposited elsewhere.
Common Layering Means of Wire Transfers and Bank Loans
Two of the most familiar means of layering dirty money are wire transfers and bank loans. Perpetrators might transfer laundromats through numerous accounts at home and abroad to blur the paper trail.
Consequently, the perpetrators can borrow extra from the banks against the principal amount deposited as security and further use this “clean” money for expenses. The money, hence laundered, is fed back to the financial system and thus assimilates the illegal profits.
Such methods are part of the usual layering techniques engaged during the intermediate 3 steps of money laundering.
Integration
Integration in money laundering is the final stage. The process involves the re-infusion of laundered money back into the real economy again without any knowledge of the source of that money, completing its cycle and giving an illusion of legally earned cash or assets.
This means that this is the stage where the crooks can bring the dirty money back into the system and use it like ordinary people as their acquired wealth or income. It completes the money laundering cycle.
Payments of Bills, Acquisitions of Assets, and Other Forms of Integration
During the integration phase, the money would have been used to pay for the dozens of standard transactions, such as everyday bills or regular investments in regular assets, including in real estate or a legitimate front business.
The purpose of this phase is to make money earned from illegitimate sources appear as if it were actually from a legitimate source. Meant to assist in completing 3 stages of money laundering.
Anti-Money Laundering Processes by Regulation
Thinking of risks, governments and financial regulators have modeled AML stages and steps to more effectively identify and put a stop to the money laundering process.
Conversely, anti-money laundering laws and the Know Your Customer requirements are put in place to make it difficult for the stages of placement, layering, and integration to obscure the criminal funding streams.
Why to identify the stages?
Understanding how money laundering operates at every discrete stage is critical knowledge to attain for current law enforcement in the fight against financial crimes.
By understanding the standard stages that criminal networks use, authorities and researchers can be better positioned to trace dirty money and get the needed forensic evidence.
Identifying the discrete 3 phases of money laundering goes a long way toward increasing the effectiveness of stopping money laundering.
Comments