How does money laundering work?
Money laundering works in following three stages.
1. Placement: Illegal funds or assets are first brought into the financial system. This
placement makes the funds more liquid. Money launderers place illegal funds using a
variety of techniques like, depositing cash into bank accounts or purchasing insurance
products and using cash to purchase assets.
2. Layering: To conceal the illegal origin of the placed funds and thus make them more
useful, the funds have to be moved, dispersed and disguised. This activity is known as
“layering”. At this stage, money launderers use many different techniques to layer the
funds like, using multiple banks and accounts, having professionals act as intermediaries
and transacting through corporations and trusts. This helps the launderers to disguise the
origin of the funds.
3. Integration: The last stage of the money laundering process is called “integration”. The
“cleaned” funds can now be made available for investment in legitimate or illegitimate
businesses. Thus, the original “dirty” money has achieved the appearance of legitimacy
