Process of Money Laundering
The money laundering process is divided into 3 segments:
- The Placement Stage (Filtering): This stage represents the initial entry of the “dirty” cash or proceeds of crime into the financial system. In this stage, the criminal relieves himself of holding and guarding large amounts of bulky of cash and the money is placed into the legitimate financial system. Money launderers are the most vulnerable at this stage as placing large amounts of cash into the legitimate financial system may raise suspicions of officials and he may get caught.
Some common methods of laundering are:
|Loan Repayment||Repayment of loans or credit cards with illegal proceeds|
|Gambling||Purchase of gambling chips or placing bets on sporting events|
|Currency Smuggling||The physical movement of illegal currency or monetary instruments over the border|
|Currency Exchanges||Purchasing foreign money with illegal funds through foreign currency exchanges|
|Blending Funds||Using a legitimate cash focused business to co-mingle dirty funds with the day’s legitimate sales receipts|
- The Layering Stage (Camouflage): The layering stage is the most complex and often entails the international movement of the funds. Here, the illicit money is separated from its source. This is done by the sophisticated layering of financial transactions that obscure the audit trail and sever the link with the original crime.
- The Integration Stage (Investment): The final stage is where the money is returned to the criminal from what seem to be legitimate sources. Having been placed initially as cash and layered through a number of financial transactions, the criminal proceeds are now fully integrated into the financial system and can be used for any purpose. For example, the purchases of property, art work, jewellery, or high-end automobiles are common ways for the launderer to enjoy their illegal profits without necessarily drawing attention to themselves.