Money Laundering as a Process

Money laundering is rather a complex process than a single act. Criminals have to make this process in a dynamic way as, first of all, their money trail is evidence of their crime and, secondly, the money is risky to hold and it has to be protected.

So, how it works?

The process of money laundering can roughly be divided into basic 3 steps that can happen either one by one or simultaneously, or separately.

These steps are placement, layering and integration. The first step is taken when money is placed into the the country’s financial system or drawn out of the country. Those who launder money want to remove “dirty” money from the location where money can be detected. The second step is trying to conceal the identity of the owner of “dirty” money by means of creating complicated layers of financial transactions to make the audit miss the trail and obtain anonymity. Integration is a final step necessary to integrate and assimilate the “cleaned” money into the legitimate financial system – in simple words, to make everybody believe in the legal status of the funds.

It is obvious that it is realistic to detect the fact of money laundering on the first step and extremely difficult on the last one. This is why international laws, directives, measures, methods and plans regarding anti-money laundering are often concentrated on the importance of the prevention of money laundering at an early stage.

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