What are the three stages of money laundering?

• A. Placement, Separation, Execution
• B. Layering, Placement, Integration
• C. Disposition, Layering, Collection
• D. Integration, Allocation, Layering

Answer: (B)

The three stages of money laundering are placement, layering, and integration, which together outline the process of making illicit money appear legitimate.

Placement is the initial stage where the illicit funds are introduced into the financial system. This often involves breaking down large amounts of cash into smaller, less suspicious deposits or using other methods to distance the funds from their criminal origins.

Layering follows placement and involves creating complex layers of financial transactions to obscure the source of the funds. This can include transferring money between different accounts, using shell companies, or making investments in legitimate businesses. The primary purpose of layering is to make the paper trail difficult to follow and to disguise the origins of the funds.

Integration is the final stage, where the cleaned money is reintroduced to the economy and made to appear as legitimate earnings. At this point, the money can be used without raising suspicion, allowing the launderer to enjoy the proceeds of their criminal activities with a lower risk of detection.

This understanding of the money laundering process is essential for recognizing illicit financial activities and reinforcing compliance with anti-money laundering laws and regulations within financial institutions and businesses.