Money laundering – or the act of making illegally obtained money look legitimate so that it can be freely spent – is something that happens in stages.
Each stage of the money laundering process tends to involve multiple people and significant legal risk. What are they?
1. Placement
Placement is the first stage of the process. This is where the illegally obtained funds are first brought into the legitimate financial system. This may be the riskiest stage in which to be involved because the large sums of money involved can attract a lot of official attention.
Cash-intensive businesses and businesses dealing in high-value assets, like real estate, are commonly recruited to participate in this stage.
2. Layering
The second stage, layering, is designed to obscure the money trail and make it harder for law enforcement to trace the money back to its origin.
This stage usually involves an intricate series of transactions, often over multiple financial institutions and jurisdictions – or even across international borders. Common techniques used in this stage involve wire transfers, the use of shell companies, investments in complex financial instruments and the conversion of funds into different currencies or even crypto.
3. Integration
This is the stage where the “laundered” money is reintroduced into the legitimate economy, where it can be used by criminal organizations without raising suspicion.
The clean money can then be used to buy high-value assets, including real estate, luxury vehicles or businesses. This way, those creating the money can enjoy the benefits of their illicit efforts.
Anybody connected to a money laundering operation, no matter what the stage, can end up swept up in a federal investigation. So can people who are completely unaware of what is happening around them just because of their proximity to the crime. If you find yourself facing money laundering charges, obtaining tailored legal guidance as soon as possible can help with your defense.