Anti-Money Laundering

Introduction

Money laundering is the process of disguising the proceeds of criminal activity as legitimate funds. This is done to avoid suspicion from law enforcement agencies and to make it difficult to trace the funds back to their illegal origins. Anti-Money Laundering (AML) is the set of laws, regulations, and procedures that financial institutions and other regulated entities use to detect and prevent money laundering activities.

What is Money Laundering?

Money laundering is a crime that involves the process of converting “dirty” money obtained from illegal activities such as drug trafficking, terrorism financing, human trafficking, corruption, tax evasion, and other criminal activities into “clean” money that appears to be legal. Money laundering is a criminal activity that helps criminals and criminal organizations to profit from their illegal activities without being detected.

The Stages of Money Laundering

There are three stages of money laundering: placement, layering, and integration.

Placement

Placement is the first stage of money laundering, where the criminal deposits the illegally obtained funds into a financial institution. This is done in small amounts to avoid suspicion and to make it difficult for the authorities to track the source of the funds.

Layering

Layering is the second stage of money laundering, where the criminal moves the funds through a series of transactions to make it difficult to trace the funds back to their illegal origin. This may involve transferring the funds through multiple accounts or across multiple jurisdictions to create a complex web of transactions that are difficult to unravel.