Money laundering is a criminal activity involving the process of making illicitly obtained money (often referred to as “dirty money”) appear to be legitimate or “clean.” The term “money laundering” originated from the idea of “cleaning” money to disguise its criminal origins and make it usable within the legal financial system without raising suspicion.
In simple words, Money laundering is a way that bad people try to hide their illegally earned money so it looks like they got it legally
Three Main Stages of Money Laundering
- Placement: In this stage, the launderer introduces the illicit funds into the legitimate financial system. This is usually done by depositing the money into banks, using cash-intensive businesses, or purchasing valuable assets such as real estate, luxury goods, or precious metals.
- Layering: In the layering stage, the launderer attempts to separate the illicit money from its criminal origins by moving it through a complex series of financial transactions. This could involve multiple transfers between accounts, converting the money into different currencies, or conducting a series of transactions to obscure the money trail.
- Integration: In the final stage, the launderer reintroduces the “cleaned” money into the economy, making it appear to be legitimate income or investments. The laundered money can now be used without arousing suspicion, and the funds are effectively integrated into the legal financial system.
