Money laundering is the process of disguising the illegal origin of criminal proceeds. Money laundering typically takes place in several stages: placement, layering and integration.
- Placement: The financial proceeds of the criminal activity must enter the financial system.
- Layering: The layering stage is a crucial part of making illicit proceeds appear legal. In this stage, illicit proceeds are separated from their origin through various transactions to conceal the source.
- Integration: In this stage, the funds are returned to the offender, who has had their illegal proceeds laundered. When the funds are returned, they are mixed with the offender's other finances and they are now able to use the money equivalent to legally earned money.
How the stages play out in practice depends on the type of crime from which the money originates, the intentions and capabilities of the criminal actors, and the opportunities for money laundering in society. Money laundering typologies vary and are constantly evolving.