Question

Explain the terms “Placement”, “Layering” and “Integration” in the context of money laundering. Your explanation must be supported by examples, and not exceed 200 words.

Answer 1

Money Laundering is the process of Converting illegal money into legitimate money. There are three stages involved in money laundering : Placement, Layering and Integration to convert the laundered funds into legitimate funds.

1.Placement : It is the first stage in which the  illegal money is injected into the legitimate financial system. Eg. Purchasing of Asset through illegal Money, depositing cash in a bank, etc. 63

2. Layering : It is the second stage in which the money injected into the system is covered and moved or transferred through a series of transaction in different accounts and different countries. Thus making it difficult to detect.
Eg.Wire Transfers between bank accounts, buying of assets, conversion of cash into monetary instruments, etc

3. Integration : It is the final stage in which the money enters the financial system in a way it appears to be legitimate i.e. it is returned to the criminal in a legitimate way where he can use the money as he wants.
Eg. Real Estate Investments, purchase of luxirious goods, investment in securities markets, etc