Question

1. What stage of the money-laundering process is occurring if the money launderer is selling a legitimate business that was purchased with the proceeds of criminal money? The sale and proceeds of the legitimate business appears "clean".

Answer 1

Money laundering process consists of three separate stages and they are :-

• Placement
• Layering
• Integration

The first two stages of the money laundering process helps to convert  proceeds of criminal money into a legitimate business. In the placement stage, bulk illegal proceeds are placed into the financial system by making purchases of assets and in the layering stage the proceeds are separated from their source of illegal money by involving in complex layers of transactions in order to hide the money trail.

In the integration stage, the asset or the business purchased out of illegal funds is sold and the proceeds received from the sale has a legitimate explanation and is considered as clean money. Thus the illegal funds now become part of legal funds and it is very difficult for enforcement agencies to differentiate the two funds.

Thus it can be concluded that a money launderer is selling a legitimate business purchased from the proceeds of criminal money in the integration stage.