Money Laundering

7 Pages 1840 Words

ome common to use a three-stage model which encompasses an ideal money laundering scheme. The three stages are as follows:

* Placement Stage
This is where cash derived directly from criminal activity (e.g. from sales of drugs) is first placed either
in a financial institution or used to purchase an asset.

* Layering Stage
The stage at which there is the first attempt at concealment or disguise of the source of the ownership of funds.

* Integration Stage
The stage at which the money is integrated into the legitimate economic and financial system and is camouflaged with all other assets in the system.

Money launderers try to prevent authorities from tracing the source of their ill-gotten gains by moving their funds around financial and economic system. The funds are then spent as if they were legitimate money. The more blatant by the money launderer will directly involve a person or a business in the crime. i.e. A launderer could simply ask someone for permission to use their account for deposits in return for a fee. Another scenario is for the money launderer to approach a business and ask them to set up transactions in which a sum of money is regularly deposited in the company's account. The business will then send the money back as a fictitious payment for non-existent goods. Although this method is very popular amongst the criminal underworld, there are other ways of laundering money without a business becoming aware of being involv...