Money laundering is an illegal act that happens when a large amount of money is gathered by participating in an illegal action but appears to be coming from a legitimate source of some kind. Someone who is committing a money laundering crime will go through three steps to do so: Placement, layering and integration.
Here’s how it works:
- With the placement step, the goal is to get the money into the financial system legally. They may have a legitimate business, for example, that works as a front.
- The next step, the layering step, conceals where that money came from by completing multiple series of transactions. Some may use methods to hide the money in their financial accounts or “cook the books” to make it look like their legitimate business is doing much better than it is (and thus has brought in this large amount of money).
- Finally, the integration step has to take place. During integration, the newly laundered money is now taken out of a legitimate bank account, for example, and spent. For instance, money for a drug deal may be placed into the bank under the guise of being a car sale. Then, after manipulating that transaction in the accounting books, the individuals may take out money from the bank to pay for other things.
Of course, as with any kind of crime, there can be variances. Not every money laundering crime is the same, and they don’t all go through the same steps to avoid detection.
It’s important to protect yourself if you’re accused of a money laundering crime. The reality is that good people get caught up in money laundering schemes without realizing it all of the time. Our website has more on what you should know about money laundering and your rights if you’re accused of participating in this white-collar crime.