Q5 - What are the main steps to effectively launder money?

Question 1

List the 3 main steps of Money Laundering.

Answer 1

• Placement
• Layering
• Integration

Question 2

What is the PLACEMENT stage of Money Laundering?

Answer 2

Placement - The 1st stage of ML process,
where the illegal money is first introduced into the legal financial system.

The money is carved up until portions (less than £10,000) to avoid raising awareness with AML legislation authorities (a technique known as “smurfing”).

Question 3

What is the LAYERING stage in Money Laundering?

Answer 3

Adding successive layers of legitimacy to the original funds. This is done until the source of the money is disguised from authorities.

Question 4

What is the INTEGRATION stage in Money Laundering?

Answer 4

This is when the criminals retrieve their illegal funds as they are now disguised as legal money. They can now spend this money and integrate it into the legal economy.

Question 5

What are money laundering techniques?

Answer 5

Smurfing - Illicit funds broken down into smaller amounts that are less than £10,000 to avoid AML authorities.

Money Mulling - Multiple participants transferring illicit funds through their accounts on behalf of the criminal organisation.

Blending Funds - Investment into business (shell companies) with high cash flows, such as carwashes to “blend” illicit income with legal income to disguise the illicit income (Marinetto 2014).