What are the three stages of money laundering?

What are the three stages of money laundering?

• A. Placement, Layering, Integration
• B. Placement, Integration, Distribution
• C. Filtration, Layering, Integration
• D. Placement, Layering, Distribution

Answer: (A)

The three-stage framework for money laundering describes how illicit funds move from crime to the legitimate economy. First, placement: illicit cash enters the financial system, often through banks or other channels, in a way that minimizes suspicion and scrutiny. The aim is to get dirty money into the financial footprint without triggering alarms. Next, layering: a complex series of financial transactions—transfers, conversions, and international movements—designed to obscure the origin of the funds and break the paper trail. This creates distance between the crime and the money, making tracking difficult. Finally, integration: the funds are reintroduced as seemingly legitimate through investments, purchases, or business activities, so they appear earned from lawful sources. This sequence is the standard model taught in AML training because it captures the typical progression criminals use to disguise proceeds. Other terms like filtration or distribution aren’t part of the recognized three-stage framework, and reordering the stages wouldn’t reflect how the process generally unfolds.

The three-stage framework for money laundering describes how illicit funds move from crime to the legitimate economy. First, placement: illicit cash enters the financial system, often through banks or other channels, in a way that minimizes suspicion and scrutiny. The aim is to get dirty money into the financial footprint without triggering alarms. Next, layering: a complex series of financial transactions—transfers, conversions, and international movements—designed to obscure the origin of the funds and break the paper trail. This creates distance between the crime and the money, making tracking difficult. Finally, integration: the funds are reintroduced as seemingly legitimate through investments, purchases, or business activities, so they appear earned from lawful sources.

This sequence is the standard model taught in AML training because it captures the typical progression criminals use to disguise proceeds. Other terms like filtration or distribution aren’t part of the recognized three-stage framework, and reordering the stages wouldn’t reflect how the process generally unfolds.