Money laundering is the process of concealing the proceeds of illegal activity, such as drug trafficking or terrorist financing, by converting it into legitimate funds. The term “money laundering” refers to the fact that the illegal money is “cleaned” or “laundered” to make it appear legitimate.
Money laundering involves three stages: placement, layering, and integration. In the placement stage, the illegal funds are introduced into the financial system, often through the use of cash deposits or wire transfers. In the layering stage, the funds are moved around and converted into different forms to make it difficult to trace their origin. This might involve transferring the funds to different bank accounts or buying and selling assets such as real estate or businesses. In the integration stage, the funds are reintroduced into the economy in a legitimate form, such as by investing in a business or purchasing assets.
Money laundering is a serious crime that can have negative consequences for the economy, society, and national security. It can enable criminals and terrorists to profit from illegal activities and fund further criminal or terrorist activities. In many countries, there are strict laws and regulations aimed at preventing and detecting money laundering, including requirements for financial institutions to verify the identity of their customers and report suspicious transactions to the authorities.
