Money laundering is a serious offence because of the fact that this money is mostly used in illegal activities like terrorism. In such a case, it always becomes important to understand the concept of Money Laundering as this would help you in avoiding any type of sticky situation later. As per the information available, the money laundering involves three stages which are Placement, Layering and Integration. We will now talk about these three stages of money laundering.

  • Placement– In this stage, the money is actually placed in a financial institution for the circulation. Now, this stage basically involves the movement of the cash or the money from the main source. There are various ways used for the placement of money and it is not just restricted to financial institute. It can be done via a casino, a shop or even via business. There are many ways that come under this stage which may include currency exchanges, security brokers, bank complicities, currency smuggling and even asset purchasing.
  • Layering– Once the one is placed, the money is layered. The idea behind this process is to make it difficult to detect the source of money and to make it difficult to uncover any such money laundering activity. So, under this stage, there are various trails made with the money which makes it quite difficult to track the transaction. For example, the person may choose to buy assets like the diamonds or gold which are easy to smuggle and which can be resold in any market in return of the cash. The other way is to buy monetary instruments like a money order or draft.
  • Integration–This is the last stage of money laundering and under this, the money is placed back into the economy using the banking system or some other way. The basic idea here is to show that the money is generated as an outcome of a regular business process. There are many methods used to integrate the money back in the system which may include false loans, property dealings, false import invoice.

So, these are the three stages of money laundering and if you need any consultation service around money laundering in order to ensure that your business is compliant with Prevention of Money Laundering Act 2002, you can reach out to Dhananjay Choudhary- Koda Associates. Dhananjay Choudhary  is a Delhi High Court lawyer who not only takes cases related to money laundering but he also provides consultation services around money laundering and financial frauds.

Published by Rahul Kh