Placement money laundering

Placement refers to the act of introducing dirty money (e.g., the proceeds from criminal activities) into the financial system without arousing suspicion from regulators and investigators. It is the first stage of the money laundering process.

Frequently asked questions

What are some examples of placement in money laundering?

Placement can take many different forms. The simplest example of placement involves depositing the funds as cash into one or multiple accounts — taking care to stay below transaction thresholds that might trigger reporting or recordkeeping requirements (a process known as smurfing). 

Other examples of placement include:

  • Funneling the funds into a “legitimate” business
  • Purchasing stocks, bonds, and other financial instruments
  • Buying high-value assets, like art and collectibles, which are not as regulated as financial instruments
  • Smuggling cash out of the country and depositing it in small amounts at foreign financial institutions

What are the three stages of money laundering?

The three stages of money laundering are placement, layering, and integration:

  • Placement is the process of integrating criminal proceeds into the financial system
  • Layering is the process of moving these funds between multiple accounts in order to build a history which obscures their origin and makes them appear more legitimate 
  • Integration is the final step of the process, in which the now “clean” money can be spent without a trace to the original crimes

How to fight money laundering

In order to combat money laundering, affected businesses like financial institutions and banks need a plan for addressing each stage of the money laundering process. Thorough Know Your Customer, Customer Due Diligence, transaction monitoring, and suspicious activity reporting programs are essential to this effort. 

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