What Regulators Should Know About Money Laundering

Money laundering is an incredibly lucrative enterprise. Criminal organizations like terrorists, drug traffickers, and smugglers employ this method to conceal their illicit activities. According to United Nations data, these groups funnel trillions of dollars through legitimate channels every year and the problem is expected to persist. The problem of money laundering makes the world more dangerous by funding criminal organizations and costs the finance sector billions of dollars a year in fines. To combat money laundering and hold offenders accountable, it’s important to understand how the practice works.  While every case is unique, they all have these three steps in common.


Placement is the first stage of the money laundering process. Simply put, this is the moment when criminals deposit illicit cash into a financial institution. The goal here is to deposit amounts below what banks are required to report and to transfer the cash into other forms of liquidity like checks or money orders. 


expert witness banking

The process of layering can be difficult to prove in court. Prosecutors often rely on expert witness banking testimony to illustrate this process for a jury. Once illegal money enters the financial system, criminals must disperse the money as quickly as possible. This makes it harder for regulators and law enforcement officials to garner any suspicions of illegal activity. This can involve opening accounts in different countries, making capital investments, or building brick and mortar businesses. 


Integration is the critical point where the laundered funds make their way back to a criminal or crime syndicate. Once the cash exists alongside dividends or profits from a car wash or small restaurant, it is far more difficult to trace the cash to its source. Offenders go to great lengths to comply with the necessary business codes and regulations to avoid drawing suspicion to themselves. 

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