What is involved in the layering stage of money laundering?

The layering stage of money laundering is characterized by conducting a series of complex and often convoluted transactions to obscure the origin of illicit funds. This process aims to create a maze of financial activities that make it difficult to trace the source of the money.

During layering, criminals typically transfer money through various accounts, countries, or financial instruments, such as using shell companies or offshore accounts. By doing so, they create a confusing paper trail that detaches the money from its illegal origins. This stage is crucial because it helps to distance the funds from their criminal genesis before they are eventually integrated into the legitimate economy.

Placing laundered funds into the economy or investing in legal businesses usually occurs in the final integration stage, while the initial placement of illicit funds refers to the process of introducing dirty money into financial systems. Therefore, the emphasis on obscuring the source through transactions is what defines the layering phase most accurately.