search

Analysis of Stages of Money Laundering

Essay details

Please note! This essay has been submitted by a student.

Table of Contents

  • ‘Money-Laundering’ is a single process but its cycle can be classified into three different stages, namely:
  • Placement
  • Layering
  • Integration

‘Money-Laundering’ is a single process but its cycle can be classified into three different stages, namely:

Placement

This is the first stage in the cycle. Placement shows the initial entry of funds into the financial system. It involves transforming the money derived from criminal activities into a more portable and less suspicious form, then getting those proceeds into the mainstream financial system. The placement stage in ‘money-laundering’ process entails the physical movement of cash or property away from the location where it was obtained and its placement in the legitimate financial system. Traditional smuggling methods are used to transport the cash or property. These include concealing money or property in the luggage or cargo, swallowing it etc. The most common method of placing money in the financial system is to deposit it into a bank account. The placement stage is amalgamation of tainted assets or funds derived or obtained directly or indirectly from illegal sources.

Essay due? We'll write it for you!

Any subject

Min. 3-hour delivery

Pay if satisfied

Get your price

In Binoy Viswam v. Union of India Supreme Court observed that “to check money laundering or unearthing black money various measures can be taken. If one the measures is introduction of Aadhar into the tax regime, it cannot be denounced that only because of the reason that the purpose would not be achieved fully. Such kind of menace, which is deep-rooted, needs to be tackled by taking multiple actions and those actions may be initiated at the same time. It is the combined effect of these actions which may yield results and each individual action considered in isolation may not be sufficient.”

Layering

Layering means uncoupling of illegal proceeds from their source by creating multiple layers of financial transactions. Layering conceals the audit trail and provides the anonymity. Shell companies are created to establish a layer of anonymity between certain assets, funds or activities and the individual with interests in those assets or funds. In most of the cases these companies exist only on the paper without having true shareholders who actually have an interest in the profitability of the company. Under-invoicing and over-invoicing refers to a practice where false information is reflected in an invoice in order to create the appearance of a legitimate business transaction. Now Electronic Fund Transfer, back to back loans, fictitious sales and purchases and Special Purpose Vehicle are used for the purpose of laundering money. It is a matter of concern that the layering transactions are crossing several national borders either physically or electronically or through corporate structures involving entities in a number of different countries.

Integration

It is the final stage at which the laundered money is re-introduced into the legitimate economy. At this very stage the person may choose to invest in real estate sector, capital or money market, gold or diamond market. The integration stage of money laundering process entails that money infused into the normal commercial sphere is collected and made available to criminals to be enjoyed or reinvested into their criminal activities. The funds that were processed during the layering stage are placed in apparently legal business. This is done by investing in shell companies, buying stocks, properties etc. it is virtually impossible to connect the funds to the original proceeds from the underlying criminal activity. At this point, the launderer can use the money without getting caught. It’s very difficult to catch a launderer during the integration stage if there is no documentation during the previous stages.

It must be borne in mind that the stages described above do not necessarily exist in the mind of the wrongdoer. They are based on the experience of investigators who have succeeded in uncovering such operations. In no money laundering operation there is an exact and clear picture between these stages. Instead, the stages flow into each other creating an overlap between one stage and the next. It is also not necessary for a successful money laundering investigation to be able to indicate on which date a specific stage ended and next stage commenced.

Get quality help now

Destiny

Verified writer

Proficient in: Finances, Crime

4.9 (2552 reviews)
“She was able to compose a 3-4 page essay in less than 24 hours and the results were fantastic !! Ty so much and I'll be using her again ”

+75 relevant experts are online

More Essay Samples on Topic

banner clock
Clock is ticking and inspiration doesn't come?
We`ll do boring work for you. No plagiarism guarantee. Deadline from 3 hours.

We use cookies to offer you the best experience. By continuing, we’ll assume you agree with our Cookies policy.