NCJ Number
206925
Journal
Law and Order Volume: 52 Issue: 8 Dated: August 2004 Pages: 106-108,110,111
Date Published
August 2004
Length
5 pages
Annotation
This article examines the stages of a money-laundering operation, the international trends that must be addressed in the investigation of money-laundering schemes, and key components of money laundering detection and investigation.
Abstract
Any money laundering scheme, regardless of the type of criminal organization involved, involves three stages: placement, layering, and integration. Placement is the starting point of any money laundering cycle. The varied placement methods involve shell corporations, phony cash-intensive businesses, and other mechanisms whereby large cash deposits in financial institutions mimic normal business transactions. Detection of placement activity by criminal enterprises typically occurs when a "front" business is clearly generating more cash than would be typical of the type of business portrayed. The second stage of the money laundering cycle, layering, is designed to sever the ties between the illegal activity and the money produced by it. Layering often involves the use of numerous bank accounts, both onshore and offshore, as well as several levels of corporate structure. When done properly, the money launderer's layering breaks any provable nexus between the original deposit (placement) and the cash when it resurfaces. By obscuring the true source of money generated by illegal enterprises, the money launderer can prevent law enforcement investigators from tracing illegal proceeds beyond a shell company. Some examples of layering are provided. Integration is the third and final stage in the money laundering cycle. The objective of integration is to make laundered money accessible to the criminal organization and/or its members. Similar to the previous stages of the cycle, integration attempts to mimic legitimate business transactions. Guidelines for investigating money laundering in the current context of expanded international trade are to maintain a strong working relationship with local financial professionals, actively monitor international anti-money laundering initiatives, scrutinize all business activity associated with a suspect, be familiar with the financial networks operating in one's jurisdiction, and always subject facts obtained in a case to the three-stage analysis profiled in this article.