What is money laundering? - By Paul Renner - C6 Intelligence | KYCmap


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What is Money Laundering? The Three Stages in Money Laundering...
By Paul Renner - C6 Intelligence | KYCmap

There are three stages in money laundering:


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What is money laundering? - By Paul Renner - C6 Intelligence | KYCmap

  1. 1. What is Money Laundering?The Three Stages inMoney Laundering... BY Paul Renner C6 Intelligence | KYCmap
  2. 2. Money Laundering is the process of taking ‘dirty’ funds and converting itinto ‘clean’ funds.‘Dirty funds’ are criminally-derived proceeds which are then converted intoother assets so that they can be reintroduced into legitimate commerce inorder to conceal their true origin or ownership – ‘clean funds’There are three stages in money laundering: Placement Layering Integration
  3. 3. 1. PlacementPlacement is the first stage in money laundering where the cashproceeds of criminal activity enter into the financial system.This is most critical stage for any money launderer as the criminal caneffectively mask his ‘dirty’ funds by commingling his ‘clean’ funds andcreate an aura of legitimacy.Examples of Placement include: Depositing into bank accounts via tellers, ATMs, or nightdeposits Changing currency to cashiers checks, bankers drafts or othernegotiable instruments Exchanging small notes/bills for large notes/bills Smuggling or shipping cash outside the county2. LayeringLayering is the second stage in money laundering where attempts aremade to distance the money from its illegal source through layers offinancial transactions.Examples of Layering include: Sending funds to different onshore and offshore bank accounts Creating complex financial transactions Loans and borrowing against financial and non-financial assets
  4. 4. Letters of credit, Bank Guarantees, Financial instruments, etc. Investments and investment schemes Insurance products3. IntegrationIntegration is the third stage of money laundering. This stage involves there-introduction of the illegal proceeds into legitimate commerce byproviding a legitimate-appearing explanation for the funds.Examples of Integration include: Buying businesses Investing in luxury goods Buying commercial property Buying residential propertyAs you can see in the graphic above, banking institutions are required bymoney launderers to conceal their illegal funds and that is why it isimportant that Know-Your-Customer (KYC) checks are done oncustomers. In certain cases there may be a need for Enhanced DueDiligence (EDD) on clients.
  5. 5. Money laundering can’t happen without banks being involved somewherewithin the three stages. Since they are our first line of defense againstcriminals, by having robust controls and access to accurate KYC data,banks will prevent many money laundering attempts. At the same timeother KYC covered entities are required to check their clients againstwarning lists issued by governments and regulators.About Paul Renner - C6 Intelligence Information Systems LimitedPaul Renner is CEO of KYCMap.com and the Co-Founder of C6Intelligence, a leading provider of global intelligence information on bothindividuals and companies through the C6 Database and bespokeresearch projects. C6 Intelligence provides Enhanced Due Diligence (EDD),Know Your Customer (KYC), and Anti-Money Laundering (AML) checksand solutions for companies worldwide, and has a presence in theAmericas, EMEA and APAC regions.Paul Renner is the co-author of the 2002, ICC (International Chamber ofCommerce) publication, “Preventing Financial Instrument Fraud – TheMoney Launder’s Tool.” The fraud models described withinthe publication have been referenced by the UK City of LondonPolice and prosecution services, to support their cases and secureconvictions against fraudsters.Source: Paul Renner C6 | KYCMap - What is Money Laundering