What does money laundering involve?

Money laundering involves disguising financial assets to use them undetected. This process typically includes a series of transactions that make illegally obtained money appear legitimate. Criminals aim to hide the origins of these funds, often derived from illegal activities, so they can ultimately use them without raising suspicion.

The act of money laundering often has three key stages: placement, layering, and integration. During placement, the money is introduced into the financial system. In layering, the money is moved through various transactions to obscure its origins. Finally, during integration, the laundered money is reintroduced into the economy and can be used without detection.

This definition distinguishes money laundering from the legal use or proper reporting of funds, which are not related to illicit activity. The focus on disguising assets highlights the illegal intent and direction of the actions involved in money laundering.