1. Anti-Money Laundering / Counter Financing of Terrorism (AML/CFT): The Process
Let us start with the basics. In any AML/CFT explanation, there is always a tendency to start with AML. The conventional beginning is to attempt to answer the main questions, the What, Why, Who and How. To answer these few basic questions, I have prepared short clips to illustrate for you.
Anti-Money Laundering: The Basics (click the questions to see the answers)
Disclaimer: These are generic answers, which certain definitions/regulations may differ according to jurisdiction
Traditionally, the process of money laundering can be broken into 3 distinct phases. They are Placement, Layering, and Integration.
Placement: Usually known as the 1st phase, here the criminal / money launderer attempts to "place" illegally obtained funds into the banking / financial system as a first step in distancing him/her self and the money from the crime. The idea is to blur any connections between the dirty money from the criminal offense. The blurer the connection, the cleaner or more legitimate the money appears to be. Legitimate money cannot be confiscated by authorities.
Layering: Usually known as the 2nd phase, here the criminal / money launderer attempts to "layer" or move the money around the banking and financial system in order to make the money trail even more convoluted. The theory is, the harder it is to trace the original source of funds, which is illegally obtained, the higher the chance that the criminal will be able to keep and enjoy the funds.
Integration: Usually known as the 3rd phase, here the criminal / money launderer eventually takes the cleaned money out of the laundering process and places the laundered funds back into the economy by re-entering the funds into the financial system and thus finally giving them the appearance of cleanness / legitimacy.
That's all for now.... until the next post... happy reading!