The stages of money laundering include Placement, Layering, and Integration.

Placement: Placement is when “dirty money” is introduced into the financial system. This is often done by breaking up large amounts of cash into less conspicuous smaller sums to deposit directly into a bank account or by purchasing monetary instruments such as cheques or money orders that are collected and deposited into accounts at other locations. Other placement methods include:

• Adding illicit cash from a crime to legitimate takings of a business, particularly those with little or no variable costs.
• False invoicing.
• Smurfing, where amounts of money below the anti-money laundering threshold are inserted into bank accounts or credit cards and used to pay expenses among others.
• Taking small amounts of cash below the customs declaration threshold abroad and lodging it in foreign bank accounts before being re-sent.

Layering: In the layering stage, the launderer moves money through a series of financial transactions with the goal of making it difficult to trace the original source. The funds could be channeled through the purchase and sales of investments, a holding company, or simply moved through a series of accounts at banks around the globe. Widely scattered accounts are most likely to be found in jurisdictions that do not cooperate with Anti Money Laundering investigations. In some instances, the launderer could disguise the transfers as payments for goods or services or as private loans to another company, giving them a legitimate appearance.

Integration: The integration stage of money laundering is the final step in the laundering process. This is when the launderer attempts to integrate illicitly obtained funds into the legitimate financial system. To use the funds to buy goods and services without attracting attention from law enforcement or tax authorities, the criminal may invest in real estate, luxury assets, or business ventures.

Common integration tactics include:

• Fake employees, namely a way of getting the money back out. Usually paid in cash collected.
• Loans, namely to directors or shareholders which will never be repaid.
• Dividends, namely paid to shareholders of companies controlled by criminals.