What is money laundering?

Money laundering is best defined as the concealment of illegal origins of money. This process typically involves three stages: placement, layering, and integration. During placement, illegal proceeds are introduced into financial systems. Layering then obscures the origins of the money through a complex series of transactions. Finally, integration allows the laundered money to be reintroduced into the economy, making it appear legitimate.

The primary goal of money laundering is to disguise the illegal source of funds, making them seem like they come from legal activities. This practice poses significant risks to financial institutions and the overall economy since it can facilitate further criminal activities and undermine legitimate businesses. Understanding this definition is crucial for recognizing the tactics and impacts of financial crime in business strategy and practice.