Layering makes the audit trail hard to follow. Common techniques are rapid transfers between accounts and jurisdictions, back-to-back loans, shell companies, trade invoices that do not match the goods, and chains of crypto transactions through mixers, bridges or many wallets. Transaction monitoring and sanctions screening are mainly aimed at this stage.
Example
Funds are wired from a company in country A to a newly formed shell in country B, then on to a law-firm account in country C, then back as a 'consulting fee'.
Where it appears in the exams
This topic is relevant for CAMS, CFCS, CCAS.
Read more
AML red flags and typologies: a CAMS exam cheat sheet
Related terms
- Placement: Placement is the first stage of money laundering, in which criminal cash or other proceeds are put into the financial system or converted into other assets.
- Integration: Integration is the final stage of money laundering, in which laundered funds re-enter the legitimate economy and look like ordinary income or assets.
- Shell company: A shell company is a legal entity with no real operations, employees or assets of its own, often used to hold assets or move money without revealing who owns it.
- Trade-based money laundering (TBML): Trade-based money laundering is the use of international trade transactions to disguise criminal proceeds and move value, for example by falsifying the price, quantity or quality of goods on invoices.
Source: Widely used three-stage model of money laundering (placement, layering, integration). Independent explanation for study purposes, not legal advice.