Money Laundering Law and Legal Definition
Money laundering is the processing of criminal proceeds (including but not limited to drug trafficking) to disguise their illegal origin or the ownership or control of the assets, or promoting an illegal activity with illicit or legal source funds.
Money laundering systems generally have three basic elements- placement, layering and integration. In the placement stage of money laundering, the launderer introduces his illegal profits into the financial system. This can be done by breaking up large amounts of cash into smaller sums that are then deposited into a bank account, or by purchasing a series of monetary instruments (money orders, checks, etc.). After the money has entered the financial system, the second, or layering, stage takes place, where the launderer moves the funds from one account to another at various banks around the world to distance them from the original source. The funds might also be channeled through the purchase and sales of investment instruments or the transfers may be disguised as payments for goods or services. The launderer then moves into to the third stage, integration, in which the funds re-enter the legitimate economy. Afterwards, the launderer might choose to invest the funds into real estate, luxury assets, or business ventures.
