Stages of Money Laundering

The stages of money laundering are involved in money laundering as criminals generate large amounts of proceeds whose illegal activities cannot be explained or concealed. A smooth money laundering organization usually involves multiple transactions, as black money is constantly circulated to avoid detection. These illicit funds must be represented and documented as legally obtained funds so that criminals can access them undetected and without retaliation by the relevant authorities. Laundering of proceeds of crime is usually carried out in a process consisting of three stages.

These stages are

Placement Phase: The income obtained from illegal activities is generally in cash. The main purpose of the placement phase is to save the proceeds of crime from cash. It is the stage where the black money is presented as legal income in the country where it is obtained or taken out of the country indirectly. According to the Financial Crimes Investigation Board (MASAK), this stage is the most difficult part of laundering the proceeds of crime.

Proceeds of crime that are not obtained in cash are laundered through economic activities without having to go through the placement stage. The reason for this is that it is usually subject to a cash notification or suspicious transaction report made to the authorities by the institution that makes the transaction in the first instance when it enters the financial system in cash.

Some methods used in the placement phase are as follows;

It can be physically taken abroad and deposited in banks in countries where there is little supervision, it can be introduced into the system in cooperation with financial institutions or their employees, or it can be saved from the cash form by criminal organizations by owning financial institutions by exaggerating the work a little more. It can be divided into small amounts (below the notification amounts) and deposited in various banks within the country, in accounts opened in the name of different individuals.

Layering Phase: The purpose of this stage is to prevent the tracing of the proceeds of crime recovered from cash and the disclosure of the source of black money. The proceeds of crime are still not on legal grounds at this stage. The proceeds of crime are divided into small amounts and travel from country to country through banks. At the segregation stage, transactions are carried out in a very fast and complex manner, and the purpose of this is to try to make the black money disappear. It is more difficult for anti-money laundering units at this stage than at the placement stage.

Integration Phase: At this stage, the proceeds of crime have now been transferred to legal grounds. At this stage, a normal transaction structure has been achieved, where a legal explanation can be given to a question that may be asked about the source of black money or a normal transaction structure that does not require such a question to be asked. At this stage, the launderer introduces the money into the economy as normal commercial money. With this money, he can buy securities or real estate, stocks, bonds, bills; he can use it as collateral to obtain a loan from a financial institution, lend it, pay his debts and make all kinds of similar legal transactions. In this way, money is integrated into the system and purified from the aspects that are different from legal funds.

The importance of using anti-money laundering software products to protect your organizations from money laundering is increasing day by day. Each stage of the steps to prevent money laundering should be considered in detail. Different methods are used in the stages mentioned in our article, and in the determination of these methods, customer recognition and suspicious transaction monitoring activities of your organizations should be carried out by considering all kinds of scenarios and creating scenarios according to this structure. Otherwise, it becomes difficult to monitor transactions and create a customer profile, in which case mistakes may be made. As a result, your organization may face criminal sanctions and loss of reputation in the sector.