Money laundering is a federal offence in many countries. This course is a compliance guide that will help us define money laundering and its processes, common money laundering schemes to watch out for, and how we can prevent money laundering practices from corrupting our legitimate business. 

In this lesson, we will define money laundering as a criminal offense and explain the three major steps involved in this type of white-collar crime.  

Placement
In the placement stage, the dirty money is introduced to a legal financial system. This can be done through a bank deposit, purchasing real estate or other expensive assets such as cars, or purchasing chips in a casino.


It is in this stage that money launderers are most likely to get caught since using large sums of cash to purchase or deposit can trigger suspicion from financial institutions and law enforcement.


In order to avoid suspicion, money launderers would typically break the cash down and hire couriers (also known as smurfs) to deposit smaller amounts below the reporting threshold in different banks and locations.


Layering
Also referred to as structuring, this is the longest and most complicated stage of money laundering.


Layering is done in order to obscure the trail from the dirty money's criminal origins. If done successfully, it becomes extremely difficult to discern legitimate from illegal income.


After placement, the money launderer moves the dirty money electronically and often internationally, around pre-established bank accounts, "shell" companies, and other financial markets.


Placement ends when the money launderer inserts dirty money into the legal financial system.
Layering begins once the inserted money is moved in order to make it extremely difficult to trace its criminal origins.


It is in this final stage where the dirty money, after going through multiple layering transactions to elude detection and avert suspicion, is finally integrated into the legitimate financial system.
While the money can now be used for any purpose, criminals don't necessarily have to withdraw the funds in cash form.
As an added security measure, instead of withdrawing a large sum of cash, some criminals opt to purchase property, cars, jewellery, or expensive art work, since they attract less unwanted attention from authorities.


Integration


Money Laundering Defined

Though there are probably countless more money laundering schemes yet to be uncovered by law enforcement agencies, these are the most common methods utilized by money launderers. 

A number of factors such as the money launderer's available resources, as well as local law enforcement tactics can influence the type of money laundering scheme they choose to utilize.
Let's talk about the most common money laundering schemes, starting with...


One popular example is a hawala, which is a system of underground banks that operate via an honour system and a large network of brokers called hawaladars.
In such a system, if **Person A **wants to send money to Person B in another country, Person A will approach a hawaladar in their country to provide the cash, and a password.
Hawaladar A, will then contact Hawaladar B who is in Person B's country, to advise them of the cash amount and the password.
Finally, Person B, after having acquired the password from Person A, can claim the money from Hawaladar B after giving the correct password.
Hawaladar B will now count on Hawaladar A's word that he or she will receive the payment at a later time.


Informal value transfer systems


Which of the following statements regarding money laundering schemes are true?


Common Money Laundering Schemes

Even if we pride our operation to be completely legitimate, we may unknowingly assist in money laundering schemes if we aren't careful about how we conduct our business. Let's talk about what we can do to protect our business from money launderers.

Some business types and sizes are more susceptible to money laundering than others.
While this remains to be true, money launderers and their schemes continue to evolve which means no one corporation is completely safe.
Let's talk about what we can do in order to protect our business against money laundering.


Aside from doing our due diligence via thorough background checks, we must be inquisitive when dealing with potential clients.


In an attempt to close a deal as soon as possible, criminals may offer arrangements that seem too good to be true.


Be adamant in your questioning and if they are unwilling to provide clear answers to common business inquiries, or they seem unusually evasive, know that they may be hiding something.


Beware of several small transactions from different banks


It is typical for money launderers to break down a large sum of dirty money into smaller amounts which are then deposited separately to different banks, a practice also known as smurfing.


If they try to do business by sending money from several bank accounts in small denominations with no clear and sensible reason, it's better to be on the safe side and discontinue negotiations.


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