Placement, layering and integration
Also called three stages of money laundering
Placement, layering and integration are the three stages of money laundering. Placement puts criminal cash into the financial system. Layering moves it through transactions that hide its origin. Integration returns it to the criminal as apparently legitimate wealth. The model helps firms decide which controls catch which activity.
How it works
At placement, criminals deposit cash in small amounts, buy assets or use cash-heavy businesses. Banks look for structured deposits and activity that does not fit the customer's profile. Layering uses wire transfers, shell companies, trade invoices and crypto to break the audit trail, and transaction monitoring targets rapid movement and circular flows. Integration shows up as property purchases, loans or investments funded by the cleaned money.
The model matters because each stage leaves different traces. Placement is easiest to detect but often happens outside banks. Layering is the hardest stage to follow and the main focus of monitoring and network analytics. Laundering offences do not require all three stages. A single transfer of criminal property is enough to meet the offence in most jurisdictions.
The rules
Requires countries to criminalise money laundering on the basis of the Vienna and Palermo Conventions, covering the widest range of predicate offences.
FATF member and assessed jurisdictionsMakes it an offence to conceal, convert, transfer, arrange for, acquire, use or possess criminal property, covering every stage of laundering.
All persons in the UKSets minimum rules on the definition of money laundering offences and sanctions across the EU, including self-laundering.
EU member statesMakes it a federal crime to conduct financial transactions with proceeds of specified unlawful activity to conceal their source or promote crime.
All persons subject to US jurisdictionCommon questions
Which stage of money laundering is hardest to detect?
Layering. Criminals spread funds across accounts, companies, jurisdictions and asset types, often at speed. Each transaction can look normal on its own, so detection depends on linking activity across accounts and institutions.
Does laundering always go through all three stages?
No. The model is a teaching tool. Many cases skip or merge stages, for example when criminal proceeds already sit in a bank account. Laws define laundering by dealing with criminal property, not by completing each stage.
What are examples of placement?
Common examples include splitting cash into deposits below reporting thresholds, buying high-value goods or casino chips with cash, mixing proceeds into the takings of a cash-heavy business, and using money mules to pay in cash.
