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What Do You Know About Placement, Layering and Integration ? - YouTube
Channel: FinCrime Agent
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in today's video we are going to talk
about the three phases of money
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laundering:
Placement, Layering and Integration i
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will also touch base on
some examples on how money laundering
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occurs
in real life so let's get started right
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now
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hi i'm Marco Beranzoni and this is FinCrime Agent
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the YouTube channel talking about
financial crime prevention
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if you haven't subscribed yet please hit
the subscribe button
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below to be notified of new videos going
live on my YouTube channel
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also check the description of this video
to find the references
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that could be useful and related to the
topic that we are talking in
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today's video. If you also want to
support FinCrime Agent
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in the description you will find our
Patreon link where you can become part
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of our
community so let's get started and talk
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about the three phases
of money laundering and some real
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examples. If you're watching this video
you are
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interested to find out more about
Placement Layering and Integration
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that's exactly
what we are going to talk about today
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let's start with
the definition of money laundering. As
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we've seen before
this is the definition we have and is in
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line with the
proceeds of crime act 2002 that is a uk
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legislation money laundering
includes all forms of handling or
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possessing criminal property
including possessing the proceeds of one
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owns crime and facilitating any handling
or possession of criminal property
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as we clarified previously, essentially
to be
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involved in money laundering as long as
you touch any money that are somehow
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associated to a crime you will be
connected to
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money laundering activities so, money
laundering essentially is
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where criminals will try to hide
the proceeds of crime
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and inject those into the financial
system
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in order to do that they would need to
go through Placement
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Layering and Integration in order not to
be caught
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by the law enforcement. So, let's get
started with the three phases of money
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laundering
Placement this is the initial part where
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the money from crime are placed into the
financial
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system so this can be done in different
ways and we will see in a minute
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some options to do the Placement
activity.
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The second part is Layering this at this
stage
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criminals will try to create a number of
transactions to
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make more complex the source of funds
and therefore making very difficult for
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law enforcement and financial
institutions to understand
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the sorts of fund and therefore hiding
then these
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funds are coming from crimes. The third
phase is the Integration so at this
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point
the funds will be generally grouped back
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into bank accounts that can be
reached
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and accessed by those criminals and the
funds
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will be either invested in some
financial instruments
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or maybe they can be used to buy and
purchase
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products. Let's see some examples of
Placement
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Layering and Integration and how those
happen.
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In the Placement phase the
transaction can go in
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from cash businesses for example cash
businesses are attracting
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a lot of attention from a money
laundering perspective because
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they can inject cash transactions and mix
them
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with illegal money coming from crimes.
False invoicing will be used in order to
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put those transactions
into the book and make them show us
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legitimate
activities from that business, but in fact
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they are actually related to
some proceeds of crimes. Smurfing
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is another activity which is very common,
which is
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completing those transactions in amounts
that are below
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the detection that is usually in place
by
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a financial institution. The use of trusts
and offshore companies is also very
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common
and the involvement of foreign bank
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accounts always plays
a significant role in the Placement
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aspect
of money laundering. If we look at
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Layering at this point
the transaction will be completed in a
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smaller amount or cut
in different type of sizes and generally
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transferred nationally or
internationally to make even more
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complex
the understanding of where those money
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are coming from.
So eventually all those transactions
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will join back into a number of bank
accounts that can be accessed by
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criminals
and at that level the funds will look
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clean
and coming from legitimate business or
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legitimate
activities - at this point
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criminals will be free to do their
Integration by implementing successfully
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the money
into the financial system. Let's now take
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a look an example
based on a casino scheme so
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we've got a customer of a casino (which
is actually a criminal)
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and he walks into the casino with
an amount of cash that has been generated
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from
illegal activities, he will change the
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funds into
chips and spending some of those at the
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casino and when
the customer will leave, he will convert
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back
the chips into cash so if at any point
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later on
he will be asked where those money
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are coming from he will have a proof
that the money are coming from the
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casino and by doing that
he has managed to complete a cleaning
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and laundering
of those money initially coming from
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illegal activities.
If we look another example based on
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a cash
based business this is another area
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where criminals
very often try to
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inject cash into the the system using
this method
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so for example by doing fake invoicing
on a business that could be
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car wash for example, if you own
a legitimate car wash please do not
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take this personally, but
i'm just making this example to say that
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you could have those transaction in cash
into the business and then the criminal
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at that point
when is the end of the year will pay
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taxes showing that transactions are
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coming from
the carwash business and once taxes are
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paid
they can use the money and
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do further activity with that. So
cash-based businesses are
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often considered to be of high risk
for money laundering activities. One more
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example
for larger transactions is the
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trade-based
industry. Trade-based money laundering is
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extremely
big and sophisticated, you can think
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about the volume
of containers that are going around
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in the world every day for
genuine trade so within this industry
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criminals are hiding funds
and they use the instruments that are
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available
in trade finance to transfer funds
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illegally across the globe. This is quite
complex to explain so i will dedicate a
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specific video to trade based money
laundering
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and we will show this at some point in
the future
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but this is a very very big part
of money laundering nowadays trade-based
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money laundering
is managing a massive chunk of funds for
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criminals so we've seen the phases of
money laundering we
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touched base about some examples of
how money laundering can happen but what
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can you do
in order to keep down the volume of
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money laundering globally
as we explained before in the Layering
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aspect
criminals will need bank accounts in
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order to do transfer
either nationally or internationally
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often criminals will contact you asking
to use your bank account
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to do a transfer for whatever amount
and you can retain 10 20 even 30 percent
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of that transaction sometimes this can
sound to you
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as easy money but this is a serious
crime
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if you are involved in this type of
activities
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you will be involved in money laundering
and you can go to jail for up to 14 years
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for money mules - so make sure that you
first do not do any of these activities
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and secondly
that you do report when
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someone is approaching you
to borrow your bank account for those
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type of transfers. It's important that
you do your part
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so that all together we can keep down
the volume
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globally of money laundering and reduce
this significant issue
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that is affecting a lot of people
globally with that we are at the end of
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the video
for today thank you for watching if you
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haven't subscribed yet please hit the
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in the future i would like to know and
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FinCrime Agent on Patreon you can find
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in the description as well so until next
time thank you for watching and see you
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soon
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