What is the first stage of the money laundering process?

The first stage of the money laundering process is placement. This stage involves the initial introduction of illicitly obtained funds into the financial system. During placement, the money launderer seeks to distance the illegal proceeds from their criminal origins by depositing them into banks, using them to buy assets, or engaging in other financial transactions that obscure the source of the funds.

Placement is crucial because it marks the transition of cash or assets derived from criminal activities into forms that can be used more legitimately. At this stage, the goal is to avoid detection by authorities, as large inflows of cash might raise red flags.

Understanding placement is vital for those in anti-money laundering (AML) roles, as it informs how organizations can implement controls and monitoring measures to detect suspicious activity related to the entry of illicit funds into the financial system. This foundational stage sets the stage for the subsequent phases of layering and integration, which further obscure the origins of the funds.