Phases of money laundering
Money laundering is made up of three distinct phases: placement, concealment and integration.
These phases may be carried out jointly or separately. However, they will usually end up being performed simultaneously.
Known internationally as placement (Anglo-Saxon term). It is at this initial moment when criminals try to introduce dirty money in cash or any other type of goods (always of illegal origin) into the financial system. That is, it is here when they try to give the appearance of legality to those goods acquired through illegal activities.
It could be considered the most important phase of the entire process and, without a doubt, it is in which the bleach runs a greater risk of being discovered by the authorities, due to the fact that there are more and more measures and demands when it comes to movements and insertion of money in financial entities (identifications, economic limits in operations, etc.). To avoid being discovered, the most common is to introduce dirty money in small and fractional amounts (act known as smurfing). In addition, this is usually carried out by people outside the criminal organization so that, in case of being discovered by the authorities, they cannot find out the origin of the capital. The idea is to be able to continue, on the one hand, with criminal activities and, on the other hand, with money laundering.
Cash can also be introduced in other different ways (not just by resorting to financial institutions), such as through retail trade or by moving it abroad.
Phase also known as diversification, shadowing or, internationally as layering. Mainly what is tried to do in this phase is to eliminate the origin of the money previously inserted in the financial system (phase 1) through a large number of financial transactions.
These operations are usually bank transfers between branches, acquisitions of goods with cash to sell them later, loans between shell companies, alleged foreign investments in companies created in Spain and, mainly, electronic transactions to any other financial institution and even offshore companies where there is strong banking secrecy and can be done easily and quickly. All these movements provide anonymity and liquidity.
Last phase in which, after having carried out this series of successive operations, the money returns to the bleaching agent, fulfilling the objective: to convert dirty money into apparently legal money so that it can be used normally in the financial system. For this, the criminal must obtain a legal explanation that proves his wealth.
In this phase, methods such as the creation of businesses that involve a large amount of liquid money (restaurants, casinos, cinemas, etc.) are usually used to insert the money of illegal origin between money acquired in a totally legal way, with the possibility of justifying the origin of these monetary masses through the business created. In addition, other methods are used such as the purchase of real estate and its subsequent sale at a supposedly higher price that allows proving income generated by said sale that has not really occurred.