2️⃣ Layering Stage

What It Is:

Layering involves complex financial transactions designed to obscure the origin of funds.

Criminals may:

• Transfer money across multiple accounts

• Use offshore companies

• Convert funds into crypto assets

• Trade high-value goods

Real Example:

In the Panama Papers investigation, numerous shell companies were used globally to hide beneficial ownership and move funds across jurisdictions, making it difficult to trace the true source of wealth.

Another example: Funds are transferred from a local bank account to an offshore account in a tax haven, then used to purchase luxury assets under a different company name.

Red Flags:

• Complex ownership structures

• Rapid international transfers

• Transactions lacking clear economic purpose

3️⃣ Integration Stage

What It Is:

Integration is when the laundered money re-enters the economy appearing legitimate.

At this stage, funds may be used for:

• Real estate purchases

• Investments

• Luxury assets

• Business expansion

Real Example:

In the 1MDB scandal, misappropriated funds were allegedly used to purchase luxury real estate, artwork, and finance the Hollywood film The Wolf of Wall Street, integrating illicit funds into legitimate sectors.

Another example: A criminal invests layered funds into a construction company and later sells properties, showing profits as lawful business income.

Red Flags:

• High-value asset purchases inconsistent with profile

• Use of complex financing arrangements

• Investments without logical business rationale