The money laundering process can be broken down into three stages, which often overlap:

Placement — This is the physical disposal of criminal proceeds. In most cases, the proceeds normally take the form of cash which the criminal will attempt to place into the financial system. Placement can be achieved in a variety of ways and it is only limited by the criminal's own ingenuity. Money launderers are employing increasingly sophisticated techniques.

Layering — This is the separation of criminal proceeds from their source by the creation of layers of transactions designed to disguise the audit trail and provide the appearance of legitimacy. Again, this can be achieved in a variety of ways and it is the primary stage at which insurers can get inadvertently involved in money laundering.

Integration — Providing the layering process has been successful, integration places the criminal proceeds back into the economy in such a way that they appear to be legitimate funds or assets.

• Placement: Collection of dirty money
• Layering: Dirty money integrates into financial systems
• Integration: 1) Transfer to bank account of "X," 2) Wire transfer, 3) Off-shore bank loan to "Y," 4) Payment by "Y" of false inovice to "X"
  
  • Purchase of luxury assets
  • Financial/commercial investments