{"id":2588,"date":"2021-01-10T10:41:15","date_gmt":"2021-01-10T10:41:15","guid":{"rendered":"https:\/\/blog.kyc2020.com\/?p=2588"},"modified":"2023-07-24T12:24:01","modified_gmt":"2023-07-24T12:24:01","slug":"layering-in-the-fight-against-money-laundering","status":"publish","type":"post","link":"https:\/\/www.kyc2020.com\/blog\/layering-in-the-fight-against-money-laundering\/","title":{"rendered":"Identifying “layering” in the fight against money laundering"},"content":{"rendered":"

Many criminal activities generate substantial volumes of cash that require money laundering and layering to avoid detection. These can include drug trafficking, arms dealing, terrorist activities, theft rings, and even human trafficking.<\/span><\/p>\n

The\u00a0<\/span>anti-money laundering regulations and controls<\/span><\/a>\u00a0are in place to identify these activities and alert financial institutions. Reporting red-flags is critical to preventing and reducing these criminal activities, and ultimately stop the source of funds for criminals.<\/span><\/p>\n

Criminals use “layering” to hide their funds. They move money in-between accounts and companies. The more layers, the harder it is for the crime divisions to track the source of funds.<\/span><\/p>\n

Layering allows the criminal to remove themselves from the source, and each transaction helps add another layer of the legitimacy to the funds.<\/span><\/p>\n

Placement of the funds<\/span><\/h4>\n

The first step in the layering process is called “placement.” This happens after the criminals have illegally acquired the funds from their activities. The most common way criminals do this is by moving money through a legitimate business often owned by the criminals or their families. This initial funneling of funds usually occurs through cash-heavy operations and companies like casinos.<\/span><\/p>\n

The aim is to manage large volumes of smaller transactions that do not trigger deposit alerts at the banks. These reporting thresholds are common knowledge, and the criminals ensure that their transactions are always below these threshold alerts.<\/span><\/p>\n

Moving money from these companies to suppliers and other criminal associates via false invoices and payments is standard practice.<\/span><\/p>\n

This first layer of money laundering is only the beginning. Criminals add many more layers to reduce traceable funds.<\/span><\/p>\n

How to identify money laundering activity<\/span><\/h4>\n

\u00a0Reg flags for layering by criminal organizations include:<\/span><\/p>\n