Three Phases of Money Laundering

Now, if you’re like me… mention money laundering and everything seems to go fuzzy.  But for Integra Systems’ employees… let’s just say they sit forward in their chairs a little bit more.

There are three distinct phases of money laundering, according to the Advancing Financial Crime Professionals Worldwide.  Here they are, in perfect money laundering order:

Placement Phase:  This is the actual “physical” disposal of the cash or other assets derived from the criminal activity.   This in, in fact, the most critical and likely time when a criminal will be caught due to the fact that placing large amounts of cash into the system will raise suspicions of officials.  An example of this would be smuggling a briefcase full of money into another country.

Layering Phase:  Separating the illicit funds from the original criminal source through layers of financial transactions intending on concealing the original origin.  An example of layering could be the movement of funds electronically from country to country and then separating them into investments in overseas financial markets.  The money would be moved frequently to escape exposure and the launderers would use delays in court or police collaboration to their benefit.

Integration Phase:  Trying to make the funds appear to be legitimate through re-entering the wealth into the economy in what appears to be a normal business or personal transaction.  (This is when the original criminal has “his money” returned through what seems to be valid sources.)  The funds now appear to be “clean” for example:  purchasing assets, art, jewelry or expensive vehicles are ways the criminal can enjoy their funds without drawing notice.

And that—is the simplest way to explain the three phases of money laundering.

 

3 tips to remain BSA compliant

Remaining compliant can be as complicated as understanding the BCS Bowl system. To understand the bowl games, read ESPN. To understand how to stay BSA compliant, keep up with these three sources.

  1. Keep updated with Fincen’s constantly changing regulations by visiting: http://www.fincen.gov/statutes_regs/bsa/index.html or their FAQ’s at http://www.fincen.gov/statutes_regs/bsa/bsa_faqs.html
  2. Update yourself on the Bank Supervision Process by reading: http://www.occ.gov/publications/publications-by-type/comptrollers-handbook/bsp-2.pdf
  3. Use a BSA compliance system that has extensive experience in regulatory compliance, lending, operations, and financial reporting to help manage your BSA and AML programs in order to prevent financial loss at your financial institution with ease.  Many of these systems will be able to identify high-risk applicants, prevent loss, reduce cost, eliminate paper-based forms, report for auditing and exception purposes while integrating into your own core banking system.  www.integrasystems.net

The Bank Secrecy Act can be complicated, but you still have to keep your BSA program compliant.