Money laundering encompasses two main elements:
• the process by which illegally obtained funds are given the appearance of having been
legitimately obtained
• the use of funds (either illegally obtained or legitimate) as an instrument of crime.
Money laundering is a major component of virtually all criminal activity and adversely affects the
Australian community in numerous ways. It perpetuates serious crime by enabling criminals to reinvest
in further crime. It diminishes tax revenue and weakens government control over the economy. Money
laundering also undermines the integrity of SCDO’s financial system and other industry sectors and
has the potential to damage the credibility and reputation of SCDO’s regulatory and law
enforcement agencies.
The money laundering cycle describes the typical process criminals may use to conceal the source of
illicit funds and make funds appear legitimate. It consists of the three stages of placement, layering
and integration:
• Placement – illegal funds or assets are introduced into the formal financial system. Some
common placement techniques include structuring deposits into bank accounts and using cash
to purchase assets.
• Layering – illegal funds or assets are moved, dispersed or disguised to conceal their true origin.
Funds are sometimes layered using a web of complex transactions. Some common layering
techniques include using multiple banks and accounts, having professionals act as
intermediaries and transacting through corporations and trusts.
• Integration – after funds or assets are distanced from their origins, they are made available
for investment in further criminal activity, legitimate business or to purchase high-value assets
and luxury goods. At this stage the illegal money has achieved the appearance of legitimacy.
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