The process by which criminals make a large amount of money through several evil activities like drug trafficking and terrorist funding is called money laundering. Later, the money earned by unethical means appears as legal money in the economy. The process of money laundering is done through several stages. There are many ways of money laundering and generally, there are three stages of money laundering.
- Placement where the illegal money enters into the financial system.
- Layering where the funds are separated from the sources and
- Integration stage where the criminal gets the money back as legitimate money.
Few among the plenty of money laundering methods are:
- In order to avoid direct involvement, money launders seek to buy properties using the illegal money and showing another person or family member as the owner.
- To layer and integrate illicit money, criminals use loans and mortgages to cover the laundering criminal activity. Later, criminals borrow their own illegal funds in the form of legal money.
- In the real estate business, money launders manipulate property values by buying and selling real estate at lower or higher prices than market value.
- To generate rental incomes, money launders lease out their properties. The tenet is provided with the illegal funds to cover up the rental payments, sometimes partially and sometimes full.