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1. Placement – this is when the cash earned from crime is introduced to the financial system while using different techniques to avoid detection.
2. Layering – this is the actual process of separating dirty money from their source. It is accomplished by a series of fast transactions designed to bury the origin of criminal proceeds under a very long paper trail that makes tracing very difficult.
3. Integration – this is when the laundering cycle completes. The money is reintroduced in the economy and can be used freely without the danger of incrimination. The source appears legitimate and raises no suspicion.

During the placement phase, the process is fairly simple. However, this is when criminals are most vulnerable because those involved can get caught with the cash. In contrast, the layering phase requires a lot more sophistication and knowledge of the loopholes in the legal and financial systems. Quite often layering involves international transactions with offshore companies and banks..

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