Criminal proceeds are at the centre
Money laundering refers to transactions intended to disguise the unlawful origin of proceeds from crime. The concept involves more than a large or unusual transfer: the source of the funds and efforts to conceal that source are central.
A three-stage framework
FATF’s explanatory framework describes criminal proceeds entering the financial system, their connection to the source being obscured, and their return to the economy with an appearance of legitimacy. These stages are commonly called placement, layering and integration.
The framework helps readers understand financial movements described in the news. It should not be assumed that every case contains these stages in the same order or in an easily identifiable form.
The line between suspicion and evidence
Suspicion about a transaction is a reason to investigate. It does not by itself prove criminal conduct. When reading a report, consider who made the allegation, which documents support it and the stage of any legal proceedings.
FATF also stresses that the hidden nature of these transactions prevents a definitive estimate of the amount laundered worldwide. Large global figures should be read in light of that uncertainty.
Sources & supporting documents
This article is an original summary of the sources listed above. Event dates are distinguished from the publication date.