Money Laundering
The process of disguising the illegal origin of criminal proceeds so they appear to come from a legitimate source.
Definition
Money laundering is the process of making the proceeds of crime appear legitimate, and it is conventionally described in three stages. Placement introduces illicit cash into the financial or gambling system; layering moves and disguises the funds through transactions to obscure their origin; and integration returns the now clean-looking money to the criminal as apparently legitimate wealth. Gambling is attractive to launderers because it mixes many small transactions, can convert cash into winnings, and offers products that can be misused to move value. This is why the whole AML regime, from due diligence to reporting, exists to detect and disrupt these stages.
Worked example
A criminal buys gambling credit with illicit cash (placement), plays through a portion across products to muddy the trail (layering), then withdraws the balance as apparent winnings that look like legitimate income (integration).
Why it matters
For learners the placement, layering and integration model is the mental map that makes every AML control make sense. For professionals, mapping observed activity to these stages is how typologies and red flags are reasoned about.