Layering

Layering is the middle phase of the classic three-stage money laundering model: placement, layering, and integration. After dirty money has been introduced into the financial system (placement), the launderer's goal is to put as much distance as possible between the funds and their criminal source. This is achieved by passing money through a complex web of transactions, accounts, jurisdictions, and asset classes.

Layering techniques include transferring funds between dozens of bank accounts in different countries, converting cash into casino chips and back again, buying and selling real estate or luxury goods, using shell companies and trusts to obscure beneficial ownership, converting bank funds to cryptocurrency and then mixing or swapping them, and exploiting complicit professionals — accountants, solicitors, or currency exchange operators.

The more layers added, the harder it becomes for financial investigators to follow the money trail. Anti-money laundering (AML) regulations require financial institutions to monitor for transaction patterns consistent with layering — such as rapid, round-trip fund movements, unusual cross-border transfers, and accounts with no clear economic purpose. Sophisticated pattern-recognition tools help compliance teams flag suspicious layering activity for suspicious activity reports.