Money Laundering Three Stage Process

The money laundering three stage process is the model everyone is taught, and it is worth knowing that it simplifies considerably.

Real laundering frequently does not follow the sequence. There may be no placement stage at all where the predicate offence generates funds already inside the banking system, as with fraud, tax evasion or cybercrime. Stages may run simultaneously, or repeat, or reverse. The same funds may pass through several jurisdictions and re-enter the process.

Why this matters practically is that staff trained only on the classic model look for cash. A great deal of modern laundering involves no physical cash at any point.

Use the model to explain the purpose. Do not use it as a checklist of what to look for, because the pattern in front of you may fit none of the three.

AUSTRAC publishes guidance for reporting entities. This is general information rather than legal advice, and obligations vary by state and territory.

See Sentrient’s AML/CTF course and workplace compliance courses.