Money laundering is the process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
There are 3 different distinct categories of money-laundering:
The stage at which money is injected into the financial system.
The transaction stage during which the money is passed through several financial instruments and vehicles to give the appearance that the money is from a legitimate source.
The stage at which the ‘washed’ money is re-introduced to the financial system, and given its legitimacy, it can now be used without the appearance that it was previously from proceeds of crime.
Take note that the process may not follow in order, or utilise the entire 3 stages to complete a money laundering process.