Certified Fraud Examiner Practice Exam 2025 – All-in-One Guide to Master Your Certification!

In the context of money laundering, 'Layering' specifically refers to the process of obscuring the origins of illegally gained funds. This is the second stage in the money laundering process, which follows the initial placement of illegal funds into the financial system. During layering, the aim is to make the money untraceable by moving it through a complex series of financial transactions. This could include transferring funds between different accounts, using shell companies, or making investments in various financial instruments.

The main goal of layering is to create a disconnect between the money and its illicit source, thereby making it difficult for law enforcement agencies to trace the funds back to criminal activities. This process helps to protect the money from being seized and allows the perpetrators to eventually integrate the 'cleaned' money back into the economy.

In contrast, placing illegal profits into the banking system is part of the initial stage called 'Placement.' Integrating laundered money into the economy refers to the final stage, where the laundered funds are reintroduced into the financial system as legitimate, and executing a series of small transactions to avoid detection relates more to methods of placement rather than the true nature of layering itself.