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

In the context of money laundering, "layering" is a critical step that involves complicating the audit trail of illicit funds in order to obscure their origins. This process typically follows the initial placement of illegal funds, where the goal is to create a series of financial transactions that make it difficult for authorities to trace the money back to its criminal source.

Layering may involve moving money through various accounts, financial institutions, or even across international borders, using tactics such as transferring funds between different banks, converting cash into financial instruments, or investing in assets. By doing so, the individual or group can effectively distance the illicit funds from their original source, thereby reducing the risk of detection by law enforcement.

The other options do not accurately characterize layering. The initial placement of illegal funds pertains to the first step in money laundering, while integrating funds back into the economy represents the final stage of the money laundering process, where the cleaned money is reintroduced into legitimate financial systems. Consequently, the selection of the option related to complicating the audit trail aligns correctly with the established definition of layering in money laundering.