Money laundering is the process of disguising illegally obtained money as legitimate income. Drug trafficking, corruption, tax evasion, fraud — the proceeds from these crimes need to be "cleaned" before criminals can spend them without raising suspicion.
The process typically involves three stages: placement (putting dirty cash into the financial system), layering (moving money through complex transactions to obscure its origin), and integration (re-introducing the now-clean money into the legitimate economy through business investments or luxury purchases).
The UN estimates that $800 billion to $2 trillion is laundered annually — roughly 2-5% of global GDP. Banks are on the front line of prevention, required to implement KYC (Know Your Customer), AML (Anti-Money Laundering) programs, and report suspicious transactions. Non-compliance fines can reach billions of dollars. — roughly 2-5% of global GDP. Banks are on the front line of prevention, required to implement KYC (Know Your Customer), AML (Anti-Money Laundering) programs, and report suspicious transactions. Non-compliance fines can reach billions of dollars.