Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

What are the three stages of money laundering?

1. Placement, Separation, Integration

2. Placement, Layering, Integration

3. Identification, Layering, Integration

4. Integration, Distribution, Reinvestment

The correct answer is: Placement, Layering, Integration

The three stages of money laundering are accurately defined as placement, layering, and integration. In the placement stage, illicit funds are introduced into the financial system, often through methods like cash deposits, purchases of assets, or using shell companies. This stage involves the critical task of distancing the money from its illegal source to begin the laundering process. Layering follows placement and focuses on obscuring the origins of the money. This is achieved through a series of complex financial transactions that make tracing the original source of the funds more challenging. Layering may involve wire transfers, changing currencies, or investing in various financial instruments to further distance the funds from their illicit origins. Finally, the integration phase involves reintroducing the cleaned money into the legitimate economy. At this point, the funds can be utilized without raising suspicion, appearing to have derived from a legitimate source. This stage is crucial as the objective of a money launderer is to make the illegal funds appear legal and available for use. The other options do not accurately capture the recognized stages of money laundering as understood in the context of anti-money laundering frameworks. Identifying, separation, distribution, or reinvestment are not specifically defined stages in the traditional model of money laundering. Understanding these defined stages is essential for