Which of the following is not one of the three stages of money laundering?

• A. Layering
• B. Integration
• C. Identification
• D. Placement

Answer: (C)

Money laundering unfolds in three classic stages: placement, layering, and integration. Placement is about getting illicit funds into the financial system, often through deposits or transactions that raise fewer red flags. Layering involves moving those funds through a maze of transfers, accounts, and jurisdictions to obscure their origin. Integration is when the funds re-enter the economy as seemingly legitimate assets or purchases, making them appear clean.

Identification, or knowing your customer (KYC) and customer due diligence, is a preventive control used by financial institutions to detect and prevent money laundering. It’s not a stage in the laundering process itself, which is why it isn’t one of the three stages. While identifying and verifying customers is essential to anti-money laundering efforts, it stands outside the three-stage sequence of money laundering.