There are three main steps to successfully laundering money without drawing undesired attention from the authorities. The first is placement. This is the most dangerous stage of the process, as it involves the initial deposit of illicit funds into a legitimate financial institution. The money is usually deposited in cash form into separate bank accounts. Because banks are required to report unusually large deposits, smaller amounts are often deposited incrementally to avoid suspicion.

The second stage of money laundering is layering. By changing the form of the money and making various transactions or purchases, the original source of the funds can be obscured—even if investigators trace the money back several steps. For example, the currency can be converted into foreign currency, used to purchase high-value items such as jewelry, art, or property, or deposited and withdrawn from multiple bank accounts in varying amounts.

The final stage, which must occur before the money appears to be legitimate, is integration. The funds might be deposited into a U.S. bank account from the sale of a high-value item or from the sale of a business. Alternatively, the money can be funneled through a front company, where the launderer may “purchase” goods or services from their own store or invest the money back into the business. Once the funds reach this stage, it becomes exceedingly difficult to convict the individual of a crime due to a lack of clear documentation and the multiple layers of legitimate-looking transactions.