ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
During the audit of Kestrel Ltd, the auditor notes that funds were wired through a chain of shell companies in several jurisdictions, with repeated loans and repayments between them that have no commercial rationale. Which stage of money laundering does this pattern most closely represent?
This is layering. Layering uses complex chains of transfers, shell companies and circular loans to obscure the audit trail between criminal proceeds and their source. It follows placement and precedes integration, when the cleaned funds are returned to the launderer as apparently legitimate wealth.
- ALayering, because the transactions obscure the audit trail between the funds and their sourceCorrect
- BPlacement, because the funds are entering the financial system for the first time
- CIntegration, because the funds are being reinvested in legitimate business assets
- DConcealment, because it is the final stage of the laundering cycle
Explanation
Layering separates illicit proceeds from their origin through complex transactions, often across jurisdictions and entities. Placement concerns initial entry of cash, and integration is where funds re-emerge as apparently legitimate wealth. 'Concealment' is not a named final stage.
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