ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
Orion Ltd receives funds of doubtful origin and quickly wires them through several shell companies in different jurisdictions, then converts part into investment securities, with no commercial reason. An auditor assessing this pattern would identify it primarily as which stage?
This is layering. Moving funds rapidly through several shell companies and across jurisdictions, and switching into securities without commercial rationale, aims to distance the proceeds from their criminal source by creating a complex trail, which distinguishes it from placement and integration.
- APlacement
- BLayeringCorrect
- CIntegration
- DTipping off
Explanation
Layering separates illicit proceeds from their source through multiple complex transactions, such as transfers through shell companies and conversion to other assets. Placement is the initial entry of cash, and integration is the return of apparently clean funds to the economy. Tipping off is an offence, not a stage.
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