What does the 'placement' stage in money laundering refer to?

The 'placement' stage in money laundering refers specifically to the initial phase where illicit or criminal funds are introduced into the financial system. This stage is critical as it marks the first step in the process of laundering money, allowing the criminal to distance themselves from the source of funds. Typically, this can involve activities such as depositing cash into bank accounts, purchasing assets, or using the funds to buy goods, which serves to obscure the origin of the money.

During this stage, the focus is on circumventing laws that restrict the deposit of cash that may be associated with criminal activity. The intent is to make the funds appear legitimate, facilitating the subsequent stages of layering and integration. It's important to understand that this phase aims not to legalize the funds directly, but rather to inject them into the financial system in a way that minimizes suspicion.