Money Laundering

Money laundering is the process of making illegally obtained money appear legitimate by disguising its criminal origin.

The Three Stages

1. Placement

Introducing illicit cash into the financial system:

• Cash deposits below reporting thresholds (structuring)
• Currency exchanges
• Cash-intensive businesses (restaurants, car washes)
• Gambling (buying chips with cash, cashing out "winnings")

2. Layering

Creating complex transaction trails to obscure the source:

• Multiple transfers between accounts
• Shell companies and nominee owners
• Cross-border transactions
• Trade-based laundering (over/under invoicing)

3. Integration

Returning cleaned funds to the launderer as legitimate income:

• Real estate purchases
• Luxury goods
• Business investments
• Loan repayments

Scale of the Problem

• Estimated 2-5% of global GDP laundered annually
• $800 billion to $2 trillion per year
• Enables drug trafficking, terrorism, corruption, fraud

How KYB Fights Money Laundering

KYB targets laundering at multiple points:

UBO verification: Exposes true parties behind shell structures

Sanctions screening: Blocks known bad actors

PEP screening: Identifies corruption risk

Ongoing monitoring: Detects suspicious patterns

Without knowing who truly controls a business, financial institutions cannot effectively prevent money laundering.

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Related: AML | Shell Company | SAR | CTR