Picture a drug dealer with £1 million in cash under the floor. He cannot buy a house with it: the seller asks where it came from. He cannot bank it: the bank asks the same. The cash is real, and useless until it looks like money that was earned. People call the work of making it look earned money laundering.
Placement: get it in→Layering: move it round→Integration: spend it
It is done in three stages. Placement: get the cash into the system, in amounts small enough not to be asked about, or through a business that takes cash anyway. Layering: move it, between accounts, companies and countries, until nobody can follow the trail. Integration: spend it on something that looks like a normal purchase.
Put the three stages in the order they happen.
Tap them in the order they happen, first to last. Each tap gets a number.
In→Round→Out
Right. In, round, out. The cash has to be inside the system before it can be moved, and moved before a flat bought with it looks like anybody else's flat.
The bankknows the customer
↓→
A suspicious report
↓→
The crime agency870,000 reports a year
The law puts the bank at the door. Before it opens an account a bank must know who you are, and once it is open it must watch how you use it. If something looks wrong it must report it to the National Crime Agency, and must not tell you. About 870,000 such reports were sent in one recent year.
Each card is something a customer does. Is it ordinary, or worth a report?
One card at a time. Tap the pile it belongs to.
Card 1 of 6
A nurse's salary arrives on the 28th every month
A small jeweller pays in £1.5 million in cash in a month
A student spends £40 at a supermarket
A new company receives £2 million from abroad and sends it on the same day
A pensioner withdraws £200 a week
Cash deposits of £9,000 on ten days running, each at a different branch
A nurse's salary arrives on the 28th every month → Ordinary
Not yet. Ordinary. Same sum, same day, from an employer the bank can see. Nothing here needs an explanation.
A small jeweller pays in £1.5 million in cash in a month → Worth a report
Not yet. Worth a report. The question is not the sum but whether a small shop could have sold that much, and in cash.
A student spends £40 at a supermarket → Ordinary
Not yet. Ordinary. A small spend at a shop is what a current account is for; there is no stage of laundering it could be.
A new company receives £2 million from abroad and sends it on the same day → Worth a report
Not yet. Worth a report. Money that arrives and leaves at once through a company with no history looks like layering: the account is a corridor, not a home.
A pensioner withdraws £200 a week → Ordinary
Not yet. Ordinary. Small, regular, and the money is going out to a person who is known. The watchers look for money coming in that cannot be explained.
Cash deposits of £9,000 on ten days running, each at a different branch → Worth a report
Not yet. Worth a report. Splitting one sum into many, each one small enough not to be asked about, is placement with the seams showing.
3Ordinary
vsvs
3Worth a report
Right. Three and three. The bank is not asking whether a sum is big. It is asking whether the money fits the person: the job, the shop, the history.
Picture a jeweller that really sells £2 million of jewellery a year. Move how much cash it pays into the bank and see what the bank should be comparing. Made up to show the shape.
Cash paid in£1 million
Real sales£2 million
Cash paid in, a year: £1 million
Cash paid in £1 million, against sales of £2 million: half its sales, in cash, which fits a jeweller's trade.
Cash paid in£5 million
Real sales£2 million
Cash paid in, a year: £5 million
Cash paid in £5 million, against sales of £2 million: two and a half times its whole sales.
Cash paid in£50 million
Real sales£2 million
Cash paid in, a year: £50 million
Cash paid in £50 million, against sales of £2 million: twenty-five times its sales.
Cash paid in£365 million
Real sales£2 million
Cash paid in, a year: £365 million
Cash paid in £365 million, against sales of £2 million: about 180 times its sales.
What is the bank comparing?
The size of the sum. Big is suspicious.
Not yet. One million pounds at a jeweller selling two million is half its sales, which is fine. The number only means something set beside the trade.
The cash against what the business could really have sold. Money that cannot have been earned is the signal.
Right. £1 million at a jeweller selling £2 million is fine. £50 million is twenty-five years of sales in one. The number means nothing on its own and everything against the trade.
Whether the notes are real.
Not yet. The notes are real. That is the problem: real cash from a crime is exactly what laundering exists to clean.
Move the control.
Paid in£365 million
Of which cash£264 million
The fine£264.80 million
The last frame is close to a real case. From 2012 to 2016 a Bradford jeweller, Fowler Oldfield, paid about £365 million into NatWest, £264 million of it in cash, some in bin bags that tore under the weight. The bank's own staff and systems raised flags. Nobody acted. In 2021 the bank pleaded guilty and was fined £264.8 million.
Tap the stage the jeweller's deposits were.
Tap the part of the picture that answers it.
Placementcash into the bank
↓→
Layeringmoved around
↓→
Integrationspent
Placement
Right. Bin bags of cash going into a bank account is money entering the system. The bank is the door, and the door was open.
Layering
Not yet. Layering is the moving about afterwards. The cash had not got in yet; it was arriving in bags.
Integration
Not yet. Integration is the spending at the end. Nothing was being bought; the cash was being deposited.
A month-old companyabroad
↓→
A flat£800,000, in a week
An estate agent is offered a flat purchase, £800,000, paid by a company set up last month in a country the buyer has never visited, and the buyer wants to complete in a week. From this lesson, which stage, and what must the agent do?
Placement. It is cash going in.
Not yet. Nothing here is cash. The money is already in the system and has been layered through a company; the flat is the thing it comes out as.
Integration, the spend at the end. The agent must check who the buyer really is and may have to report it, without telling the buyer.
Right. Nothing here is cash; the money is already in the system and has been through a company. The flat is what it buys. Estate agents are at the door too.
Nothing. Estate agents are not banks.
Not yet. The law puts estate agents, lawyers and accountants at the door too, because a flat is where layered money comes out. The agent has the same duty to know and to report.
Lesson complete
Dirty money is washed in three stages, and the bank is meant to notice at the first.