What is money laundering?

Money laundering is primarily defined as the process of concealing the origins of illegally obtained money. This involves a series of transactions and strategies designed to make illegal funds appear legitimate. Criminals engage in money laundering to disguise the original source of their ill-gotten gains, allowing them to use that money without drawing attention to its illegal origins.

The process generally includes three stages: placement, layering, and integration. In the placement stage, the illicit money is introduced into the financial system. Layering involves conducting a series of transactions to obscure the illegal source, and integration allows the laundered money to be reintroduced into the economy seemingly as legitimate funds.

Understanding this definition is crucial because it highlights the reasons behind anti-money laundering laws and the importance of forensic accounting in detecting and preventing such illicit activities. The other options describe activities related to legal processes and income verification, which are not relevant to the definition of money laundering.