Layering

Once criminal money has entered the system, layering puts distance between it and its source. Common methods include rapid transfers between accounts in different countries, moving funds through shell companies, buying and selling assets, loans that are repaid with the same money, and conversion between currencies or cryptocurrencies. Each step adds complexity, and using several jurisdictions makes investigation slower because evidence sits under different laws. The transactions often serve no clear business purpose. Their only job is to obscure the origin. Banks look for sequences that move money in and out quickly, round amounts, transfers with no visible commercial reason, and accounts where balances barely change. In market abuse, 'layering' means placing orders to mislead other traders, which is a different matter. Investigators facing a long chain across borders need records from each hop, so layering is the stage that is hardest to unwind and where quick information sharing between countries pays off.

A fraudster has 300,000 in a local account. In one week he transfers it to a company in a second country, which splits it among four firms in a third. Part then goes to a crypto exchange and the rest is converted into another currency. None of these steps has an invoice or contract. The first bank flags the chain of transfers as unusual.