Predicate crime
The underlying offense that generates illicit proceeds. Fraud, corruption, and trafficking can be examples. Money laundering then conceals the origin or ownership of that value.
TRACK A / MODULE 01
Money laundering
& financial crime.
Understand how illicit value is concealed, how related financial crimes differ, and how an analyst reasons from a suspicious pattern to a proportionate next step.
Follow the value, then ask what changed.
Money laundering is the process of making proceeds of crime appear to have a legitimate origin. The classic teaching model has three stages: placement, layering, and integration.
01
Placement
Illicit value first enters a financial channel. The channel might be cash deposits, a business, or another product. The point is exposure to the financial system.
02
Layering
Transactions, transfers, or structures make the trail harder to follow. Complexity may obscure source, ownership, or purpose.
03
Integration
Value reappears in a form that seems legitimate, such as a business investment or property purchase.
Use the model as a lens. Real cases do not always move neatly through all three stages. A transaction can serve more than one purpose, and ordinary activity can resemble a red flag without being criminal.
Trace a suspicious flow.
Explore each point. The picture is a simplified hypothetical case; none of its elements alone proves money laundering.
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SELECT A POINT
Start with what you can substantiate.
Explore the four points to see what each represents and what an analyst would need to verify.
Diagram in text
- Proceeds: Value originates from a predicate crime. Establish what is known about source of funds.
- Placement: Cash is mixed with business revenue. Compare deposits with the business profile and expected activity.
- Layering: Transfers among linked entities can obscure the trail. Identify counterparties, ownership, and commercial purpose.
- Integration: Value funds a property purchase. Trace the source and assess whether the transaction fits the customer's profile.
A plausible explanation is a starting point.
HYPOTHETICAL CASE
A small restaurant that normally deposits modest weekly cash begins making much larger deposits. The owner says a local event increased sales. Within two days, much of the money is wired to a newly formed company that appears to share an address with the owner's relative.
What should the analyst do first?
Check whether the activity fits the restaurant's normal pattern and the event explanation. Review the transfer's purpose, the recipient's ownership, and available records. Escalate according to the institution's procedure if concerns remain. Do not treat the explanation as proof of legitimacy or file a report solely because the amount is large.
What facts would strengthen or weaken the concern?
Potentially reassuring: verifiable event records, sales data matching the cash increase, a documented commercial relationship, and a clear invoice or contract for the transfer.
Potentially concerning: deposits inconsistent with capacity or records, round-number transfers without a business purpose, contradictory explanations, or concealed ownership.
The correct operational response depends on the institution's procedures and applicable law. A red flag triggers inquiry; it is not an automatic verdict.
Test your judgment.
Five original questions. Select one answer for each, then review the reasoning. Your result is stored only in this browser.
Where this lesson comes from
Original explanations and scenarios based on ACAMS Prep Guide, AdviseCube Consulting, Module 1, PDF pages 14–21. The source is third-party preparatory material. The 2021 sample-question PDF informed the broad multiple-choice format only; no questions were copied.
This module covers general concepts. It does not state current exam requirements or give jurisdiction-specific reporting instructions.
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