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6.5 Money laundering process
The money laundering process usually involves three phases. 

Placement 
– this is the initial disposal of the proceeds of the illegal activity into apparently 
legitimate business activity or property eg 'smurfing' whereby small amounts are banked with a 
number of institutions in order to avoid suspicion and anti-money laundering reporting 
requirements. 

Layering 
– this involves the transfer of monies from business to business or place to place to 
conceal the original source eg under- or overvaluing invoices to disguise the movement of money. 

Integration 
– having been layered, the money has the appearance of legitimate funds, eg an 
individual may use cash to gamble at a casino and receive a cheque for any winnings. This cheque 
can then be banked as proceeds from gambling, regardless of the original source of the money.
For accountants, the most worrying aspect of the law on money laundering relates to the offence of 
'
failing to disclose
'. It is relatively straightforward to identify actual 'knowledge' of money laundering, and 
therefore of the need to disclose it, but the term 'suspicion' of money laundering is not defined. The 
nearest there is to a definition is that suspicion is more than mere speculation but falls short of proof or 
knowledge. It is a question of judgement. 
6.6 The role of the Financial Conduct Authority 
In addition to UK legislation, there are other rules which apply to 
investment firms 
(that is, firms which 
sell financial services or shares). The 
FCA SYSC sourcebook
is one source of rules. 
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PART C: ACCOUNTING AND REPORTING SYSTEMS, CONTROLS AND COMPLIANCE