Module 1: What is money laundering? - Certificate in Anti-Money Laundering Fundamentals

What you will learn

Define money laundering in plain words and under Bangladesh law
Describe placement, layering and integration
Recognise common laundering techniques

Definition

Money laundering is processing the proceeds of crime to disguise their illegal origin, so that the money can be used as if it were clean.

Bangladesh law is wider than this everyday definition. Section 2(v) of the Money Laundering Prevention Act, 2012 (MLPA) also covers:

smuggling money or property abroad, even if it was earned legally;
structuring transactions to avoid reporting;
acquiring, possessing or using the proceeds of a predicate offence;
attempting, abetting or conspiring to do any of these.

A conviction for the underlying (predicate) crime is not needed before a person can be prosecuted for money laundering (MLPA s.4(5)).

The three stages

Placement: the cash is put into the financial system, for example by many small deposits or by buying goods.
Layering: the money is moved again and again (between accounts, firms, countries or forms of asset) to break the trail.
Integration: the money comes back looking legitimate, for example as business profit, a property sale or a loan repayment.

The stages can overlap, and not every case shows all three. Staff of reporting organisations see placement most often, because that is where cash meets the system.

Common typologies

Smurfing / structuring: splitting a large sum into many small transactions to stay under limits.
Shell and front companies: firms with no real business used to hold or move money.
Hawala and informal transfers: value moved without passing through the formal banking channel.
Trade-based laundering: over- or under-invoicing of imports and exports.
Cash-intensive businesses: mixing illegal cash with genuine sales.
Virtual assets and mobile money: fast, cross-border or fragmented transfers.

Why it matters

Laundering lets criminals enjoy and reinvest their proceeds, which rewards crime such as corruption, fraud and trafficking. It also damages the integrity of banks and other financial institutions and weakens public trust in the financial system. This is why law, regulators and institutions treat prevention as a duty of every reporting organisation, not only of the police.

Bangladesh lens

The wider Bangladesh definition means a person who moves lawfully earned money abroad in breach of the law can still commit the offence of money laundering. Staff should therefore look at how and why money moves, not only at where it came from.

Illustrative case (fictional): a microfinance client with a small shop repays a large loan in full, in cash, three months after disbursement, and cannot explain where the money came from. The repayment looks like integration of funds of unknown origin. The staff member does not accuse the client, but records the facts and escalates them under the institution's procedure (see Module 6).

The same ideas appear in every sector (all illustrative and fictional): a bank customer whose small shop account suddenly receives large cash deposits; an insurance customer who buys a large policy for cash and cancels it early to receive a cheque; a capital-market client who deposits unexplained cash, buys shares and sells them quickly; a mobile-wallet agent whose wallet receives many small transfers that are cashed out within minutes.

Microfinance: MFI branches are cash-heavy. Cash comes in as instalment collections and member savings deposits and goes out as loan disbursements, usually handled by field staff in villages. Illustrative risks: a client deposits far more in savings than her small business could earn; a loan is repaid early with a lump sum of unexplained cash; a loan is taken in one name but the money goes to someone else (a ghost or nominee borrower).

Key takeaways

Money laundering disguises the origin of criminal proceeds.
Placement, layering, integration are the classic stages.
In Bangladesh, smuggling even lawfully earned money abroad can be laundering.
No conviction for the predicate crime is needed to prosecute laundering.

Practice quiz

Five questions, instant feedback. Not graded for the certificate.

Based on the Money Laundering Prevention Act 2012 (as amended 2015), the Anti-Terrorism Act 2009 and BFIU circulars, as understood on 16 October 2026. Laws and circulars change: always check the latest text on bfiu.org.bd. This course is general education, not legal advice. Cases marked "illustrative" are fictional.