This is the riskiest stage of the money-laundering process. Large cash deposits and frequent suspicious deposits are required to be reported to government entities such as FINTRAC and FinCEN. The objective is to place the cash into foreign or domestic bank accounts without raising red flags. To make the dirty money appear to be clean, deposits are made into domestic banks by splitting the large amount into smaller amounts and making multiple deposits below reporting limits to avoid detection. This is known as smurfing or structuring. Often, currency exchange businesses are used for these smaller amounts and to obtain alternative currencies for deposit.

For deposit to foreign entities, the cash needs to be smuggled out of the country. Funds are converted to large denominations to reduce the bulk. Purchasing diamonds and other jewels or precious metals by converting the cash can also facilitate the smuggling. Electronic transfers and other payment methods, such as gift cards, are tools that can be used in the placement stage. Additional placement methods include:

• Use of insurance products such as immediate or deferred annuities.
  
• Use of investment-related transactions such as purchases of securities.
  
• Use of nonbank financial services such as wire transfer companies and currency exchange entities.

The layering stage is the most complex of all the stages; this is where the origin of the money is being made difficult to trace. A number of transactions or layers need to be put between the original sources of the funds before they are brought back into the legal economy. Funds might be moved to foreign countries that usually have strong bank secrecy laws, moved into accounts in the name of others who are nominees, or moved to accounts held by offshore corporations where the beneficial ownership is hidden and the funds can be withdrawn and redeposited to a number of other accounts.

Other layering tools and techniques include:

• Bank secrecy laws
  
• Offshore banks
  
• Tax havens
  
• Shell corporations
  
• Trusts
  
• Intermediaries
  
• Walking accounts

Walking accounts are frequently used as they are very effective as a layering tool. An account is opened in one foreign jurisdiction where funds are deposited. The account is arranged so that all deposited funds are immediately transferred to another account, usually in another jurisdiction. The first bank is instructed to notify the second bank if any inquiries to the account are made. The second bank then has instructions to transfer the funds to a third bank. This provides the criminal with additional protection from investigation and seizure by law-enforcement agencies.