Module 1: AML/CFT Fundamentals

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Module 1

AML/CFT Fundamentals

What money laundering and terrorist financing are, the 3 stages of ML, and why this matters for programs and accountability.

Learning goals

  • Define money laundering (ML) and terrorist financing (TF) clearly.
  • Recognize the three ML stages: placement, layering, integration.
  • Understand consequences and individual/board accountability.

At a glance

  • Time: 10–15 minutes
  • Format: short explainer + 7-question quiz
  • Pass mark: 80% (recommended)

Lesson

What is Money Laundering?

ML is the process of concealing the illicit origin of criminal proceeds so they appear legitimate and usable in the formal economy.

The Three Stages

  • Placement: introducing illicit funds into the financial system (e.g., cash deposits, cash-intensive businesses).
  • Layering: distancing funds from their source via multiple transactions/transfers to obscure audit trails.
  • Integration: reintroducing funds as apparently clean (e.g., investments, luxury purchases, loans repaid with laundered funds).

Terrorist Financing (TF)

TF concerns collecting or moving funds to support terrorist acts or organizations. Unlike ML, TF funds can be from legal or illegal sources; intent and destination are key.

Why It Matters: Consequences & Accountability

  • Legal, regulatory, and reputational risk; financial penalties; business restrictions.
  • Boards/senior management and compliance officers can face personal accountability for program failures.
  • Risk-based approach (RBA) focuses effort on higher risks, tailoring controls proportionately.

Module Quiz

Score 80% to proceed (recommended). Instant feedback is enabled.


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