Layering (AML Stage)

Layering is the second stage of money laundering where criminals obscure the origin of illicit funds through a sequence of complex transactions. Techniques include rapid transfers between accounts and jurisdictions, use of shell or front companies, trade misinvoicing, conversion into crypto or commodities, and funneling via money mules.The objective is to break audit trails and complicate attribution. Effective controls combine real-time monitoring (velocity, jurisdiction risk), graph analytics to reveal circular flows and hubs, and red-flag scenarios aligned to current typologies. Institutions strengthen interdiction by linking alerts to case management, enriching with KYC/KYB/UBO context, and escalating to EDD where warranted. Clear SAR/STR narratives should reconstruct timelines, beneficiaries, and rationale for suspicion.Layering is adaptive; programs must review scenarios against emerging channels (instant payments, cross-border fintech corridors) and tune thresholds to reduce false negatives while keeping alert volumes manageable.