Placement is the first of the three classical stages of the money laundering process. It refers to the initial introduction of illegally obtained cash or assets into the legitimate financial system. Because criminal proceeds — particularly from drug trafficking, robbery, or extortion — frequently take the form of large amounts of physical cash, the placement stage involves finding a way to deposit or convert that cash without attracting suspicion. Common placement techniques include making multiple small cash deposits across different bank branches or accounts (known as structuring or smurfing), commingling criminal proceeds with the revenues of a cash-intensive legitimate business such as a restaurant or car wash, purchasing easily transportable high-value assets such as jewellery or luxury goods, or using currency exchange bureaux and money service businesses.
Placement is considered the stage at which criminals are most exposed to detection, because the physical movement of large amounts of cash is difficult to conceal entirely and financial institutions are specifically trained and required to flag unusual cash activity. EU AML rules for example place particular emphasis on cash controls — for example, Regulation (EU) 2018/1672 imposes declaration requirements on cash movements of €10,000 or more across EU borders — and the incoming EU AML Regulation (AMLR) introduces an EU-wide cap of €10,000 on cash payments for goods and services. For compliance professionals, large or unusual cash transactions, round-sum deposits just below reporting thresholds, and the use of cash-intensive business types as a cover are all classic placement-stage red flags.
There are also limits for obliged entities when even for one-off trade, the full due diligence is required, aiming to ensure that obliged entity is able to catch possible placement attempts.
