Money laundering usually consists of three main stages as follows:

Placement

(placement), is usually done by depositing money into a Bank to buy valuable assets such as cars, property, and other luxury goods, or breaking up cash into several small parts to avoid detection by the authorities.

  1. Layering (layering), is done by severing the connection of money with its source, by making transfers between accounts, buying or selling assets, and using complex transactions to make it difficult to trace. The goal is to obscure the trail of money so that it is difficult to trace.
  2. Integration (integration), at the final stage after going through the layering process, the money re-enters the formal financial system and looks like money from legal and legitimate activities. At this stage, the money that has been “cleaned” is used to buy assets, property, or official goods, making it difficult for the authorities.
  3. Common Money Laundering Schemes Smurfing

(structuring), which is an activity carried out by dividing large amounts of money into several small transactions so as not to be detected by the authorities.

  1. Smurfing (strukturisasi), yaitu aktivitas yang dilakukan dengan cara membagi uang dalam jumlah besar menjadi beberapa transaksi kecil agar tidak terdeteksi oleh pihak berwenang.
  2. Use of a fictitious company, i.e., using a fake company or shell company to launder money through seemingly legitimate fund flows.
  3. Casinos, perpetrators launder money by gambling in casinos by buying chips with cash, playing a few games, and then exchanging the chips back for checks, making it appear as legitimate winnings.

The above methods are common and widely used by money launderers. Some of the above money laundering schemes can be anticipated by law enforcement, making them irrelevant and posing a high risk of detection by the authorities. As technology advances, financial systems and mechanisms also evolve. Like a double-edged sword, technology can facilitate human activities on the one hand, while also increasing new options for criminals.

Crypto technology, in principle, stems from criticism of the banking system, which is too central, so crypto emerged as a decentralized digital currency platform as an answer to the above gap. The decentralized crypto system is used by criminals as a transaction medium, a place for money laundering, and as a currency for other criminal activities. However, we certainly cannot blame technology; technological advancement is an inevitability that we cannot stop.

Money laundering through crypto platforms has become a major concern for authorities because of its anonymity, difficulty in tracking, and the absence of a central authority overseeing transactions. This money laundering mechanism involves a series of techniques designed to obscure the origin of illegal funds, making them difficult to detect.