Money laundering: what it is and why it matters

Money laundering is the process criminals use to make dirty money look clean. They hide where the money came from so it can be spent or invested without raising red flags. That matters because laundered cash fuels organised crime, corruption and economic harm — and it can drag honest businesses into legal trouble.

This page gives clear, practical steps to spot and respond to money laundering. No jargon, just useful signs and actions you can use today.

How money laundering actually works

Think of it in three simple steps: placement, layering and integration. Placement is getting illicit cash into the system — for example, through a cash-heavy shop or a fake invoice. Layering means moving the money around to hide its origin: wires, shell companies, or complex trades. Integration is when the money comes back as seemingly legitimate funds — a property sale, investments or business profits.

Methods change with technology. Cash businesses and real estate remain common, but crypto platforms now create new routes. The 2025 Bybit breach that exposed $1.1 billion in stolen crypto showed how modern attacks can feed laundering chains fast.

How to spot money laundering

Watch for patterns, not single details. Red flags include: large cash deposits that don’t fit the business, many small transactions to avoid reporting limits, clients who refuse ID or give inconsistent information, and complex ownership that hides beneficiaries. Other signs: sudden changes in payment methods, unexplained high-value purchases like property or luxury cars, and frequent transfers to high-risk countries.

If you run a business, pay attention to customers who use different names, switch bank accounts often, or ask to route payments through third parties. For banks and accountants, odd invoice patterns, round-dollar transfers, and mismatched documents are warning signs.

What to do if you suspect laundering

Don’t confront the customer. Instead: collect records, secure transaction details and report to your country’s Financial Intelligence Unit (FIU) or local authority. Follow local anti-money laundering (AML) rules: keep audit-ready records, run Know Your Customer (KYC) checks, and complete suspicious activity reports where required.

Businesses should train staff to recognise red flags, set transaction limits, and use basic screening tools to check names against sanctions lists. Small changes — like consistent ID checks and simple transaction reviews — make a big difference.

Money laundering affects everyone. Staying aware, keeping good records and reporting suspicious activity helps protect your business and your community. For related news and analysis on financial crime and security across Africa, check our stories tagged under money laundering on Africa Daily Spectrum.