What happens at the placement stage of money laundering?

Placement is the physical disposal of criminal cash: moving it from a drawer or a suitcase into a bank account, a casino, a business that takes cash, or some other legitimate channel. Until that happens the money cannot be moved electronically, invested or spent on anything large without questions being asked.

It is also the point where the launderer has to deal face to face with an obliged entity that must identify customers, watch for unusual transactions and report suspicions to MOKAS. So placement techniques are all about looking ordinary: keeping amounts small, spreading them across people and places, or hiding the cash inside a business that normally handles cash.

Cyprus law narrows the room further. Since 31 December 2024 anyone trading in goods or providing services, including buying and selling property, may make or receive cash payments of no more than €10,000, whether in one operation or in several that appear to be linked. There are exceptions, for example payments between private individuals and cash paid in at the premises of a bank, e-money institution or payment institution, so the limit does not stop cash being deposited at a bank.

Structuring splits a large amount into several smaller cash deposits, each below the level that would prompt extra checks or a report. A launderer holding €45,000 might pay in €9,000 on five different occasions: at one bank on different days, or at several banks on the same day. No single deposit stands out, but the pattern does.

Smurfing adds people. The cash is divided among several individuals, the 'smurfs', who each make many deposits into many accounts at a number of institutions. Because the depositors seem unrelated, the link between them, the deposits and the accounts is hard to see, and the money is then ready to be layered.

The law answers splitting in two ways. The CDD thresholds for occasional transactions count operations that appear to be linked, and suspicion must be reported to MOKAS whatever the amount. A pattern of deposits kept just below a threshold is itself a classic warning sign that staff should report internally.

Mixing is the oldest: criminal cash is added to the genuine takings of a business that naturally handles a lot of cash, such as a café, a restaurant or a hair salon, and banked as ordinary turnover. Others are carrying cash across a border to pay it in elsewhere, buying foreign currency, repaying loans with criminal cash, and setting up offshore private investment companies to receive and hold assets.

Some techniques use contracts. In the insurance route, the launderer buys a policy with criminal money, then cancels it and asks for a refund, accepting a cancellation penalty as the price of getting a clean payment from an insurer. In the reverse flip, property is bought at a declared price well below its real value and the difference is paid in cash 'under the table'. In a loan-back, the launderer gives the money to an associate, who then 'lends' the same amount back with proper-looking loan or mortgage documents.