Money laundering is the process of making illegally-gained proceeds appear legal by concealing or disguising their origin, existence, movement and destination.

The definition of money laundering varies in each country where it is recognized as a crime, but typically, it involves three stages: 

1. Placement: which is the introducing the illicit funds into the financial system
2. Layering: concealing the source of the money through a series of transactions
3. Integration: making the funds appear legitimate

To give an example, one method by which money laundering can occur is through the establishment and operation of a seemingly legitimate business. This front conceals the illicit activities generating illegal income. 

Here, the importance of AML due diligence on the companies you engage with cannot be overstated. It provides an opportunity to determine whether a business is entirely legitimate or potentially be part of a financial crime. AML activities are designed to combat this persistent issue by implementing comprehensive processes, policies, and enforcement mechanisms. These measures include anti-money laundering checks, regulations, and laws that compel businesses to actively monitor the entities they interact with. The aim is to identify and mitigate risks associated with practices such as market manipulation, illegal trading of goods, tax evasion, bribery, securities fraud, and other forms of financial corruption. By adhering to these AML protocols, businesses play a crucial role in maintaining the integrity of the financial system and preventing the concealment of illicit funds.