How is money laundering best defined?

The best definition of money laundering is filtering money through a series of transactions to hide its illegal origin. This process typically involves three stages: placement, layering, and integration. During placement, illicit funds are introduced into the financial system. Layering involves conducting complex transactions to obscure the source of the money, making it difficult to trace back to illegal activities. Finally, integration allows the laundered money to be reintroduced into the economy, making it appear legitimate.

The other options, while they describe various aspects of financial crime or illegal activity, do not encapsulate the broader and more precise definition of money laundering. For instance, using funds illegally obtained from a fraudulent mortgage transaction emphasizes a specific source of illicit funds but lacks the comprehensive process involved in money laundering. Similarly, purchasing legal financial products with illegally procured funds is a narrower action that would fall under the umbrella of money laundering but does not capture the entire process of concealing illegal origins. Transferring money into offshore accounts to avoid taxes, while potentially related to money laundering, focuses more on tax evasion rather than the overall concept of laundering illicit money.

Thus, the definition that highlights the process of filtering money through transactions to disguise its illegal origins is the most accurate understanding of money laundering.