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Layering is a crucial phase in the money laundering process that involves the separation of illicit funds from their original sources. The primary goal of layering is to obscure the trail of the illicit funds, which makes it exceedingly difficult for law enforcement and financial institutions to trace the source of the money.

This phase employs complex and often convoluted transactions, such as transferring money through various accounts, converting it to different currencies, or using multiple financial institutions. Each of these steps adds a layer that further disguises the origins of the funds, thereby reducing the likelihood of detection. The goal is to create such a complex web of transactions that identifying or tracing the movements back to the original illegal activity becomes nearly impossible.

By making the financial trail more challenging to follow, layering effectively protects the money from investigations, allowing the launderers to use it without raising suspicion. This is why it is a vital tactic in the money laundering process.