Life & Health Insurance Practice Exam 2025 - Free Practice Questions and Study Guide

The layering stage of money laundering is characterized by the process of separating illicitly obtained funds from their source through various financial transactions. This often involves the purchase of multiple financial instruments, such as stocks, bonds, or other securities, which can help disguise the origins of the money. By using a complex web of transactions, individuals aim to obscure the trail of the money, making it difficult for authorities to trace back to the original illicit source.

In contrast, the placement stage is when the criminal attempts to introduce the illegal funds into the financial system, while the integration stage involves reintroducing the laundered money back into the economy, where it appears to be legitimate. The term "finalization stage" is not commonly used in the context of money laundering processes compared to the other recognized stages. Thus, understanding that the layering stage focuses on creating complexity through the purchase of various financial instruments reinforces why it is the correct answer.