Cash as the mainstay of crime

Cash is king when it comes to crime; it leaves no audit trail and is virtually anonymous. There are three main problems when you hoard cash. Firstly, like any other asset, it will loose value if it is not working for you due to inflationary pressures. Secondly, if someone else discovers you have quantities of cash they might try to take it off you. Finally, someone who has a cash only lifestyle will draw attention to themselves in today’s modern ‘electronic’ finance systems. 

Cash and cash businesses, which are places where cash is expected, causes two main risk areas for money laundering purposes. Firstly, cash businesses can be easily used in tax evasion by simply under declaring their income, an simple example would be to use a third party cheque encashment service to convert a business cheque for services rendered in cash before pocketing the proceeds and not declaring the income.

Secondly, cash from illegitimate sources can be added to other income, tainting all of it. Many businesses have no legitimate income at all. Recent types of business for this have been;

  • Retail such as mobile phone shops, corner shops and travel agents
  • Beauty outlets such as nail and tanning studios
  • Leisure and lifestyle businesses such as taxi firms, pubs, clubs, restaurants and fast food outlets

The examples above are places where significant amount of cash in small denominations are expected.

The UK has no border controls on cash movements; however, anyone bringing in to the UK over £1,000 should make a formal declaration upon entry. Moving between jurisdictions is a major tool in the armoury of the money launderer. The following fact highlights the risks associated with this.

‘Every man, woman and child who comes into or back to the UK via Spain, whether that was for holiday, business or other reasons repatriates £350 of sterling on average each and every time’.

This highlights the ease of cash movements for the criminal, crossing jurisdictions. Cash, though is becoming riskier for the criminal, the same £1,000 limit is used in law to allow law enforcement the right to seize cash where they suspect it may have originated from crime. The criminal organisation is more likely to spread its risk concerning cash utilising a number of different methods including money transmission services and business banking services.