The HVD population is disparate, consisting of retailers and wholesalers of goods who accept cash payments equivalent to 15,000 euro or more. Types of HVD include jewellers, car dealers, art dealers and auctioneers. Cash means notes, coins or travellers’ cheques in any currency.
Cash is the mainstay of much organised criminal activity. For the criminal, it has the obvious advantage of leaving no discernable audit trail and is their most reliable and flexible method of payment. Cash is also a weakness for criminals. Whilst they hold cash they are more at risk of being traced to the predicate offence. Cash seizure powers also mean they are more at risk of having the money taken away by law enforcement.
They will therefore often seek to dispose of cash into high value goods. The objective of the first stage of money laundering, i.e. placement, is to move the criminal cash into the financial system. Money launderers normally want to move funds quickly in order to avoid detection. This is more easily done in large one-off transactions.
The purchase of high value goods, paid for in cash, with good portability represents an attractive area for money launderers. Goods purchased with cash that can easily be sold on (even for a loss) for ‘clean money’ are especially attractive. High value goods are also a useful store of value and may form part of a criminal lifestyle. Goods purchased would generally be luxury items that could be potentially sold on through the black market e.g. jewellery, art, antiques, high performance cars.
Returning high value goods paid for in cash and obtaining a refund by way of a cheque enables the laundering of the ‘dirty money’ by exchanging it for a legitimate retailer’s cheque.
Risk can be indicated by a customer’s behaviour, for example where a customer initially proposes to pay for goods over 15,000 euro value by credit card/cheque and then at the last minute presents cash as the means of payment prior to taking ownership of the goods.