The Cash Comeback: How & Why Criminals Are Reverting to Old-School Money Laundering

As regulatory scrutiny on electronic transactions intensifies, criminals are increasingly reverting to cash-based laundering methods. This shift suggests that anti-money laundering (AML) measures on digital payments—such as the FATF Recommendation 16 Travel Rule (R16), the UK's Money Laundering Regulations 2019 (MLR 2019), and Recast EU 2015/847—are effectively disrupting illicit financial flows in the banking system. However, it also highlights a growing blind spot: cash-intensive industries, which continue to provide opportunities for criminals to move illicit funds with minimal oversight.

Industries at the Heart of Cash-Based Money Laundering

Casinos & Gambling

Casinos remain a prime vehicle for money laundering due to high cash turnover. Criminals use techniques like 'chip walking' (buying chips with illicit cash, gambling minimally, and cashing out as winnings) or exploit junket operators in jurisdictions with weak AML controls. While regulatory efforts have tightened in the US, UK, and Australia, casinos in parts of Asia and Eastern Europe remain vulnerable.

Between 2014 and 2021, Star Entertainment one of Australia’s largest casino operators, was found to have inadequate AML controls, allowing individuals with alleged links to criminal activities to launder money through its establishments. Investigations revealed that the company failed to address money laundering risks associated with Macau-based junket operators, misleading investors and regulators. As a result, Star Entertainment faced a $100 million fine and had its Sydney casino license suspended.

Real Estate & Luxury Goods

All-cash real estate purchases, particularly in luxury markets (US, Canada, Dubai, and the UK), enable money launderers to integrate illicit funds. Criminals frequently use shell companies to conceal ownership and bypass beneficial ownership disclosure requirements. Luxury assets such as art, jewellery, and high-end vehicles are also commonly used to move illicit funds.

A striking example occurred in September 2024, when French authorities seized €70 million worth of villas and luxury cars linked to Russian businessmen Ruslan Goryukhin and Mikhail Opengeym. These assets were acquired through companies registered in tax havens like the British Virgin Islands, illustrating how offshore entities allow criminals to obscure the origins of illicit wealth.

Cash-Intensive Businesses

Small businesses—including restaurants, bars, car washes, and beauty salons—are frequently used to co-mingle illicit cash with legitimate earnings. By inflating reported revenue, criminals can successfully integrate dirty money into the formal economy. Due to the volume of cash these businesses handle, tax authorities and regulators struggle to distinguish between real profits and laundered funds.

Between 2011 and 2016, NatWest Bank failed to prevent the laundering of £365 million deposited in cash by a single customer, a small Bradford-based jewellery business. The substantial cash deposits, sometimes reaching £1.8 million daily, were disproportionate to the company's expected turnover. Despite numerous red flags, the bank did not act promptly, leading to a £265 million fine for inadequate AML controls.

Cash Courier Networks

Cash courier networks remain one of the most traditional and difficult-to-detect methods of laundering illicit money. In December 2024, the UK’s National Crime Agency (NCA), in collaboration with international law enforcement, dismantled two major laundering networks: the Smart and TGR groups under Operation Destabalise. These networks laundered billions of dollars for Russian oligarchs, organised crime syndicates, cybercriminals, and drug traffickers.

One of the networks conducted cash handovers at 55 locations across the UK and Channel Islands over four months, laundering funds for at least 22 criminal groups. The operation resulted in 84 arrests and the seizure of over £20 million in cash and cryptocurrencies, demonstrating the ongoing role of physical cash in high-level financial crime.

Trade-Based Money Laundering (TBML) & Construction

TBML enables criminals to move illicit funds under the guise of international trade by over-invoicing, under-invoicing, and misrepresenting shipments. Similarly, construction projects are frequently used to absorb illicit funds, particularly in jurisdictions with weak financial oversight.

In January 2025, India’s Enforcement Directorate (ED) secured a major conviction in a TBML case. The investigation exposed multiple firms involved in illicit foreign exchange transactions, sending substantial sums abroad through manipulated trade invoices. By falsifying import and export values, criminals transferred millions across borders while bypassing banking regulations.

Black Market Peso Exchange (BMPE)

Common in Latin America and the US, the BMPE enables drug cartels and criminal groups to exchange illicit US dollars for pesos through legitimate businesses. These transactions occur within cash-heavy retail industries, making them difficult for regulators to detect.

A high-profile case in February 2019 saw a federal jury in Laredo, Texas, convict six individuals for operating a multi-million dollar BMPE scheme. The defendants laundered proceeds from US drug sales to Mexican traffickers by accepting bulk cash—often referred to as "narco dinero"—and failing to file mandatory transaction reports. This case highlighted how BMPE facilitates the covert transfer of illicit funds across borders while bypassing the traditional banking system.

Is This Proof That Regulations are Working?

The growing reliance on cash-based laundering methods suggests that global AML efforts in digital transactions are proving effective. As regulations such as the FATF R16, UK MLR 2019, and Recast EU 2015/847 make it more difficult for criminals to use traditional banking channels, illicit actors are forced to adopt riskier, less efficient methods. However, significant challenges remain:

• Cash transactions are harder to trace, making it more difficult to disrupt laundering schemes.

• Jurisdictional loopholes allow criminals to move physical cash across borders where AML controls are weaker.

• Bulk cash smuggling is rising, with increased seizures reported in the US and Europe.

Strategies to Combat the Rise of Cash-Based Money Laundering

As criminals increasingly turn to cash-intensive industries to bypass digital AML controls, regulators and financial institutions must adapt their strategies to close gaps in enforcement. Addressing this shift requires a multi-pronged approach, leveraging stricter regulations, advanced technology, and cross-border collaboration to mitigate the risks posed by cash-based laundering.

• Stricter Regulations on High-Value Cash Transactions

One of the most effective ways to curb cash-based money laundering is by imposing limits on large cash transactions and requiring enhanced due diligence (EDD) for high-value purchases.

The EU’s €10,000 cash payment cap under its 6th Anti-Money Laundering Directive (AMLD6) prevents large-scale laundering through cash purchases. Several EU countries, such as France (€1,000 limit) and Italy (€5,000 limit), impose even stricter caps. The UK is considering a similar cap to prevent real estate, luxury goods, and business transactions from being exploited. The US requires businesses to report cash transactions over $10,000 via Form 8300, but there is growing pressure to lower this threshold for high-risk industries. Criminals often structure transactions just below reporting thresholds to avoid detection. Financial institutions must deploy AI-driven pattern analysis to flag customers engaging in suspicious structuring behavior.

• Enhanced Monitoring of Cash-Intensive Businesses

Small cash-only businesses are commonly used as fronts for money laundering. Since these businesses generate significant legitimate cash revenue, criminals can blend illicit funds with legal earnings without raising immediate suspicion. Machine learning can analyse revenue patterns across businesses in the same sector. A barbershop reporting 10x higher daily cash earnings than similar businesses in the area may raise red flags. Regulatory bodies can conduct unexpected cash audits in high-risk sectors to uncover discrepancies between reported revenue and actual transactions. In 2023, the UK’s HMRC launched targeted audits of cash-heavy businesses, resulting in millions in recovered taxes and fines for undeclared income. Governments could require automated reporting of large cash sales from POS systems, making it harder for businesses to under-report cash transactions.

• Greater Transparency in Beneficial Ownership (BO) Registries

Criminals frequently exploit shell companies to conceal the origins of illicit funds. Many jurisdictions allow companies to be registered without disclosing their real owners, making it easy for criminals to launder cash through property purchases, business acquisitions, and investment schemes. The UK’s Economic Crime Act (2022) established the Register of Overseas Entities (ROE), requiring foreign property owners to disclose their ultimate beneficial owners (UBOs). This forced Russian oligarchs and other financial criminals to reveal or forfeit their assets in London. The US Corporate Transparency Act (2024) requires businesses to disclose their UBOs to FinCEN, helping law enforcement track illicit financial networks. The EU’s 5th AML Directive (AMLD5) mandates UBO disclosure for companies operating in the EU, although enforcement varies by country.

Countries with weak corporate transparency laws must close loopholes to prevent criminals from shifting laundering activities to less regulated jurisdictions. Public access to UBO registries should be expanded to allow investigative journalists and civil society groups to assist in uncovering illicit ownership structures.

• Improved Cross-Border Cooperation to Combat Bulk Cash Smuggling

Cash smuggling remains a major challenge, as criminal networks exploit gaps in border security and financial intelligence sharing. Criminals move bulk cash shipments across borders to jurisdictions with weak AML enforcement, where it can be easily integrated into the financial system. Organisations such as the Financial Action Task Force (FATF) and the Egmont Group of FIUs facilitate intelligence sharing between customs agencies, border patrol units, and financial institutions. Airports and border crossings are increasingly deploying AI-driven cash detection scanners, such as the EU-funded CATCH project, which scans luggage and vehicles for undeclared cash. Many smuggling networks convert cash into foreign currencies at exchange bureaus. Regulators must mandate stricter reporting at money service businesses (MSBs) to track suspicious foreign exchange transactions. In 2023, the US Customs & Border Protection seized over $25 million in bulk cash shipments linked to drug cartels along the Mexico-US border. Enhanced intelligence-sharing agreements with Mexican authorities led to the dismantling of several smuggling networks.

• Stronger Oversight of High-Risk Industries

Criminals often convert illicit cash into high-value assets such as real estate, jewellery, artwork, and luxury cars. These assets are difficult to track and can be resold or transferred without triggering AML alerts. The UK’s Economic Crime Act (2022) requires foreign property buyers to disclose their identities, reducing anonymous cash purchases. Following the major failures at Star Entertainment Group, Australia introduced stricter AML rules for casino transactions, increasing KYC requirements for high-roller customers. AI tools are being used to track high-value asset sales, flagging customers who make large purchases with no clear source of wealth. For example, in 2024, French authorities seized €70 million in assets from Russian oligarchs suspected of laundering money through real estate and high-end cars. The investigation was made possible by tighter UBO disclosure laws and increased scrutiny of high-value transactions.

• Targeted Enforcement Against TBML

TBML is one of the most complex money laundering methods, as it involves falsified trade invoices, mispriced goods, and complex supply chains to disguise illicit financial flows. Criminals exploit international trade agreements and free-trade zones to move funds unnoticed. Several governments are exploring blockchain technology to create tamper-proof trade records, preventing invoice manipulation. AI tools can cross-check import/export invoices across multiple jurisdictions, flagging price discrepancies and unusual trade routes whilst banks are being encouraged to integrate trade finance data with transaction monitoring systems to detect suspicious trade payments.

Final Thoughts

The shift back to cash underscores the adaptability of financial criminals in response to digital AML measures. Whilst the UK MLR 2019, the FATF Travel Rule, and Recast EU 2015/847 have made digital transactions safer, cash remains a critical weak point. To prevent cash from becoming the last refuge for illicit finance, regulators and enforcement agencies must continue evolving their strategies, leveraging technology, cross-border cooperation, and stricter regulatory enforcement to close existing loopholes.

Are You Compliant with the UK’s Wire Transfer Regulations?

As regulatory oversight tightens, financial institutions must navigate complex wire transfer compliance requirements to prevent financial crime. The UK’s MLR 2019 and EU 2015/847 impose stringent obligations on payment service providers to ensure transparency and traceability of transactions. Download the White Paper to ensure your institution meets the latest UK wire transfer regulations.