Criminals still prefer cash for money laundering

A recent study by Europol has shown that cash remains criminals’ instrument of choice to facilitate money laundering, in spite of the rapidly changing face of criminality and the rise of cybercrime.

A recent study by Europol has shown that cash remains criminals’ instrument of choice to facilitate money laundering, in spite of the rapidly changing face of criminality and the rise of cybercrime.

“Cash is typically involved at placement stage, but also plays a role at both layering and integration phases in the money laundering process. Almost all crime types make use of cash to facilitate money laundering in spite of the fact that not all are readily cash producing criminal businesses,” Europol said in a strategic report on the use of cash by criminal groups as a facilitator for money laundering.

Europol added, “Although not all use of cash is criminal, all criminals use cash at some stage in the money laundering process. This may be because their criminal activities generate cash profits or because cash is used as an instrument to disguise the criminal origin of profits.”

The study said physical cash smuggling remains a prevalent method, and highly conservative estimates based on records received by Europol indicate that from 2012 to end June 2014, more than €3.8bn in cash was detected and/or seized by competent authorities in EU member states.

It said however that the recording and sharing of details pertaining to cash detections is not always centralised at national level, and even less at the international level, making it difficult to assess the scale of the cash smuggling or other related elements such as preferred routes for criminal cash movements.

Europol said in the EU, the use of cash is still the main reason triggering suspicious transaction reports within the financial system, accounting for more than 30% of all reports.
Reports on detections of suspicious physical cash movements represent around one third of all contributions to Europol in the area of money laundering.

“Although the use of cash for payments has experienced a moderate decline in the EU, the demand for high denomination notes not commonly used for payments, such as the €500 note, has been sustained.

“The €500 note alone accounts for over 30% of the value of all banknotes in circulation (€1tn as of end 2014 according to the European Central Bank). This raises questions about the purpose for which they are being used and whether this could be linked to criminal activity, which should be further explored,” the study said.

Europol said that linking cash to criminal activities remains a key challenge for law enforcement.

“The use of cash by criminals remains one of the most significant barriers to successful investigations and prosecution,” says Rob Wainwright, Director of Europol.

He added, “It is a threat that has not received sufficient international attention or legislative solutions. A fragmented enforcement approach at national and international level, and the differing regulatory frameworks across the EU member states, are widely exploited by criminals, who adapt their methods and routes to take advantage of these loopholes.

“Stepping up efforts to increase international cooperation and information exchange and establishing a more harmonised approach among EU member states concerning cash movements within the EU are crucial if we are to tackle these criminal activities,” he said.

Among the recommendations put forward by Europol include the creation of a Europe-wide database for suspicious cross border cash movements, and the extension of the scope of cash control regulations to cover precious metal and stones, freight and mail, and e-money instruments.

It is worth noting that the Commercial Crime Services’ Financial Investigation Bureau is able to offer financial institutions and other businesses an added layer of protection and due diligence by conducting enquiries and investigations into matters associated with money laundering, fraud and trade based money laundering.

FIB’s unique database provides intelligence on the modus operandi and parties involved in suspicious financial transactions which is invaluable for transaction analysis and fraud prevention, money laundering and counter terrorism financing checks. More information about becoming a member can be found at https://www.icc-ccs.org/icc/fib/membership.