Journalist Oliver Bullough, author of "Everybody Loves Our Dollars: How Money Laundering Won," discussed the paradoxical increase in physical cash, particularly $100 bills, despite declining everyday cash use. He noted that 85% of the $2.4 trillion in circulation consists of $100 bills, with a significant portion used by criminal enterprises for money laundering. The global scale of money laundering is estimated to be between $2 trillion and $5 trillion annually, representing 2% to 5% of global GDP.
Bullough highlighted that while much attention is given to money laundering through regulated financial institutions, such as the $130 billion moved by Danske Bank, cash smuggling and trade-based money laundering dwarf these figures. Global cash smuggling is estimated to be in the hundreds of billions annually. Trade-based money laundering, which involves misinvoicing goods or converting illicit funds into physical items, is even larger, potentially reaching $1 trillion a year according to Global Financial Integrity.
A key method for criminals to balance their books and move value across borders is by exporting high-value physical goods. For instance, Mexican cartels involved in drug trafficking in the United States export items like John Deere tractors back to Mexico to offset the drug proceeds. Similarly, European luxury goods such as Gucci handbags and Burberry items are used to move value from Europe to China, often in exchange for illicit goods or drugs. This approach allows criminals to move significant wealth without relying on bank transfers or triggering customs declarations, as a $1 million watch can be transported across borders without scrutiny, unlike cash exceeding $10,000.
