According to a comprehensive risk assessment by the United States Treasury Department, cash continues to be the preferred medium for money laundering activities by criminals and transnational criminal organizations, rather than cryptocurrencies. This preference is detailed in three reports examining the mechanisms through which these entities engage in money laundering, terrorist financing, and proliferation financing both domestically and internationally.

The reports emphasize the enduring appeal of cash for illicit financial activities, citing its anonymity, widespread acceptance, and stability as key factors. Despite the growing attention on virtual assets, the use of traditional fiat currencies in money laundering operations significantly outstrips that of digital currencies.

“Due to its anonymity, cash is significantly utilized in money laundering operations. The preference for U.S. currency is notable, given its global acceptance and stability,” the Treasury notes. The reports illustrate that methods such as bulk cash smuggling, where U.S. dollar banknotes are physically moved across borders and into foreign banking institutions, remain prevalent practices for laundering illicit proceeds.

In 2023 alone, the U.S. authorities conducted 1,480 currency and monetary instrument seizures in inbound transactions totaling $18 million, alongside 1,010 outbound seizures amounting to approximately $53 million. The U.S. Customs and Border Protection plays a critical role in these efforts, monitoring entry points across the country.

The transportation of cash associated with domestic crimes via U.S. highways and the increasing utilization of private aircraft for cash smuggling are also highlighted. The latter method is underscored as a particularly efficient way to move large sums of money quickly and across long distances, exploiting less stringent inspections at small airports and along the U.S.-Mexico border.

While acknowledging the role of cryptocurrencies in facilitating illegal activities such as ransomware attacks, scams, drug and human trafficking, the Treasury points out that these instances remain significantly less common compared to traditional money laundering methods. The reports also underscore the challenges in Anti-Money Laundering (AML) compliance within the cryptocurrency sector, citing the $4.3 billion Binance.US settlement as an example of regulatory shortcomings.

Furthermore, decentralized finance (DeFi) protocols and cryptocurrency mixing services are identified as emerging tools that criminals leverage to obscure the origins, destinations, and amounts involved in their transactions, presenting new challenges in the fight against money laundering and illicit financial flows.