The ongoing money laundering risk posed by cash, and what to do about it

You will have seen that someone recently tried to purchase $100 million of property in New Zealand – with cash.  Cash is still the most efficient way to launder money. It is less traceable than Bitcoin, much more widely accepted than precious stones, and less volatile than property. As a money laundering vehicle, cash also benefits from its anonymity, immediacy of value, low transactions costs and the ability to be carried and stored anywhere.  As a result, authorities are constantly trying deter the use of cash by financial institutions and their customers. Have they now found a way to?


Peter Sanders, of the Harvard Kennedy School, supports the growing international movement to abolish high value cash notes.  Getting rid of larger value notes would make it physically harder to carry and transfer big amounts of money and therefore harder for money launderers and terrorists to move funds around the world anonymously.  Moves have already taken place in Canada and Singapore where larger value notes ($1,000 and $10,000 respectively) have been taken out of circulation.


Countries will need to work together to reduce the money laundering threat of cash. With an increasingly global economy, cash can easily be transferred to a different currency or carried over borders. It’s such a hot topic that presidential candidate Bernie Sanders is calling for the US to join Canada and Singapore in abolishing larger value notes. The 500 euro, 100 US dollar and 50 pound notes are tipped to go next; could the 100 NZD note follow suit?


Compared to most other developed nations, New Zealand has the ability to be an almost cashless financial system.  Eftpos and credit cards are accepted almost universally, with Smartphone-supported payment apps rising in popularity. Despite this, there is more cash in circulation than ever before: the Reserve Bank reports there is as much as $5 billion in circulation.  Offering electronic alternatives to cash has clearly not decreased the perceived necessity of cash. Perhaps getting rid of the $100 note will?


While there would inevitably be some downsides to doing away with cash, the advantages to combatting money laundering in New Zealand outweigh them. So what is stopping the New Zealand government from getting rid of the $100 note? It’s up to the policy makers to make the next move.