Cash-Intensive Business

🔹 Definition

A Cash-Intensive Business (CIB) is a type of enterprise that conducts a large volume of transactions in physical cash as part of its normal operations. Examples include retail stores, restaurants, bars, car washes, salons, convenience shops, and gaming establishments. Because of their reliance on cash, these businesses are often considered higher risk for money laundering and tax evasion, and they receive enhanced scrutiny from financial institutions and regulators under AML/CFT frameworks.

🔹 Frequently Asked Questions (FAQs)

Q1: Why are cash-intensive businesses considered high-risk?

• Cash is anonymous and hard to trace, making it a preferred tool for laundering illegal funds
• It’s easier to commingle illicit proceeds with legitimate revenue
• Such businesses can be used to justify large cash deposits or withdrawals
• Often involved in underreporting of income or tax avoidance
• Criminal networks may use CIBs as front companies to clean money

Q2: What are common examples of cash-intensive businesses?

• Restaurants, cafés, and food courts
• Nightclubs, bars, massage parlors
• Retail stores, especially convenience shops
• Vending machine operators, car washes, laundromats
• Casinos or gaming lounges
• Travel agencies, foreign exchange houses

Q3: How do financial institutions assess the risk of a CIB?

• During onboarding, institutions will assess:
  • Business model and ownership structure
  • Expected volume of cash deposits
  • Location and industry type
  • Source of funds and customer base
• Enhanced Due Diligence (EDD) may be required
• Banks often apply lower transaction thresholds for monitoring
• May request receipts, sales records, or tax filings for justification

Q4: What are red flags related to cash-intensive businesses?

• Large, frequent cash deposits inconsistent with stated turnover
• Structuring (smurfing) to avoid currency transaction reporting
• Refusal to provide valid sales documentation or audited records
• Use of nominee owners or shell entities
• Cash deposits made from multiple distant branches or ATMs

Q5: How can CIBs demonstrate legitimacy to banks and regulators?

• Maintain accurate and verifiable accounting records
• Provide point-of-sale (POS) data and tax filings when requested
• Avoid excessive cash deposits without clear business justification
• Cooperate with periodic reviews or KYC refreshes
• Establish transparent ownership and UBO documentation