Why Money Launderers Love $100 Bills

PodcastOdd LotsOliver BulloughSep 7

The discussion examines why $100 bills remain attractive to criminal networks, despite declining cash use, and how the dollar's liquidity, trust, infrastructure, and network effects support its role in global illicit finance. It also traces how cash, crypto, stablecoins, luxury goods, trade paperwork, and VAT fraud move value across borders, including through mechanisms estimated at hundreds of billions or roughly $1 trillion annually. The guest argues that costly anti-money-laundering rules, reporting overload, and unilateral restrictions have done little to disrupt criminals, while central banks retain incentives to preserve large-denomination notes.

Currencies Banking Financial Regulation Stablecoins Crypto Markets Market Liquidity

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Key Takeaways

The $100 bill remains central to global criminal finance because it is widely accepted, liquid, trusted, and supported by established financial infrastructure; about 85% of the $2.4 trillion in U.S. currency circulation is held in $100 notes. The discussion argues that this demand reflects both illicit activity and legitimate or unregulated uses such as poker.

Removing large-denomination banknotes would require international coordination: the guest argues that unilateral U.S. action could shift criminal demand and seigniorage revenue toward euro notes or other jurisdictions without eliminating the criminal economy. Central banks face an incentive to retain the notes because the currency outstanding functions as interest-free government financing.

Cash and crypto serve different roles in sophisticated laundering networks: cash supports street-level transactions, while crypto enables rapid international transfers and purchases. Stablecoins are the main crypto vehicle discussed, and their links to U.S. Treasury holdings may reduce incentives to restrict them.

Trade-based laundering can move value through goods and paperwork rather than direct cash transfers, including misinvoiced shipments, counterfeit products, and triangular exchanges involving luxury goods, Chinese exports, and cocaine. Global Financial Integrity estimates that about $1 trillion a year moves through trade-based laundering, potentially exceeding global cash smuggling.

High-value, compact assets such as Rolexes and handbags provide an alternative cross-border value-transfer channel, particularly where China’s $50,000-per-person annual limit on moving money abroad creates demand for informal mechanisms. The Vancouver model illustrates how casino cash, Chinese gamblers, drug gangs, and cross-border drug sales can form a circular settlement system.

GEO-POLITICS

Banknote Coordination — Eliminating large-denomination banknotes would require international coordination, because unilateral action could shift criminal demand and seigniorage revenue to other jurisdictions. The guest argues that the United States may benefit financially, while Colombia and Mexico bear much of the harm from cartel use of $100 bills.

“So what you need is an international agreement that everyone could get together and say, we're not going to do this…”—

TECHNOLOGY

Stablecoin Laundering — The speakers identify stablecoins as the main cryptocurrency vehicle discussed in connection with money laundering. Crypto allows value to move internationally and instantaneously, while stablecoins' links to U.S. Treasury holdings may reduce incentives to restrict them.

“Specifically, we're really talking about stablecoins when we talk about crypto being big in money laundering.”—

Cash and Crypto — Sophisticated laundering networks, including Russian, Chinese, and Iranian groups, combine cash and crypto. Cash is useful for street-level transactions, while crypto helps move wealth internationally and buy products.

“So the really entrepreneurial money laundering gangs now tend to this is the Russians, the Chinese, the Iranians do this too. They combine cash and crypto…”—

ECONOMY

High-Denomination Cash — About 85% of the $2.4 trillion in U.S. currency circulation is reportedly held in $100 bills, even though Americans use less cash in daily transactions. The speakers suggest that unregulated activities such as poker help explain demand for high-denomination notes.

“And then 1 thing that I remember is Austin actually telling us that 85% of the $2,400,000,000,000 in circulation happens to be $100 bills. Do you remember that?”—

Criminal Economy Estimate — The commonly cited 2% to 5% estimate for the criminal economy originated with Michel Camdessus, then head of the International Monetary Fund, and was based on late-1990s economic estimates. The guest emphasizes that it was a guesstimate.

“That's a really good question…”—

Criminal Economy Share — The guest says the criminal economy is still commonly estimated at 2% to 5% of global GDP, the same range cited in the late 1990s. The guest argues that criminals have continually outmaneuvered regulators.

“So the estimate that tends to be given is, yeah, 2 to 5% is the same estimate that was given in the late nineties, which is it's a kind of…”—

The $100 Bill Puzzle

The hosts introduce money laundering by contrasting declining everyday cash use with record circulation of high-denomination dollar bills, especially $100 notes.

Money Laundering Scale

Oliver Bullough explains that estimates place global money laundering at roughly 2% to 5% of GDP, while acknowledging the figures are uncertain and largely unchanged for decades.

AML Rules Fall Short

The guest argues that costly global anti-money-laundering rules generate enormous reporting burdens and suspicious activity filings without meaningfully stopping criminals.

Trade-Based Laundering

Cash smuggling is substantial, but trade-based laundering through goods, misinvoicing, luxury products, and equipment moves even greater value outside regulated financial institutions.

China’s Cash Networks

Chinese capital controls, cartel cash, casinos, and international brokers combine into a global value-transfer system that substitutes goods and drugs for direct money movement.

Carousel VAT Fraud

Bullough describes carousel fraud, in which shell companies exploit cross-border VAT rules to claim taxes that were never paid, creating a costly jurisdictional-arbitrage scheme.

Why Cash Supply Grows

Despite weak transactional demand, central banks continue issuing record quantities of banknotes, with the unexplained gap suggesting cash serves purposes beyond ordinary domestic spending.

Seigniorage And Big Bills

The guest explains seigniorage as either profitable currency issuance or an interest-free loan to governments, creating incentives for central banks to preserve large notes.

Cash, Crypto, And Dollars

Stablecoins increasingly complement cash by moving value internationally, while the dollar remains criminals’ preferred currency because of its liquidity, trust, acceptance, and infrastructure.

Reforming Financial Crime

Bullough calls for smarter enforcement, fewer unread reports, better-resourced investigators, and international coordination rather than shifting compliance costs onto banks.

The Multi-Leg Economy

The hosts reflect on criminals’ creativity, the spatial efficiency of cash and luxury goods, stablecoin incentives, and the many hidden steps behind seemingly simple transactions.