Dirty Money in Plain Sight: The Real Risk of Cash-Rich Businesses

What Do Nail Bars, Car Washes, and Takeaways Have in Common?

They may seem mundane, but these businesses share a key feature that makes them attractive to criminals: they're cash-rich businesses - dealing heavily in cash.

In anti-money laundering (AML) compliance, cash-intensive businesses are recognised as high-risk typologies for placement — the first stage of money laundering. And while law firms are usually targeted later in the process, the presence of these businesses in a transaction should raise immediate questions.

Why Cash-Rich Businesses Are So Useful to Criminals

When criminals acquire large volumes of cash — often from drug dealing, fraud, or organised crime — they need a way to get it into the banking system without raising suspicion. That’s where cash-heavy operations come in.

Businesses like:

• Nail bars

• Barber shops

• Hand car washes

• Takeaways and kebab shops

• Vape and candy stores

• Market stalls and discount retailers

These are easy to set up, rarely questioned, and don’t always maintain detailed records of customer transactions. This makes them ideal vehicles for ‘washing’ cash and making it appear legitimate.

How It Works: A Simple Typology

Let’s say a criminal owns a nail bar. They don’t need to actually perform services — they simply inflate the number of daily customers and bank the illicit cash as though it were legitimate income. On paper, it looks like a thriving business.

Once in the system, that money can be:

• Used to purchase property

• Invested in other businesses

• Transferred internationally

• Disguised further via legal structures

At this point, the criminal may instruct a solicitor to assist with a legal transaction — and that’s where the law firm becomes part of the laundering process, often without knowing it.

Why Law Firms Need to Pay Attention

While law firms aren’t usually involved in the placement phase, they’re frequently drawn in once the money has been "cleaned" through businesses like these. The client may appear legitimate, presenting as a self-employed business owner with a healthy income.

This is why knowing your client — and understanding the underlying source of their wealth — is critical.

Ask yourself:

• Does the volume of income make sense for the type of business?

• Is the business in a sector known to be targeted by money launderers?

• Are there inconsistencies in the client’s explanation of how the funds were earned?

What Does a Risk-Based Approach Look Like Here?

These clients aren’t automatically suspicious. But they do require enhanced scrutiny, particularly if:

• The funds are being used in a high-value transaction (e.g. property or shares)

• There are multiple businesses or entities with unclear ownership

• The client is vague or resistant when asked about their income

Your AML policy should flag cash-intensive businesses as higher risk, triggering additional questions and, where appropriate, enhanced due diligence.

Final Thoughts

Not every nail bar is a front. But every law firm needs to be aware that criminals frequently use these types of businesses to disguise the source of illicit funds. They are not rare — they’re hiding in plain sight.

By being alert to this typology, your firm is better equipped to detect suspicious activity and avoid becoming an unwitting part of a criminal enterprise.

Need help identifying high-risk clients before it’s too late?

AML Sorted helps law firms across Australia spot hidden red flags and build stronger compliance systems. Talk to us today.