Barcoding Banknotes: Moving Towards a System Addressing Cash Anonymity in Money Laundering and Terrorist Financing Operations

• Citation: (2024) 37 SACJ 21
• DOI: https://doi.org/10.47348/SACJ/v37/i1a2
• Published date: 21 August 2024
• Pages: 21-47
• Author: Van Vuren, R.J.
• Date: 21 August 2024

Barcoding banknotes: Moving

towards a system addressing cash

anonymity in money laundering

and terrorist nancing operations

RUANN JANSEN VAN VUREN*

ABSTRACT

The anonymity in c ash transactions pr esent a signicant hurdle i n nancial

crime prevention. The centr al issue in addressi ng illicit cashows lies in

the difcult y to distingui sh between licit and ill icit cashows amongst

countless daily cash t ransactions. Addre ssing the issue poses the ch allenge

of identifying a ba lance between an extr eme of total surveil lance, which

can impinge on freedoms and d isrupt cash-dep endant economies, and total

inaction, which allows il licit ows to persist. Between t hese two extremes

lie various middle path s, some more effective than ot hers in strik ing the

required balance. Th rough an examin ation of the historical la ndscape of

money laundering, the evolution of countermea sures, and the exploitation

of gaps by crimina ls, a technologically advanced solution is pr oposed.

In this regard, t he implementation of traceable barcodes on b anknotes

aims to enhance tr ansparency and tr aceability in n ancial dealings. A

barcoded system is an in novative strategy to tackle money launde ring and

terrorist na ncing. This art icle assesses the viabilit y, potential impacts and

challenges of this sys tem in policy formulation and e conomic frameworks,

contributing to the dis course on enhancing ant i-money laundering and

counter-terroris t nancing measures.

1 The core of concealment

1.1 Historical trails: laundromats and liquor

In a world dominated by global economies, nancial systems are both

enablers of growth and potential tools for misuse.1 Organised crime,

deeply engrained within our societies,2 not only threatens individual

* Bcom (Law) LLB (Stell), Paralegal to Advoc ate LJ Van Tonder SC. I am grateful to

Dr DC van der Linde of Ste llenbosch Universit y, and my father, Hannes Jansen va n

Vuren, for their const ant support in my academ ic endeavours.

1 R Hülsse ‘Creating demand for global gover nance: The maki ng of a global money-

laundering problem’ (2007) 21 Glob al Society 155–1 78.

2 A Kruger Organised Crim e and Proceeds of Cr ime Law in South Africa 2ed (2013)

1–4.

https://doi.org/10.47348/SACJ/v37/i1a2

21

(2024) 37 SACJ 21

© Juta and Company (Pty) Ltd

lives and community well-being3 but also erodes the integrity of

nancial infrastruct ure.4 One of the signicant by-products of these

criminal ventures is the vast sums of money that ow from them,5

desperately seeking integration into the legitimate nancial fabric. At

the centre of this nexus bet ween crime and nance stands money

laundering, a multifaceted crime character ised by varying denitions

across juri sdictions.6 T he term ‘money laundering’ is commonly

associated with the infamous A l Capone, in an era when private

washing machines were a luxur y, Capone is said to have used his

chain of laundromats to conceal the proceeds of cr iminal endeavours

such as sex work, gambling, and the sale of illegal alcohol during

Prohibition.7 While the validit y of this story remains subject to debate,

it is a narrative that resonates with the term itself: the process of

taking ‘dirty ’ money, ‘washing’ it, and then reintroducing it as ‘clean’

cu r re nc y.

Criminal act ivities, often referred to as predicate offences, give rise

to the necessity to conceal the origins of the nancial gain back to

the individual s and offences involved.8 Th is is done by laundering the

funds through a process that generally involves three fundamental

stages: placement, layering, and integration.9 In the placement stage,

illicit proceeds are introduced into the nancial system in a way that

avoids raising suspicion as to their illicit nature.10 The layering phase

that follows commonly maneuvers these funds through multiple

nancial channels to dist ance them from their illicit roots and make

3 Kruger op cit (n2) 69–71; N Ryder, S Bourton and D Hall ‘ The United Kingdo m,

organised cri me, and money launderi ng: A critical reec tion’ in D Jasinski,

APhillip s and E Johnston (eds) Organised Crim e, Financial Crime , and Criminal

Justice: Theor etical Concepts and Challenges (2023) 199 at 199–20 0.

4 International Monetar y Fund ‘Financial s ystem abuse, nanc ial crime and money

laundering – Backgro und paper’ (2001) 1 at 8–9. A Clark and P Bur rell A Practitioner ’s

Guide to Interna tional Money Laundering Law and R egulation (2003) 7–13.

5 UNODC Estimating Illicit Financi al Flows Resulting fr om Drug Trafcking and

Other Transnational Organized Crime s (2011) 1 at 127.

6 Section 1 of the Financial Intel ligence Centre Act 38 o f 2001 (FICA) and s 4 of the

Prevention of Organi sed Crime Act 121 of 1998 (POC A) denes money launderi ng

as ‘an activity wh ich has or is likely to have the ef fect of concealing or d isguising

the nature, source , location, disposition of the proceed s of unlawful activit ies or any

interest which anyone ha s in such proceeds’; See also a rt 3.1 of the United Nations

Convention Against I llicit Trafc in Na rcotic Drugs and Psychot ropic Substances

(adopted 20 December 1988, enter ed into force 11 November 1990).

7 J Robinson The Laundrym en: Inside Money L aundering, the World’s Thir d-Largest

Business (1996) 9.

8 L De Koker et al Money Laundering and Terr or Financing: Law and Compliance in

South Africa 4ed (2020) 4.

9 Ibid 4–6.

10 Ibid 5.

22 SACJ . (2024) 1

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