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The global shift toward digital payments is often framed as a movement that brings speed, convenience, and greater security. For those working in anti-money laundering (AML) and financial crime prevention, digital transactions create data trails that can be monitored, analysed, and audited.
How does a cashless society impact financial crime?
Sweden is one of the countries that is paving the way for a cashless society. According to Riksbank’s 2024 Payments Report, just 10% of in‑store purchases in Sweden were made in cash during 2023, confirming that around 90% of transactions are digital. This digitisation has helped make payments fast, convenient and cheap.
On one hand, a knock-on effect of innovation and change in the way we pay, is new avenues for financial crime. According to financial crime statistics, cases have more than doubled since 2019, in tandem with the adoption of digitisation. Criminals have adapted by exploiting alternative methods such as currency exchanges and informal value transfer systems. In the absence of banks willing to handle large volumes of physical cash, currency exchangers have become a preferred channel for criminals to exchange small denominations into large ones, or convert Swedish kronor into foreign currencies for cross-border transfers.
There’s no denying that digital payments offer significant advantages for criminals and financial crime fighters alike. Unlike cash, digital payments leave a trail. This makes it easier to detect suspicious patterns, monitor high-risk behaviour, and respond to emerging threats in real-time.
Efforts to combat crime must be balanced with the need to maintain a payment system that remains accessible to everyone. To support the fight against money laundering and other illicit activities, the Riksdag and the Government should consider implementing a general cap on cash purchases, in line with new EU regulation, similar to measures already adopted in many other EU nations.
Do we still need cash?
While cash still plays a role in many economies, the global shift toward digital payments has proven to be a powerful tool for inclusion. In countries like India, the Unified Payments Interface (UPI) has revolutionised access by enabling instant, low-cost payments across the entire population, including rural and unbanked communities. Similarly, Brazil’s Pix system has rapidly onboarded millions who previously had limited or no access to financial services.
That said, it’s important to ensure that transitions toward cashless systems don’t unintentionally leave certain groups behind. Some individuals still face barriers such as lack of identification, digital literacy, or reliable internet access. For them, cash remains a vital tool for daily life.
The goal should not be to eliminate cash entirely, but to ensure that digital advancements improve access without creating new forms of exclusion. Inclusivity and flexibility must be central as we modernise payment systems globally.
Removing cash from circulation too quickly could inadvertently create blind spots in AML monitoring. The Swedish Police warn that without cash, illicit financial flows may shift to less visible channels, such as digital currencies or fragmented transactions via multiple low-profile intermediaries. As such, cashless policies must be accompanied by robust monitoring of emerging risk areas.
AML challenges in a fully digital system
While digital systems offer traceability, they’re not immune to abuse. The rise of cryptocurrencies, privacy coins, and peer-to-peer platforms has introduced new channels for laundering funds outside the traditional financial system. Criminals adapt quickly and always will, enabling a cashless society will not eliminate crime it will shift the focus.
A fully cashless economy could also push illegal activity further underground, making it more difficult to detect in communities that no longer interact with formal institutions.
1. Enhance transaction monitoring for new channels
Evolve to detect nuanced money laundering typologies that do not resemble traditional cash-based activity, such as dormant accounts suddenly conducting large transactions.
2. Invest in compliance-first AI
AI has the capability to detect anomalies in transaction patterns, especially those designed to mimic normal consumer behaviour.
3. Deploy NextGen client screening
Criminals can exploit fast onboarding and weak monitoring to move illicit funds rapidly and undetected. NextGen client screening can continuously analyse behaviour throughout the customer lifecycle.
A balanced approach is essential
The goal shouldn’t be to eliminate cash entirely but to build a financial system that combines the strengths of both cash and digital payments.
That means:
- Supporting digital innovation while protecting access to physical currency.
- Ensuring AML frameworks account for vulnerable groups who may be excluded by digital-only systems.
- Expanding financial literacy and access to banking services without mandating them as the only option
Ultimately, AML efforts are strongest when they are inclusive. A system that drives people out of formal finance in the name of crime prevention may weaken the very oversight it seeks to strengthen.
A cashless society may seem like progress, especially in the fight against financial crime. But without thoughtful policy and inclusive design, it risks deepening inequality and pushing the most vulnerable into the shadows.
Learn more about financial crime in the Nordics, download the Napier AI / AML Index.
Photo by David Becker on Unsplash
