Editorial: Cash & Car Washes. The Cash-Intensive Business Flag.

Image by Tomasz Zajda | Adobe Stock

There is no denying it. Take a drive down Highway 27 and you can’t help but notice something striking. In the span of just a few miles, our town now boasts a surprising number of similarly themed restaurants, car washes, car lots and a noticeable growth in banks and financial institutions.

On the surface, this may seem like nothing more than economic growth. New businesses mean jobs, convenience, and perhaps even a sense of prosperity. But when so many similar businesses pop up at once, especially in a small rural community, it raises fair questions worth asking.

Across the country, federal regulators have long flagged car washes as “cash-intensive businesses.” Because most transactions happen in small bills and coins, the revenue can be difficult to track, making such operations tempting vehicles for money laundering. In fact, several U.S. court cases have shown how car washes were used to funnel illicit cash into the banking system, disguised as everyday business revenue.

Banks, for their part, are required by law to monitor unusual activity under the Bank Secrecy Act. Community banks often work hard to stay compliant, but they also face unique challenges—fewer staff, closer relationships with customers, and less capacity for complex oversight than big city institutions. That reality makes rural banks both vital to their communities and vulnerable to abuse by those who might seek to exploit them.

The jury is out when it comes to a theory on why we have so many chicken and Mexican-style restaurants. That said, we decided to go down the underside of the car wash & car lot rabbit hole.  

Here is what we learned during this exploration

Car washes are “cash-intensive businesses” (CIBs). U.S. Treasury’s 2024 National Money Laundering Risk Assessment notes criminals often set up or use CIB fronts to commingle illicit cash with real sales before depositing it into bank accounts, sometimes alongside “automotive” businesses. Banks then see the cash as ordinary revenue unless patterns trigger AML controls.

Regulators explicitly flag CIBs as higher-risk customers banks must scrutinize under the Bank Secrecy Act. The FFIEC’s BSA/AML Manual has a whole section on CIB risk, and the FDIC reiterates that banks must run risk-based programs and file Suspicious Activity Reports (SARs). These rules apply to community and rural banks, too.

There are U.S. cases where a car-wash business was the laundering vehicle. In a New Mexico drug-trafficking case, the court record says proceeds were laundered “through his car wash and real estate business.”

Why small/rural towns?

Relationship banking and lean compliance teams can make oversight harder (community bankers themselves call BSA/AML a significant burden), while cash businesses can look “normal” on the surface. But banks still file SARs, which feed FinCEN analyses used by law enforcement.

Two caveats:

• Lots of car washes ≠ proof of laundering; many are legitimate.
• SARs are confidential, so public signs (rapid expansion, unusual cash flows, lots of structured deposits, heavy cashier’s-check use, multiple accounts at different banks) are discussed in regulator guidance, but only law enforcement can conclude illegality.

https://www.occ.gov/publications-and-resources/publications/banker-education/files/pub-money-laundering-bankers-guide-avoiding-probs.pdf