Why do money launderers target the securities industry?

The reason money launderers target the securities industry is primarily due to the operational characteristics of the firms within this sector. Most firms in the securities industry do not accept cash transactions, which makes it easier for launderers to obscure the origins of illicit funds. Since securities transactions primarily involve transfers of ownership rather than cash exchanges, it becomes more difficult for authorities to trace the movement of funds.

This environment allows launderers to integrate dirty money into the financial system without the telltale signs associated with cash transactions. By converting cash into securities and then trading or selling those securities, launderers can create a façade of legitimacy for their funds, making it appear as though they have been earned through legal means.

In contrast, other options, such as the competitive nature leading to neglect of fund sources or the ease of transferring funds between firms, while they may hold some truth, are not as directly connected to the mechanics of laundering as the acceptance of cash is. Thus, the feature of not accepting cash transactions is what specifically draws launderers to exploit the vulnerabilities within the securities industry.