> Because its coins and banknotes don’t leave a paper trail

Slightly off-topic, I've wondered whether serial numbers are captured on bills processed through an ATM. Bill are also put through machines when human tellers receive them at a bank. These days it wouldn't be that hard to track the currency flows, although intermediaries would not be visible.

ATMs with bill serial number readers are available.[1][2] So are back-end systems for full-cycle cash tracking. Supposedly all ATMs in China have this feature.

It's not widely used in the US. It's more common where ATMs take sizable cash deposits, and where ATMs can be used to pay bills with cash. There are cash-recycling ATMs, where deposited bills are read, sorted, and dispensed again. Those often take full pictures of the bills and read serial numbers, since they have to have very good counterfeit detection.

If inflow and outflow are roughly equal, the ATM doesn't need to be serviced as much. US ATMs are mostly outflow, so recycling ATMs are rare. China and India apparently have more of them.

[1] https://www.glory-global.com/-/media/GloryGlobal/Downloads/E...

[2] https://atm.icard.com/en/smart

Wouldn't it be hard as soon as people exchange that money in non traceable areas?

E.g. people gift money on birthdays, people buy things in private sales, etc.

Edit: overlooked your last part about intermediates you are right

even if they were, you can't prove that the cash transfer was part of a taxable transaction