I had an encounter of UK-traceable cash recently, on changing over some older $20 bank notes using a Bank of England service setup for that purpose.
The notes had been handed over to me 5 or so year earlier, from a banking outlet. Travelling back to the UK 5 year later, I found out no merchants would accept them; some indicating that there had been a period where folks could swap over the notes at bank outlets. That grace period had ended, and now one is reduced to using the last-swap-opportunity service delivered by the Bank of England itself. One can visit some office in London, or use a post-based service – invoked by filling out and submitting a particular form.
Now, the notes all had serial numbers (which we can assume could be traced to lots of cash issued to and then handed out by the particular original banking outlet). In any given month, we can assume its ATMs and teller processes keep records of which serial number go out of the door (in which geography). These days, we can also assume that the camera above the tellers desk is also recording which serial numbers are going to you, given its recording of the id card placed on the desk along with the other transactional records (to facilitate precisely just such recording purposes and linking up of serial numbers of cash to the original transaction and responsible party).
Of course, its even more obvious that scanners in ATMs do the same thing facilitating micro-tracing, augmenting there serial-number batching controls used for macro tracing.
I can see how the macro-controls are there to address nation-security related current controls and currency manipulation type event.
I can also see (and from knowing the deceptive way the UK treats its public) that the micro-controls are used in just the same manner, but for more “personal” tracking. One can see Cromwell’s spies in GCHQ building metadata association graphs based on the flow of serial numbers, as they pass out of and then back in to the sensor points – the banks and major merchants who cooperate to build the tracing paths.