Criminals’ ‘currency of choice’ for chop

International terrorists, money launderers and German car buyers will have to rethink their currency options after the European Central Bank moved to make the €500 bill a thing of the past.

While many Europeans have never set eyes on the purple notes — and few retailers accept them — they have featured prominently in EU discussions about how to choke off terrorist financing, a key concern since November’s Paris attacks.

Rob Wainwright, director of European police agency Europol, has called high-denomination notes the “currency of choice” for criminal and terrorist networks.

Speaking to European Parliament lawmakers in Brussels on Monday, ECB governor Mario Draghi gave his clearest indication yet that the note was on borrowed time, saying there was an “increasing conviction in world public opinion” that such notes were used for criminal purposes.

Finance ministers last week called for a review of the notes, but the decision on the €500 bill’s future rests with the ECB. Although Mr Draghi stopped short of announcing an end to the note, an informal decision has already been made within the central bank to withdraw the bill from circulation, according to people briefed on the matter.

While the withdrawal of the note would be music to the ears of Europol, taking it out of circulation would be politically controversial in Germany, which has a tradition of using high-value notes for big purchases.
Asked about the issue last week, Michel Sapin, France’s finance minister, said that the €500 bill was “used more to conceal activities than to buy things, more used to facilitate dishonest activities than by people like you and me to get a bite to eat”.
According to a study published by Europol last year, shops often refuse to accept €500 bills. Nevertheless they still account for one-third of the value of all euro banknotes in circulation.

It highlighted the case of Luxembourg, which issued bills worth €87.5bn in 2013, equivalent to around twice its GDP, with a “significant proportion” in high denominations, even though it is one of the most “cash averse” countries in the euro area.

Complicating matters for the ECB, Bild, Germany’s highest circulation newspaper, launched a “hands off our cash” letter-writing campaign to Wolfgang Schäuble, the country’s finance minister, to protest against plans being considered to limit maximum cash payments.

Many Germans now link the fate of the €500 note with those plans. Bild said last week that 10,000 letters have been received so far.
Mr Draghi sought to disentangle the two issues in his remarks to MEPs, insisting that the withdrawal of the note had “nothing to do with reducing cash, that is important to keep in mind”.

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