- Says the 500-euro note is criminals' `currency of choice'
- Eliminate high-denomination notes to fight crime, report says
High-value banknotes have become the “currency of choice” for criminal and terrorist networks and there’s a case for removing them from circulation, according to Rob Wainwright, director of Europol.
Speaking at a conference in London on terrorism financing, Wainwright said the availability of high denominations makes it easier for criminals to smuggle and hide large sums of cash.
His comments followed the publication of a report by Peter Sands, the former chief executive officer of Standard Chartered Plc, which said the 500-euro ($556) note, the $100 bill, Switzerland’s 1,000-franc note and Britain’s 50-pound note should be eliminated to make it harder for criminals, terrorists, tax evaders and corrupt officials to transfer funds.
“It’s a very interesting report,” Wainwright said. It “raises really serious questions about whether or not the European Central Bank, for example, should continue to produce and circulate these notes that make it easier for criminals and terrorists to hide their business, and to fund illegal activities.”
More than $2 trillion in money related to illegal activities is moved globally each year, with corruption amounting to another $1 trillion, according to Sands’ report, “Making it Harder for the Bad Guys.” Despite efforts by authorities to detect and intercept these, less than 1 percent of illicit flows are seized.
“The scale of such illicit money flows is staggering,” Sands wrote in the paper, published by Harvard Kennedy School, where he’s an academic.
While not calling for the complete elimination of cash, the predominant payment method of smaller transactions, he described high denominations as an “anachronism” given the availability of electronic payment methods.
“They play little role in the functioning of the legitimate economy, yet a crucial role in the underground economy,” Sands said. “The irony is that they are provided to criminals by the state.”
Sands said eliminating high-denomination notes would disrupt the “business models” of criminals, tax evaders and terrorists. He called for agreement by the Group of 20 nations on the issue, which would include all the issuers of high-denomination notes, bar Switzerland, Singapore and Hong Kong.
European Central Bank President Mario Draghi has said his institution is reviewing its policies on issuing 500-euro banknotes after years of law-enforcement authorities in the region raising concerns. ECB Executive Board member Yves Mersch said last week that officials want to see evidence that high-denomination euro banknotes facilitate criminal activity rather than relying on unproven assertions.
Sands, who was CEO at Standard Chartered from 2006 to 2015, is now a senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School.