EU Commission's problematic proposal for restricting cash to fight terrorism
On 2nd February 2016, the EU Commission published a cash-restricting Action Plan to 'step up the fight against the financing of terrorism'.
Within the document, the EU Commission proposed that the European Parliament and Council further explore the scope of an existing legislation controlling large amounts of cash entering or leaving the EU. It suggests upper limits to cash payments and restrictions on the use of high denomination notes, particularly the EUR 500 note.
This is worrying because there is no evidence to suggest that restricting cash will stop crime or fight terrorism. For more, read our White Paper on Keeping Cash: Assesing the Arguments about Cash and Crime.
Payments in cash are widely used in the financing of terrorist activities. EU legislation sets controls on persons carrying cash equal to or in excess of €10,000 entering or leaving the EU. An evaluation carried out by the Commission has pointed to the need to extend the scope of this Regulation, to include cash shipped in post and freight shipments and to allow the authorities to act upon lower amounts of cash where there are suspicions of illicit activity.
Action could also be taken to include precious metals and potentially other highly liquid high-value commodities. In this context, the relevance of potential upper limits to cash payments could also be explored. Several Member States have in place prohibitions for cash payments above a specific threshold.
Beyond the use of cash in general, the use of high denomination notes, in particular the EUR 500 note, is a problem reported by law enforcement authorities. These notes are in high demand among criminal elements who engage in physical transportation of cash due to their high value and low volume. The Commission will work with the European Central Bank, Europol and other relevant parties on this matter.