Europol: cash is still king – for criminals
More than 30% of all suspicious transaction reports in the European Union are triggered by the use of cash, according to Europol, with the €500 note – not widely used for payments – still in demand.
While European consumers are switching to electronic payment methods, resulting in a small decline in the use of cash overall, the €500 note alone accounts for over 30% of the value of all banknotes in circulation.
In a new report, Why is Cash Still King? Europol says this “raises questions about the purpose for which they are being used and whether this could be linked to criminal activity” – something that many observers such as Dave Birch at Consult Hyperion have been saying for years. The European Central Bank says that a large share of the €500 notes in circulation “may be used for hoarding purposes”, but Europol says “there is also evidence that the €500 banknote is used disproportionally in the various stages of criminal activity and the money laundering process”.
The report notes that “in spite of the rapidly changing face of criminality and the rise of cybercrime, money laundering methods detected by law enforcement remain overwhelmingly traditional” with cash “still one of the preferred methods used to launder the proceeds of crime”.
“The use of cash by criminals remains one of the most significant barriers to successful investigations and prosecution,” said Rob Wainwright, director of Europol. “It is a threat that has not received sufficient international attention or legislative solutions. A fragmented enforcement approach at national and international level, and the differing regulatory frameworks across the EU Member States, are widely exploited by criminals, who adapt their methods and routes to take advantage of these loopholes. Stepping up efforts to increase international cooperation and information exchange, and establishing a more harmonised approach among EU Member States concerning cash movements within the EU, are crucial if we are to tackle these criminal activities.”
Almost all crime types make use of cash to facilitate money laundering at some stage – not only traditional crimes that generate cash profits, but also crimes that use new technologies such as virtual currencies, where cash is used as an instrument to disguise the criminal origin of proceeds.
One of the prevalent methods used by criminals to launder profits remains physical cash smuggling. “Highly conservative” estimates based on records received by Europol show that €1.5 billion in cash is detected and/or seized by EU Member State authorities a year.
The report contains a set of recommendations aimed at providing practical solutions, including the introduction of common thresholds at which high value cash payments trigger suspicious activity reports, following the example of France, Greece, Italy and Spain.
Why is Cash Still King? can be downloaded from the Europol website