EU Initiative for a Restriction on Payments in CashClient: European Commission | Sectors: Security and Justice
Within the EU there are several national regulations that regulate payments in cash for high-value transactions, either through an obligation to declare these to the authorities or through prohibiting them.
These have been put in place to serve a range of goals, including the combating of terrorist financing, money laundering, and tax evasion. Such national limits include for example transactions above EUR 1 000 in France, EUR 3 000 in Belgium, Italy and Portugal and EUR 15 000 in Poland. However, at EU level there are no upper limits to high-value cash payments.
Ecorys has been commissioned by the European Commission to study the impacts of a potential EU initiative restricting high-value payments in cash. The study considered 1) a declaration obligation on and 2) a prohibition of high-value payments for three defined thresholds: EUR 10 000, EUR 5 000, EUR 1 000. The study then looked at the impacts of such a measure on four categories:
1. Terrorist financing
2. Money laundering
3. Tax evasions
4. Distortions in internal market
This study follows from the Action Plan to further step up the fight against the financing of terrorism (COM (2016) 50). This Action Plan aims at addressing two shortcomings that are identified as arising from the current situation. Firstly, diverging national restrictions weaken the effectiveness of national measures, since they can be exploited by displacing illegal activities from a Member State with cash payment restrictions to those with more lenient or no cash payment restrictions. In addition, an initiative would seek to address distortions of competition in the Internal Market that have arisen from the different rules applying to cash payments between Member States as these may negatively affect certain business sectors in countries with cash payment restrictions, to the benefit of their competitors in neighbouring countries without such restrictions.
The study concludes that restrictions on high-value cash payments would not significantly prevent terrorism financing, however such restrictions could be useful to tackle money laundering. More research is needed on devising a targeted restriction balancing the various impacts.