Study on an EU initiative for cash payments restrictionClient: European Commission - DG ECFIN | Sectors: Security and Justice
In recent years, an increasing number of EU Member States have introduced restrictions on payments in cash in order to combat illegal activities, such as terrorist financing and money laundering, as well as tax evasion and the shadow economy in general.
These national measures vary from one another in terms of the threshold above which cash payments are restricted, who is subject to the controls and which sectors are targeted by them. While there are no upper limits to cash payments in place at the EU-level, the Commission recently signalled its intention to explore such an initiative (see COM (2015) 50), which could complement the current European AML/CFT framework.
In this context, Ecorys together with CEPS carried out an impact assessment study in support of an EU initiative for restrictions on cash payments. The study aimed at addressing two key shortcomings arising from the current situation, namely that diverging national restrictions:
(1) weaken the effectiveness of national measures by displacing illegal activities from Member States with cash payment restrictions to those without, and
(2) create distortions to competition in the Internal Market.
Two main categories of options were assessed during the study:
• a cash payment restriction through a prohibition on high value cash payments above an identified threshold
• a cash payment restriction through a declaration obligation for high value cash payments above the threshold
Sub-options distinguished different threshold levels, persons concerned and exemptions for certain types of transactions.
The Commission has decided, based on the study outcomes, not to proceed with a restriction on cash payment to combat terrorist financing, due to its limited impact on terrorist financing and the sensitive nature of the topic for European citizens.