Status: 07/20/2021 5:18 p.m.
The EU wants to intensify the fight against money laundering. In addition to an EU-wide cash limit, a new monitoring authority is also being discussed. What would the idea do?
Many experts are of the opinion that the EU countries have some catching up to do in the fight against crime and money laundering. The EU Commission today presented its plan for a more effective fight against it.
What did the EU Commission decide?
The package presented today consists of four legislative proposals. First, a new EU agency to combat money laundering and terrorist financing is to be created. Second, a uniform EU set of rules for combating money laundering and the financing of terrorism is planned. The third measure is an updated guideline with provisions that must be implemented in national law, including the provisions on the national supervisory authorities and the central reporting offices in the EU member states. Fourth, an upper limit for cash payments of 10,000 euros is to apply across the EU. Crypto currencies such as Bitcoin are also to be regulated more strictly so that transactions with these currencies can be fully traced in the future. The provision of anonymous crypto “wallets” is prohibited, as is already the case today with anonymous bank accounts.
“Every new money laundering scandal is one too many,” said Vice-Commissioner Valdis Dombrovskis, commenting on the plans presented, “and at the same time a wake-up call that we must continue working to close the gaps in our financial system.”
What is the Commission hoping for the cash limit?
The EU Commission argues that high cash payments are difficult to uncover and therefore represent a good opportunity for criminals to launder money. A cash cap makes it harder for criminals to disguise the illegal origin of their income. Terrorist financing would be made just as difficult as undeclared work. Because unlike electronic payments or transfers, cash transactions hardly leave any traces. Thus, an upper limit for bill and coin payments could curb criminal activity. In the opinion of the Brussels authority, an EU-wide limit of 10,000 euros is high enough not to question the euro as legal tender. At the same time, the important role of cash is recognized.
Opponents of the cash cap doubt that it is a suitable means of combating crime. “So far there is no scientifically sound evidence that the aim of combating money laundering is achieved with upper limits for cash payments,” Bundesbank board member Johannes Beermann recently said. Germany’s top consumer advocate, Klaus Müller, warned years ago that a cash limit would open “the gate to absolute control of consumers”. The right to anonymous shopping must be taken into account.
What are the criminal amounts involved?
Naturally, the amounts are difficult to quantify: According to the European Court of Auditors, billions of euros from criminal transactions are fed into the regular economy in the EU every year in order to conceal the illegal origin of the income. The European police authority Europol estimates the value of suspicious transactions within Europe at hundreds of billions of euros.
Is Europe doing enough against money laundering?
After a recent audit, the European Court of Auditors came to the conclusion that there are clear weaknesses. For example, inadequate coordination at EU level was found in measures to prevent money laundering and in intervening after a risk was identified. “The EU’s weaknesses in the fight against money laundering and the financing of terrorism must be eliminated, and supervision by the EU must be significantly strengthened,” demanded chief auditor Mihails Kozlovs afterwards.
Is there already a cash limit in the EU?
Most European countries have long since had upper limits for cash payments. In Greece, for example, it is 500 euros and in Croatia 15,000 euros. Countries such as Germany, Austria, Luxembourg and Cyprus have not set any limits so far. The EU Commission now wants all member states to enforce a ban on cash payments over 10,000 euros. States that have introduced a lower limit can keep it.
Who would the 10,000 euro limit hit in Germany?
Five-digit cash payments are likely to be a rarity for most consumers. In certain areas, however, upper limits could cause problems, for example when buying a used car. Many sellers are reluctant to rely on the promise that the money will be transferred. High rental deposits are also sometimes paid in cash.
However, the EU Commission proposes mechanisms “to ensure that citizens are not excluded from the financial system by such a measure.” These can be exceptions, for example, for business between private individuals, as they already exist in countries with upper limits on cash payments. People without a bank account are also excluded.
What other ideas does the EU have?
In addition to the upper limit for cash, the EU Commission is also planning a new surveillance authority to combat money laundering. Like the news agency dpa reports, the “Anti-Money Laundering Authority” (AMLA) should also be able to impose financial sanctions in the event of violations of EU rules. The state of Hesse is promoting that the new EU authority will be located in the banking metropolis of Frankfurt. The European banking supervisory authority EBA and the European financial supervisory authority ESMA are already based in Paris, while Frankfurt has the European Central Bank (ECB) and the supervision of the large euro banks under its umbrella.
How are things going now?
After the plans have been presented, it is the turn of the Council of Member States and the European Parliament. If there are sufficiently large majorities there, the proposals of the EU Commission can be implemented. However, no final decisions are expected before the coming year.