Europe's 500 Bills Are Latest Front in Countering Terror Financing

BRUSSELS—European finance ministers are meeting Friday to discuss measures aimed at countering the financing of terrorism and will broach the possibility of the European Central Bank withdrawing the €500 bank note as part of the strategy.

"Today we are aiming for a political agreement on measures against terrorism financing. We will ask the ECB to look at the 500 euro bank note," said Dutch Finance Minister Jeroen Dijsselbloem, who chairs the meeting.

French Finance Minister Michel Sapin said that in his country, this bill is used "rather to dissimulate than to buy, rather to facilitate dishonest transactions."

France has been at the forefront of several initiatives aimed at tackling terrorism finance and intelligence sharing, after its capital was hit by two terrorist attacks last year.

The â,¬500 ($565) note is hardly used in day-to-day commerce and many retailers in Europe refuse to accept it. A decision to withdraw it from circulation would have to be taken by the ECB.

Luxembourg's finance minister Pierre Gramegna backed his French colleague: "500 euro[s] is a huge number. We want to discourage fraud and corruption, we want to reduce cash payment and with the €500 bill it's easier to bypass the law."

But not all ministers are in favor of such a step.

Austrian Finance Minister Hans Jö rg Schelling said that banning a high-denomination banknote isn't the way to tackle illicit transactions. "You don't need to abolish bank notes, you only need to make it mandatory to have bank transfers above a certain threshold, as we have it in Austria," Mr. Schelling said.

"I am 100% in favor of keeping cash. I don't think there is much of a difference if we have a €500 bank note or not since almost nobody accepts €500 notes at fuel stations and so on. But we could keep it, under strict rules," he said.

Around half the total value of all the physical euro bank notes in circulation is in €200 and €500 notes. The U.S.Federal Reserve, by contrast, only goes as high as $100 notes, while the Bank of England gets just as far as £ 50.

In 2010, the U.K'sSerious Organised Crime Agency claimed that 90% of €500 notes issued in Britain had gone to gangsters and other serious criminals.

ECB board member Benoî t Coeuré on Thursday said that the arguments for keeping the €500 notes are becoming "less and less convincing."

"We're actively considering the question and will take a decision shortly," Mr. Coeure told the French daily Le Parisien.

Source: http://www.nasdaq.com/article/europes-500-bills-are-latest-front-in-countering-terror-financing-20160212-00134