why criminals love it so

In some countries they’re known as “Bin Ladens” the banknote everybody knows exists but few, other than criminals, ever see.

Eftychia Symeonidoy stood outside a London apartment, casually holding the box under her arm.

As the undercover team from HM Revenue and Customs secretly filmed her, an ordinary estate car pulled up and the box was handed to the driver. It was another consignment of laundered drugs cash safely delivered or so the gang thought.

Symeonidoy and the rest of the 13 strong laundering gang were all later convicted and jailed. The group smashed by HMRC investigators had taken of dirty money from their clients in the criminal underworld and returned “clean” euros.

Every month, they’d take in between and in cash massive bags of sterling notes. They had so much of it, they had to stack it on sofas and in cabinets, and stuff it in bags in cupboards. The jailing of that gang was a major breakthrough for investigators but it’s only the tip of the money laundering iceberg which revolves around fake bureau de change and the 500 Euro banknote.

After eight months of rigorous analysis of currency trading in the UK, the Serious Organised Crime Agency (Soca) has established that the 500 euro note is at the heart of money laundering. The reason is simple: it’s easier to shift.

At current exchange rates, the 500 euro note is worth about eight times more than the note which is the most common high value sterling denomination.fake bags

If a drugs gang collects up to in twenties from its clients on street corners, those notes will weigh more than 50kg about 50 bags of sugar. The equivalent in 500 euro banknotes weighs just over 2kg.

Converting it becomes a no brainer. So the launderers set up front businesses, buy in the 500 euro notes from the City and then make the new, clean and small consignments of notes disappear.

So how did the investigators know the British market in 500 euro notes was driven by drugs gangs rather than honest tourists or business travellers?

Ian Cruxton, deputy director of Soca and head of its proceeds of crime investigations, said they tracked the note’s movements and saw something odd.

One suspicious exchange bureau identified by law enforcement agencies was operating out of an office that didn’t even have a sign above the door.

It asked the note wholesalers (the major banks and well known international currency businesses) to supply it with four million euros worth of the bank notes in one year. Those orders were greater than the entire amount sold to travellers through the Post Office’s network of 12,500 counters.

‘The note of choice’

In other words, there were two markets: legitimate High Street businesses and something far murkier around the corner.

“There’s been a significant body of evidence over time that has recognised that high denomination notes are an important means of reducing the bulk of cash,” says Mr Cruxton. “The 500 euro note is really the note of choice among criminals.

“We estimate that more than 90% of the 500 euro notes that are provided in the UK have actually gone into the hands of serious organised criminals.”

Economists have long charted how large denomination notes facilitate money laundering.

The 500 euro note was born in 2002. But two years before that, the similarly high value Canadian $1,000 bill was shredded on advice from law enforcement agencies.

A decade on, the 500 euro bill has taken centre stage. An internal Bank of Italy report warned last year about the mafia’s use of the note, saying it was just adding to the national problems of tax evasion.

“It was quite clear from day one that once they decided they would have something as large as a 500 euro note that it would give the euro an economic advantage to the $100 bill. It would be used by the Mafia and in all sorts of organised underground crime,” he says.

Prof Portes is pleased at the note’s withdrawal from UK foreign exchanges, as it will “make life much more difficult for people who should find life difficult”.

But there’s no plan to withdraw the banknote itself because it plays a role in the economic culture of some countries.

In some nations, particularly Germany and Italy, people often prefer cash to plastic a demand that has risen since the credit crunch hit world markets. These nations wanted a high value note euro note when they gave up their own currencies.

There’s no doubt high denomination notes help low level domestic tax evasion, but that was not the responsibility of the European Central Bank.

sobre o autor

Caco de Castro
Caco de Castro

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