Do you have a €500 note on you? If you do then there’s a 90% chance you…

The UK doesn’t officially use the euro, though there are a fair few shops that choose to accept it voluntarily, and normally at a rather unattractive rate of exchange.

This means that although not legal tender, euro bank notes are not an unusual sight on the streets and in the exchange booths of the UK.

One that you won’t find from now on, however, is the €500 note.  This rare beast of considerable value is fairly commonly seen in Germany, where it’s culturally normal to pay for even large purchases in cash.  The other place that it’s found is in the hands of criminals and money launderers.

Proceeds from serious crime (eg people trafficking) are not much use unless they can get into the banking system and from there used to buy nice things like expensive cars and villas in some nice, warm place.  Getting dirty money into the apparently clean banking system often involves having a “friendly” bank somewhere that will turn a blind eye to where the funds are coming from.  This does, however, give a logistical challenge to the UK based serious criminal.  If one wishes to transport £500,000 from London to a “friendly” bank abroad, it’s necessary to fly and go through pesky things like X-ray machines and customs declarations.  Airport security staff are trained to spot the metal strips in bank notes in X-ray machines and alert police to what is likely to be proceeds of crime being moved.  The logic is that if the flow of money out can be stopped, the flow of illicit activity in will also dry up.

Enter the 500 euro note. This wee beast is compact enough that €20,000 can be rolled into the inside of a cigarette packet, which conveniently is wrapped in metal, thus becoming invisible on X-ray machines.  It’s about 20 times more compact than the £20 bank note.

The UK government estimates that a full 90% of €500 notes in the UK are used to service serious crime.  Thus they can no longer legally be sold in Britain.

If Britain ever adopts the euro as its official currency, this may require something of a rethink!

The ExP Group