High denomination, high value currency notes including the £50 note should be withdrawn in order to tackle tax evasion, money laundering and illicit money flows, according to an analysis prepared by Peter Sands, former group chief executive at Standard Charted Bank and a government adviser
Sands, who is now an academic at the Harvard Kennedy School for business and government, has written a paper arguing that a new approach is needed to tackle the estimated $2 trillion (£1.39 trillion) per year in financial crime flows, plus an additional $1trillion in corruption payments.
Sands writes: ‘The scale of such illicit money flows is staggering. Depending on the country, tax evasion robs the public sector of anywhere between 6% and 70% of what tax authorities estimate they should be collecting.
‘Yet despite huge investments in transaction surveillance systems, intelligence and interdiction, less than 1% of illicit financial flows are seized.’
The paper proposes removing from circulation high denomination, high value currency notes, such as the €500 note, the $100 bill, the CHF1,000 note and the £50 note. It claims such notes are the preferred payment mechanism of those pursuing illicit activities, given the anonymity and lack of transaction record they offer, and the relative ease with which they can be transported and moved.
Sands says that this approach would make life harder for the ‘bad guys’, as they would higher costs and greater risks of detection. ‘Eliminating high denomination notes would disrupt their “business models”,’ he argued.
The report, Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes, is here
