Denmark Ignores ECB to Ban 500-Euro Note in Dirty Money Battle
Denmark Ignores ECB to Ban 500-Euro Note in Dirty Money Battle
(Bloomberg) -- Denmark is ignoring a request by the European Central Bank and moving to ban 500-euro notes, as the Nordic country toughens defenses against money launderers.
The prohibition runs contrary to European agreements on the free movement of capital, but the bills’ use for criminal activities justifies the ban, according to Danish authorities. They cited the ECB’s decision to stop printing the notes, which also was recommended by the global anti-laundering organization Financial Action Task Force.
“It is worth noticing that one of the reasons the ECB decided to permanently stop producing the 500-euro banknote was the concerns that this banknote could facilitate illicit activities,” Business Minister Rasmus Jarlov said in an emailed reply to questions.
Danish lawmakers are adopting a slew of measures after the country’s biggest bank, Danske Bank A/S, became embroiled in what’s likely Europe’s worst dirty money scandal. The Danish operations of Scandinavia’s biggest bank, Nordea Bank Abp, also are under investigation for failing to stop use of the notes for laundering.
Parliament is scheduled to consider the ban for a second time later this month before holding a final vote in May. If approved, which is likely, nobody will be allowed after Jan. 10, 2020, to deposit or exchange the notes, tender them as payment or otherwise use them in Denmark. Even cash gifts will be outlawed, and violators would be fined.
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The measure is backed by opposition parties as well as members of the coalition government.
“All the parties in the parliament are agreeable to the bill and the ban,” Jarlov said.
Denmark isn’t part of the euro zone, though the krone is pegged to the euro. The ECB had asked the government to skip the ban, citing the principle of “sincere cooperation” on advancing the EU’s tasks that is part of the bloc’s treaty.
There’s no evidence the notes are used more frequently in Denmark for illegal activities than anywhere else, the ECB said in February opinion. It also noted that the Nordic country isn’t planning bans on notes issued in other currencies, such as Switzerland’s franc.
The ECB announced its decision to halt production in 2016 and stopped making the bills last year. However, it didn’t pull the notes out of circulation; they remain in use and there’s no deadline for withdrawing them.
Denmark is stopping short of making it a crime to possess the notes. Though the cash can’t be used in Denmark, it might still be useful in connection with holiday or business trips, according to the proposal.
Danske Bank is under investigation in multiple jurisdictions, including the U.S., after last year admitting that a large part of $230 billion in transactions through accounts at an Estonian unit were suspicious. The last of the accounts were closed in 2016. Danske faces potential fines in the billions of dollars, and its shares have plunged by almost half in the past year.
To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Christian Wienberg
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