Don Quijones: A New Stealth Attack in EU’s “War on Cash”

By Don Quijones, of Spain, UK, and Mexico, and an editor at Wolf Street. Originally published at Wolf Street

The EU’s Orwellian-dubbed Civil Liberties and Economic Affairs committee has approved tough new rules on cash that travelers might bring into or take out of the bloc. It’s also broadened the definition of cash to include precious stones and metals and prepaid credit cards.

For the moment the new definition does not include Bitcoin and other cryptocurrencies, for one simple reason: “customs authorities lack the resources to monitor them.”

Most importantly, the draft law will enable authorities to impound “cash” below the traditional €10,000 threshold, if criminal activity is suspected. The new rules would repeal the First Cash Control Regulation (CCR) from 2005, which requires individuals to declare sums over €10,000 when leaving or entering the EU.

The draft law still needs to be approved by the European Parliament. Then the legislation needs to be negotiated with EU governments. If the law is passed, anyone acting suspiciously carrying any amount of cash, whether in notes, precious stones, precious metals or prepaid credit cards, could face having their “money” impounded. 

“Large sums of cash, be it banknotes or gold bullion, are often used for criminal activities such as money laundering or terrorist financing,” said Mady Delvaux, the Committee’s co-rapporteur. “With this legislation, we give our authorities the tools they need to improve their fight against those crimes.”

It could be argued that any legislation aimed at disrupting criminal financial networks is, de facto, a welcome move, but that would ignore the fact that many forms of modern-day tax evasion, avoidance and money laundering are conducted without cash through shell corporations located across multiple jurisdictions, including Luxembourg.

But the EU’s anti-cash measures are not aimed at the giant corporations and well-heeled individuals and families, including those that, thanks to their armies of professional lawyers and accountants, get to exploit the loopholes built into the system to stash their wealth far from the prying eyes of European tax authorities. No, the measures are aimed at average Joes and ordinary Janes, and the main objective is to further dampen their ability or willingness to use or carry cash.

This has long been a cherished goal of the EU, which began 2017 by announcing its intention to “explore the relevance of potential upper limits to cash payments,” with a view to implementing cross-regional measures in 2018. Any attempt by the European Commission to set a mandatory continent-wide limit is likely to be met with fierce resistance — at least in countries where cash is still revered, like Germany and Austria. Others are already so far down the path toward a cashless society that they’ll barely notice the difference.

Besides fighting crime and tax evasion, there are myriad other reasons why the EU and the ECB, along with banks, fin tech firms, credit card companies, national governments and UN agencies, want to pull the plug on physical currency:

  1. Cash has no middleman. One party pays the other party in mutually accepted currency and not a single intermediary (i.e. bank, fin tech firm or credit card company) gets to wet its beak.
  2. Increased technocratic control. In a world where every transaction must be electronic (i.e. traceable) and where biometric authentication systems have become the norm, the power of banks, corporations, tech firms, and governments over people’s every-day lives would be virtually unlimited.
  3. The death of financial privacy. Fyodor Dostoyevsky wrote in 19th century-Russia that “money is coined freedom.” Today, it is one of the last remaining things that gives people a small semblance of privacy, anonymity, and personal freedom in their increasingly controlled and surveyed lives. However, according to the European Commission’s own rulings, privacy and anonymity do not constitute “fundamental” human rights.
  4. Cash sets a limit on central banks’ monetary experimentation. During this age of out-of-control financial repression, as long as cash exists, there’s no way of preventing depositors from doing the logical thing – i.e. yanking their money out of the bank and parking it where the erosive effects of NIRP can’t reach it. If cash were abolished, just about any fiscal or monetary policy would be enforceable, at least in the short run.

At the same time, the EU hopes to pass a law that will effectively render the act of carrying reasonably large sums of cash — say, anything above €1,000 — across borders enough to get it confiscated. The writing is on the wall, and it’s written in bright, bold letters. By Don Quijones.

War on Cash bogs down, despite best efforts of government, banks, and credit card companies. Read… Spain’s Third Biggest Bank Just Made it Harder to Get Cash

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  1. Thuto

    The choice now facing citizens is as stark as it is binary: freedom/civil liberties/privacy vs security. That’s how governments frame it, with plenty of TINA scaremongering thrown in to quash any pockets of resistance that might stand in the way of imposing such draconian measures upon society.

    1. Jim Haygood

      Politicization of fiat currencies via civil forfeiture (no evidence or trial required) and the non-crime of money laundering (a toxic spin-off of the War on Some Drugs) makes dollars and euros unsafe stores of value.

      Cryptocurrencies thrive when governments abuse their franchise by making mere possession of their legal tender punishable by confiscation and/or criminal charges.

      Buy a bitcoin; starve a FinCEN bureaucrat.

      1. Peter S.

        Bitcoin isn’t currently used for much except speculating in the fiat exchange rate (yeah I know, drugs).
        The wildly fluctuating exchange rate is hampering its uptake as a payment method. Most notably the online computer game marketplace Steam recently dropped support for Bitcoin.

        Even the official party line seems to have shifted from “it’s digital money” to “it’s digital gold”. That’s nice, but you won’t buy groceries or pay rent in gold.

  2. Bandit

    This law is essentially the same as civil asset forfeiture in the US, an Orwellian nightmare for law abiding citizens. Under the same pretext of fighting crime, the police can “legally” steal your money or impound your car and even your house without ever formally charging you with a crime. The EU is headed down the same road under the same pretext and possibly with less oversight (if you can call it that).

    Suspicion is all that is required, and we know how easy that is to fabricate when the authorities are already predisposed. A small minority of citizens have been able to recover some or most of their stolen funds, but, often at great expense in legal costs. The police also depend on this road block to dissuade any action toward recovery because they know that most citizens do not have the funds to go through the legal Juggernaut and even then without any assurance of recovery.

    1. The Rev Kev

      Totally agree with what you wrote and I wish that I had said it myself. You know what really gets me? Under Anglo-Saxon law, it was up to the State to prove that you were guilty of a crime. This has been a foundation stone of law for centuries. Now that has been tossed into the trash bin of history and more and more, you have to prove to the State that you are innocent when the State accuses you of a crime. Those civil asset forfeiture laws that you mentioned are a perfect example of this new and very dangerous trend.

  3. TimH

    When I bought a new car from a franchised dealer for cash, a credit check still was necessary to do the transaction.

    1. Jim A.

      One wonder what would have happened if the credit check showed lousy credit? Would they have declined your money?

    2. Vatch

      When you say that you bought the car for cash, do you mean that you wrote a check, or did you bring in a sack full of hundred dollar bills? If you paid by check, they probably wanted to be sure that you had the money in your checking account.

  4. RBHoughton

    “Cash has no Middleman” – I wish it really was the case that cash pays no tax to the moneymen but its credit, isn’t it? Its paper that some central bank has printed and controls the volume. The official scorers may say inflation is low in Europe but that has not always been the case.

    Another thing – Dostoyevsky was writing about value – gold and silver – whereas humanity was sold the idea of exchanging credit notes instead of value by the notorious William Pitt.

    1. Synoia

      Cash has no middlemen?

      Once upon a time, in a land far, far away and a long time ago I had a Bank as a customer. This bank has a major retail chain for a customer.

      Said customer complained about their bank charges, and the Bank tallied up the cost of the customer to the bank, and found handling the money daily was very expensive, especially as they has to employ cashiers who could read, count and add.

      The cost of the customer was more than the customer’s fees, so the Bank told the customer they were not profitable for the Bank, and raised the fees.

      And kept the customer.

      Morale: If you have a good deal, keep you mouth shut.

      Now, are you really still asserting that money has no middlemen? The cost of the accounting is an amount you pay, but you do not directly see the bill.

      1. JCC

        Based on the actual statement of the author of this piece, and the new regulations, I will assert it.

        Cash has no middleman. One party pays the other party in mutually accepted currency and not a single intermediary (i.e. bank, fin tech firm or credit card company) gets to wet its beak.

  5. Pespi

    To repeat a comment I’ve made before. Eliminating cash to restrict criminal liquidity forces criminals to organize into ever larger and more sophisticated syndicates, probably more intertwined with “legitimate business.”

    Feature or bug? You decide!

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