A number of concerns pervade the impending changeover from legacy currencies to the Euro. Amongst these is the great potential for organised crime to profiteer through money laundering and counterfeiting. There will be many opportunities for these organisations to launder vast quantities of cash with little prospect of detection during the biggest currency changeover since the introduction of the US dollar.

The value of the largest Euro note is such that it will allow greater sums to be transferred across borders without detection by the more traditional methods. The 500 Euro bill, which is the largest denomination of the Euro, will be worth around £300. This is nearly 17 times the value of the largest denomination note in Greece (10,000 drachma note).

Europol have warned that the average brief case will be able to hold the equivalent of £4.4 million in Euro notes compared to £670,000 in sterling. This will clearly make placement of ‘dirty’ cash a far easier task for money launderers. Indeed the Portuguese have refused to issue the 500 Euro note for fear of the ease with which large sums of illegally gained cash could be moved around.

Europol also have information to indicate that because of the ease with which the Euro can be moved around and the accessibility it provides to other areas of Europe, organised criminals are intending to use the Euro in favour of the US dollar.

Large sums of ‘dirty’ cash currently hoarded by criminal organisations will be exchanged for ‘clean’ Euro notes. Banks will be so overwhelmed with the volume of business that these types of transactions may well go unnoticed, further it is suggested that even if suspicious transactions are noticed authorities will not have the resources to follow them up.

The Federal Finance Ministry in Germany have warned that the police and customs have information to the effect that large amounts of cash resulting from criminal activities has been gathered in Europe with the intention of using the changeover day for laundering these sums.

There will be a large number of transactions which will involve customer accounts being changed from legacy currencies to Euros. This will again provide an opportunity for illegal transactions to go undetected. There will be thousands of large transactions of this nature providing the perfect cover for money launderers and fraudsters. Maria Jose Morgado, Deputy Director of the Economic and Financial Crime Unit in Portugal stated that the changeover would make it more difficult to trace suspect transactions. Ms Jose Morgado also commented that the trans-national nature of the Euro means that in the future large sums of money will be moved around Europe with no need for conversion. This will make it easier for launderers to hide the origin of ‘dirty’ cash. For example, although Euro coins will show the face of each head of state depending on the country, there will be no such marking on Euro notes.

The Secretary- General of the European Banking Federation commented that where bank staff are dealing with one transaction per minute “you cannot preclude that somebody who in a normal period you would spot slips through the net.”

Layering may also become easier if the money can be exchanged through on-line banks. The anonymity features of this type of transaction may make the source virtually untraceable.

The fact that anyone can change money into Euros in any bank, whether they hold an account or not, adds another anonymity feature to the process and another method which can and will be exploited by organised crime. Europol thinks that the Mafia, Latin American drug cartels and Asian criminal groups will all be active during the changeover


Reference:
http://www.antimoneylaundering.ukf.net/papers/solicitor.htm