How to use a 500 euro note

While anti-money laundering professionals chuckled when the European Central Bank announced the highest denomination Euro note back in 1999,  organised criminals rubbed their hands together with glee.FCA - Hiding 500euronotes

The EUR500 is one of the world’s highest value single denomination notes in circulation. Notoriously to difficult to spend – shops do not like them – or to find – although there were 594m in circulation in 2011, most European citizens have never seen one – they provide criminals with a fantastic conduit for moving large amounts of dirty cash in a relative small vessel.

High value notes

The EUR500 note is not the highest value note in circulation globally. That honour goes to two tied Asian currencies: Singapore‘s and Brunei’s. The SGD10,000 and BND10,000 (USD7,900) are in circulation in both countries. Their enormous value, compared to their next most valuable note in circulation – CHF1,000 (USD1,128), makes them very appealing to anyone who usually spends this much on a handbag, for example, or a watch. But these notes are used in limited territories.

FCA - SGD10k

Another factor which makes the EUR500 so useful and vulnerable to misuse its geographical reach. It is the national currency of 18 European Union member states and it is traded in neighbouring non-Euro zone countries. As the world’s second largest reserve currency after the US dollar and the second most traded currency, it has a thriving black market for euros reflects this. The currency is accepted under the counter in Argentina, Nicaragua and  Venezuela, that I have read about, so it is probably used all over South America. Photographs taken of a raid on a raid on a drug trafficking operation in Mexico showed Eeuro notes, albeit in a far smaller amount, piled up next to the Benjamins. It is used in Nigeria and Algeria and the rest of Africa. Although euros are not widely used for savings in Russia, the recent round of sanctions has raised interest in the currency.

Bulk cash smuggling

Woman carrying cereal box contained EUR500 notes

Woman carrying cereal box contained EUR500 notes

Bulk cash smuggling is a method of illegally moving large amount of cash across borders. In Europe, criminals used to employ people to walk across frontiers between countries carrying large amounts of undeclared francs, Deutsch marks or pesetas, for example. Travellers and students were often employed to  smuggle cash in bulk.  A backpack can carry quite a bit of cash, and if you replace the GBP50 notes – the largest denomination note in the UK – for the EUR500 and you can shift eight times more much moolah. Incidentally, UK wholesalers stopped buying and selling EUR500 in 2010. The image on the right shows a woman in London caught by a UK law enforcement surveillance operation carrying EUR300,000 in 500 notes stuffed into a cereal box. Read the BBC’s full story here.

This info graphicFCA - how big are 500Euros shows the physical space and weight of GBP1m in EUR500s compared to GBP20s; there is a huge difference.

Unfamiliarity breeds contempt

Despite the large, and at one point disproportionate, amount of EUR500 notes in circulation there is still some difficulty in spending them at retailers. European retailers have been known to refuse EUR500 and EU200 notes. Known incongruously as Bin Ladens – because everyone has heard of them but few have ever seen one and the notes cause suspicion when they do appear. Advice for travellers is to exchange a EUR500 for EUR50s. Visitors to Russia are advised to bring euros for exchange into Russian roubles upon arrival.

Numbered days?

During a speech given in 2013, the ECB chariman made a passing2 mention of phasing out the EUR500 note, but there have been no further announcements. This may be because the idea is not on the table for discussion, or it may have a more strategic purpose. If the ECB announces plans to withdraw the note, mountains of untaxed and illegal EUR500s will slowly start to drift back into circulation and the owners of the funds may never be identified. However, a sudden crack down on EUR500 notes would force the owners of stockpiled 500s to come forward or risk losing their fortunes. Anyone with a legitimate reason for sitting on a cereal box stuffed with 500s for example – such as not trusting the banks to keep their money safe – would surely come forward, provide their legit reason to the bank and exchange their currency for lower denominations.

Organised criminals and major tax dodgers would think twice about doing this as they might struggle to come up with a plausible reason for sitting on cash. They may also reach for the lawyers and accountants to help them devise slightly more obscure and quick methods of reintegrating their ill-gotten gains.



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One comment

  1. It is common knowledge that the € 500 banknotes circulate primarily among black money makers to support criminal activities from tax evasion to narcotraffic. Regular economy can prosper without this monetary instrument. It is unclear why the ECB is so esitant in rectifying an original error of Euro banknotes, without offering any explaination

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