Ban the $100 Bill to Thwart Terrorists and Despots?

The $100 bill is highly recognized around the world. And it's not because of Ben Franklin. The $100 bill is a favorite among dirty politicians, criminals and terrorists.

Dealers, Evaders, Terrorists and Politicians

Large denomination bills help facilitate the transfer and concealment of sizable amounts of money. Much of this illicit money can be stored offshore in international banks where it can be kept secure and hidden from the law.

But criminals, terrorists, cartels, and tax evaders are not the only culprits that use large bills to divert cash into international banks. It is estimated that dirty politicians from 150 mostly poor nations have hidden $12.1 trillion off shore--much of it in large bills. This statistic is based on a review of 45 years of official statistics for 200 countries. (Source)

Kill the Bill

Attempts to ban large bills have been made in an effort to combat criminal and terrorist activities. In the recent past, the $100 bill has been the focus of a little-known proposal to ban its use primarily to thwart illegal activity. But the proposal has never been approved.

In spite of the unsuccessful effort to pull the $100 bill from circulation, the European Central Bank decided in May to stop production of the 500-euro note for the same reason. (Source)

$12.1 Trillion Missing from Poor Countries

The $12.1 trillion hidden offshore, which equates to two-thirds of the U.S.A.'s annual GDP, covers a time frame starting in 1970. (Source) With such a large quantity of money siphoned away from poorer countries, it's no wonder that so many nations have large populations living in poverty. As greedy leaders steal from their own coffers, they blatantly ignore efforts to improve and enhance the overall quality of life for their citizens.

$36 Trillion Missing Overall

The term capital flight is used to describe the condition when wealth rapidly flows out of a country. When this happens, currency exchange rates can drop rapidly. As exchange rates drop, currency and assets lose value--a repercussion that ultimately affects a country's ability to carry out trade with other countries. Deficits build.

For over 40 years, greedy leaders have caused capital flight by diverting funds to offshore accounts. In addition to the $12.1 trillion, capital flight wealth has also accumulated in the accounts of the world's wealthiest by way of tax evasion and criminal or terrorist activities.

When you combine both sources of capital flight, the total sum is about $36 trillion or 15 percent of the world's wealth. That's 15 percent of the world's wealth that has been removed from the world market. That's 15 percent of the world's capital that is unable to spur economic growth. (Source)

Where's the Money

Some of the flight wealth is stored in shell companies, but it is mostly in reserve at international banks in accounts that pay little to no interest. And, some is stored in storage vaults or safety deposit boxes where it's easy to put large denomination bills or gold.

Corrupt leaders and terrorists know where to secretly divert funds. They know which countries are the best havens. They know where local law will protect their assets. The Panama Papers is a good example of this concept. (Source)

What to do?

But just knowing that there are such large reserves in offshore banks does not solve the problem. One expert, Jim Henry, chief economist at McKinsey & Co., suggests the way to thwart these activities is through banking haven reforms. (Source) Reforms would need to stop transactions that cater to illegal transactions carried out by criminals, dirty politicians, and terrorists.

In addition, removing the 500-euro note and the $100 bill from circulation could also create logistics challenges for criminals. As noted, Europe has already voted to ban the 500-euro note. On the contrary, the U.S. has done little to acknowledge this issue--in spite of the fact that two-thirds of all $100 bills are currently held outside the U.S.

One other possible solution to stop part of the hemorrhage created by politicians--have them submit to a lie detection test at various intervals during office. What do they have to hide?

Note: This article and the opinions expressed here are from Russ Warner, VP of Marketing at Converus, makers of EyeDetect, an innovative, new lie detection solution.