For the world’s biggest crooks, it’s all about the Benjamins.
That’s why Lawrence Summers, a former economic adviser to President Barack Obama, wants wealthy nations to stop issuing big bills -- namely the 500-euro note and the $100 bill.
Summers, who also served as secretary of the U.S. Treasury under President Bill Clinton, is touting a paper from a Harvard business and government program that recommends discontinuing the printing of new high-denomination currency notes, or eliminating them altogether by removing those currently in circulation.
The big bills, which also include the U.K.'s 50-pound note and the 1,000-Swiss franc note, are especially attractive to criminals, because they make big quantities of cash more portable. That's according to Peter Sands, the author of the Harvard paper and the former CEO of a British bank that paid a $340 million legal settlement to the state of New York in 2012 for violating Iran sanctions.
Sands “is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note,” Summers wrote in a Washington Post op-ed on Tuesday. “And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.”
Summers argues that ceasing the printing of 500-euro notes should be the highest priority, since they are nearly six times as valuable as the $100 bill, the United States' largest currency denomination. Such a move by the eurozone would in turn put pressure on countries like Switzerland, which produces another high-value currency popular in criminal networks.
Summers' appeal adds to the momentum the idea has picked up in recent days. Mario Draghi, the European Central Bank president, said on Monday the bank is now considering doing away with the 500-euro note precisely because it facilitates crime.
When the euro was introduced as a form of legal currency in 1999, international drug cartels began moving significant business to Europe due to the convenience of the 500-euro bill and the exchange rate at the time, according to a source with knowledge of cartel activities.
Hence, the opposition to C-notes and other slips of paper that represent substantial amounts of money.
Ideally, Summers argues in the Post, there would be "a global agreement to stop issuing notes worth more than say $50 or $100."
Peter Djinis, who helps financial institutions comply with laws against money laundering and who worked as a financial crime regulator at the Treasury during Summers’ tenure, agrees with Summers’ contention that big bills contribute to criminal activity.
But Djinis said banning $100 bills and 500-euro bills would be a “draconian” response to the kind of international financial crime practiced by groups like ISIS, for example.
“I have a lot of respect for my former boss at the Treasury [Department] but I think this is a silly, limited solution to a far more complex problem,” Djinis told The Huffington Post in an email.
He argued that strengthening existing requirements for financial institutions to report suspicious activity would likely be a more practical way to crack down on crimes committed using specific currencies.
And he didn't agree with the claim that advancements in technology have made $100 bills obsolete.
In fact, eliminating them poses its own risks, he said.
“At a certain point, the potential inconvenience of cash may force people into utilizing other forms of payment that may not be as secure,” Djinis said, such as Bitcoin and other cryptocurrencies.
Ryan Grim contributed reporting.
