Page 89 - ACAMS-Today-V20N3

[ STAFF NOTES ]
A European Union at multiple speeds
The use of cash in the European Union varies tremendously depending on the country’s legislative framework and cultural preferences.
In Europe, Sweden is leading the way with only 20% of all transac- tions made in cash, and a growing number of retailers are not accepting cash anymore.10 The ABBA museum in Stockholm was among the first retailers to only accept card payments.11 Last year, it was estimated that only 1% of Sweden’s GDP circulates as cash, possibly making the country the first to become the world’s first near cashless economy.12 The move toward online payment is mostly due to the prominence of new technologies such as the instant mobile payment system Swish, and probably the traumatic 2009 Västberga event――part of a host of heists that happened in the mid to late 2000s targeting...cash.13 Swish was established in 2012 as a payment application jointly developed by six of the largest financial institutions (FIs) in Sweden including Danske Bank, Handelsbanken, Länsförsäkringar, Nordea, SEB and Swedbank.14 It enables users to transfer money instantly.15 However, Swish’s popularity has led the app to be increasingly used in fraudulent advertising and phone fraud, according to the Swedish central bank’s press release from October 2020.16 According to Riksbank, the police also reported that Swish had been used in money laundering “with money being sent along a chain of front men before finally being withdrawn as cash or used to purchase expensive capital goods.”17
Finland, South Korea, Australia and the U.K. are among the countries that have made significant steps in moving away from cash.18
Other member states that are not at the forefront of the new technologies took a different approach to prohibit cash transac- tions, limiting them to a certain threshold by the law. Although not a requirement, the Fourth AML Directive recommended the member states “to adopt lower thresholds, additional general limitations to the use of cash.”19 As a result, European countries have implemented national limitations that vary widely. Therefore, some countries have limited their cash payments, but the range varies from country to country, going from 1,000 euros ($1,205.05) in France up to 10,000 euros ($12,040.50) in Poland. However, countries such as Germany and Austria do not have
any thresholds.20
Not all countries are going cash-free
Despite the global enthusiasm to adopt the cash-free model, some countries resist the trend. For instance, Cuba has a large cash culture and still relies heavily on cash since many retailers do not accept alternatives.21 India is another country where cash remains a widely-used mode of payment, despite the govern- ment’s effort to raise awareness about digital payments and to encourage retailers to join the online payment ecosystem.22 In semi-urban and rural areas in the Indian economy, cash continues to dominate. White-label ATMs (WLAs)――which are not owned or operated by banks――have increased in the country in the quarter
In a cashless society, FIs will have to ensure their transaction monitoring and fraud detection systems are more robust
ending June 2020.23 Deployment of WLAs was mainly done in remote areas of the country. Countries in parts of Africa and Central America as well as Mexico are also heavily reliant on cash. So where one lives and the position of the economic spectrum may determine the level of cash usage.
A fragmented legislative landscape across the bloc
To overcome the lack of harmonization in the European legislative framework, the European Commission (EC) has outlined new provisions in its May 2020 Action Plan, which will be applied to cash controls from June of this year.24 The EC wants to mitigate the costs and burdens for those providing cross-border services due the fragmented legislative landscape across the bloc regarding the limitations of cash. It also wants to put an end to regulatory shopping with businesses registering where rules may be more relaxed.
More recently, the EU’s executive branch has privately reconvened to discuss the possibility of inserting a proposal that would ban businesses, banks or otherwise from accepting cash payments of more than 10,000 euros ($12,040.50) as revealed by ACAMS moneylaundering.com in February of this year.25 If adopted, the EC’s proposal will have a great impact on countries where limitations on cash transactions do not yet exist. Industries that continue to rely on cash such as real estate and the art market could be impacted too.26
EU officials have a new opportunity to tackle cash controls by featuring a single threshold in the final version of their anti-money laundering (AML) reform package that is still to be published.
[ JUNE–AUGUST 2021 ] 89