Peter Sands, former chief executive of Standard Chartered Bank in the UK has called for the elimination of high denomination bank notes, including the $100 bill and £50 note, in order to crack down on illicit cash flows.
In a paper
for Harvard Kennedy School, Sands puts global financial crime flows at over $2 trillion per year.
"Most of the effort to combat such illicit financial flows focuses on the perpetrators, the underlying criminal activities or on detecting illicit transactions through the banking system," notes Sands. "Yet despite huge investments in transaction surveillance systems, intelligence and interdiction, less than 1% of illicit financial flows are seized.
The case for eliminating high denomination notes has been made before. Some extremely high denomination notes have been vanquished in recent years, such as Canada’s $1000 note in 2000 and Singapore’s $10,000 note in 2014.
But issuance volumes for the notes most commonly used in illicit activity, such as the €500 note and the US$100 bill continue to rise, points out Sands.
States the paper: "Ideally, all high denomination notes would be progressively eliminated with restrictions on issuance and usage limiting substitution in the meantime. Combining elimination of high denomination notes with the introduction of policies to stigmatise and constrain their use, for example by limiting the maximum value of cash transactions, or forbidding the use of high denomination notes in certain environments, and to accelerate their removal from the system would further enhance the disruptive impact."
Such radical action would effectively disrupt the business models of the criminal elite, but would require a collective effort on behalf of the world's developed economices.
"Our proposal is for all the major issuers of high denomination notes to commit to eliminating them," the paper suggests. "This could be achieved through the G7 or G20 mechanisms. The G7 includes the issuers of the most significant high denomination notes, the G20 includes all the issuers of high denomination notes, bar Switzerland, Singapore and Hong Kong. They would need to be persuaded to join this action."