REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on restrictions on payments in cash
Date: 2018-06-12
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: customs regulations, exchange of information, fight against crime, money laundering, paper money, payment, restriction on competition, single market, tax offence, terrorism

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 12.6.2018  COM(2018) 483 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on restrictions on payments in cash  
 
 
1. 

INTRODUCTION 

On  2  February  2016,  the  Commission  published  a  Communication  to  the  European 
Parliament  and  the  Council  on  an  Action  Plan  to  further  step  up  the  fight  against  the 
financing of terrorism1. The Action Plan built on existing EU rules  in order to adapt to 
new  threats  and  aimed  to  update  EU  policies  in  line  with  international  standards.  It 
discussed numerous issues and solutions in different fields related to terrorism financing. 

In  the  context  of  the  Commission's  action  to  extend  the  scope  of  the  Regulation  on 
controls  of  cash  entering  or  leaving  the  European  Union,  reference  was  made  to  the 
appropriateness  of  exploring  the  relevance  of  potential  upper  limits  to  cash  payments2. 
The  Action  Plan  also  further  noted  that  "Several  Member  States  have  in  place 
prohibitions for cash payments above a specific threshold".  However, such prohibitions 
have not been considered at EU level. 

In  its  Conclusions  on  the  fight  against  terrorism,  the  Economic  and  Financial  Affairs 
Council  ("ECOFIN")  of  12  February  2016  called  on  the  Commission  "to  explore  the 
need for appropriate restrictions on cash payments exceeding certain thresholds". 

Following  the  Action  Plan  and  the  support  provided  by  the  ECOFIN,  the  Commission 
services initiated informal contacts with Member States to collect information about their 
practices in the area, their national experience with restrictions on payments in cash and 
their views on a potential initiative in this area.  

At the ECOFIN of 17 June 2016, the Commission reported on this quick informal survey 
and  announced  that  a  detailed  impact  assessment  would  be  carried  out,  including  an 
analysis  of  the  costs  and  benefits  of  potential  EU  action.  This  assessment  would  also 
include a public consultation3.  

The Commission commissioned an impact study to an external contractor4 and a public 
consultation was carried out between March and May 2017. 

The  findings  of  the  study  produced  by  the  contractor  suggested  that  restrictions  on 
payments in cash would not significantly prevent terrorism financing, but indicated that 
such restrictions could be useful in combatting money laundering. The study also noted 
that  the  existence  of  diverging  restrictions  at  national  level  had  a  noticeable  negative 
impact on the internal market by distorting competition and creating an uneven playing 
field among some businesses. 

The  purpose  of  this  Report  is  to  present  the  findings  of  the  study  and  the  public 
consultation.  The  Report  should  be  read  in  conjunction  with  the  study,  which  contains 
more detailed information. 

1   COM (2016)50 
2   The Action Plan stated that "Payments in cash are widely used in the financing of terrorist activities… 
In  this  context,  the  relevance  of  potential  upper  limits  to  cash  payments  could  also  be  explored. 
Several Member States have in place prohibitions for cash payments above a specific threshold". 
3   The  initiative  was  validated  in  the  Commission's  agenda  planning  in  December  2016  and  on  23 
January 2017, an Inception Impact Assessment was published, setting out the case for further analysis 
http://ec.europa.eu/smart-regulation/roadmaps/docs/plan_2016_028_cash_restrictions_en.pdf. 

4   HTML Link to Ecorys Report 

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2.  CONTEXT 

2.1. 

Features of cash 

For the purposes of this Report, cash is understood as banknotes and coins issued by 
central banks.  

The  study  provides  detailed  information  on  the  use  of  cash  across  countries5.  The 
Occasional Paper of the European Central Bank “The use of cash by households in 
the euro area” also provides valuable information on the use of cash at point of sale, 
based on a survey carried out in 20166. According to this Report from the European 
Central  Bank,  cash  remains  the  most  common  means  of  payment  in  the  euro  area 
and still represents a significant store of value. 

The Commission's focus when assessing a possible cash payment limit was on high 
value  payments,  which  represent  only  a  minor  share  of  all  cash  transactions7.  The 
use of cash in general was not targeted.  

2.2.  Legal framework 

2.2.1.  EU level 

There is currently no legislation at EU level restricting payments in cash8. However, 
two legal instruments impose obligations on cash use. 

The  Cash  Control  Regulation  provides  a  system  of  controls  that  applies  to  natural 
persons  entering  or  leaving  the  Union,  and  carrying  currency  or  bearer-negotiable 
instruments  worth  EUR  10,000  or  more.  On  21  December  2016,  the  Commission 
issued  a  new  legislative  proposal  aimed  to  further  strengthen  these  controls.  This 
proposal is currently being negotiated by the co-legislators.  

The  4th  Anti-Money  Laundering  Directive  imposes  due  diligence  obligations  on 
persons trading in goods  to the extent that they make or receive cash payments of 
EUR 10.000 or more, whether the transaction is carried out in a single operation or 
in several operations, which appear to be linked9. 

2.2.2.  National level 

A  majority  of  EU  Member  States  have  cash  payment  restrictions10.  These 
restrictions vary from  thresholds of  EUR 500 to  EUR 15.000. These  measures are 
rather  heterogeneous,  with  differences  with  regard  to  the  type  of  measures, 
thresholds, and coverage. It must also be observed that the number of EU Member 
States with cash restrictions has increased rapidly in recent years, from 4 in 2008 to 
17 in September 2017. 

5   See study p. 18-21 
6   https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf  
7   See ECB Occasional Paper, page 25. 
8  

It  must be  observed  that the legal  aspects of  a  potential  EU  measure  restricting  cash  payment  limits 
have not been assessed at this stage. 

9   The directive was recently updated by the Fifth Anti Money laundering Directive.   
10   The study provides a detailed overview of the national legislation in force by the end of 2017 (p. 25-

29). 

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3.  STEPS TAKEN FOLLOWING THE ECOFIN OF 17 JUNE 2016 

To  mobilise  resources  efficiently,  a  study  was  commissioned  to  a  private  contractor,  a 
consortium formed by Ecorys and the Centre for European Policy Studies (CEPS). The 
main  purpose  of  the  study  was  to  assess  the  potential  impact  of  restrictions  on  cash 
payments on illicit activities and on the internal market11.  

In  line  with  the  Better  Regulation  Guidelines,  a  public  consultation  was  carried  out 
between 1 March 2017 and 31 May 2017. The results of this consultation are presented in 
Section 4, and indicate that a large majority of respondents were clearly opposed to any 
restrictions on payments in cash. 

In  February  2018,  the  contractor  finalised  the  study.  The  main  conclusions  were  that 
restrictions on cash payments would have little positive impact on terrorism financing or 
tax fraud. However, the study also concluded that restrictions on payments in cash were 
useful in combatting money laundering, and that the existence of diverging restrictions at 
national  level  had  a  noticeable  negative  impact  on  the  internal  market  by  distorting 
competition and creating an uneven playing field among some businesses. 

4.  THE PUBLIC CONSULTATION 

A public consultation was carried out between 1 March 2017 and 31 May 2017 through 
an internet survey inviting respondents to answer various questions on the issue of cash 
restrictions12.  

Three different objectives were identified for the consultation of stakeholders. 

First, it was recognised that cash remained the most accessible means of payment and in 
some  Member  States  was  deeply  ingrained  in  the  public’s  image  of  personal  freedom. 
Any potential change of policy would therefore be sensitive and would affect all citizens. 
Against this background, the first and  main objective of the consultation was to collect 
views  of  the  public  in  general  with  regard  to  a  potential  introduction  of  restrictions  on 
payments in cash.  

Second,  given  that  cash  is  still  widely  used,  even  for  larger  payments,  in  particular  in 
certain  economic  sectors  and  by  many  small  and  medium-sized  companies,  it  was 
recognised that these economic sectors and actors could be significantly impacted by an  
introduction of restrictions on cash payments.  For this reason, a second objective of the 
consultation was to collect views from stakeholders who are active in sectors or activities 
that rely significantly on cash, and in particular obtain their assessment of the impact that 
any such restrictions would have on their activities. 

Finally,  in  light  of  the  objective  of  combatting  terrorism  financing  and  other  illegal 
activities, the views of experts in criminal matters and law enforcement were also sought 
on the pertinence of restrictions on cash payments in relation to this specific objective. 

While  there  were  three  categories  of  respondents,  it  should  be  underlined  that  the  first 
category of respondents - the general public - constituted the main target of the electronic 
survey, which was carried out with the use of an electronic tool allowing the collection of 

11   For a detailed description of the methodology followed, see study, p.31-35 
12   Gross results are available at: https://ec.europa.eu/eusurvey/publication/CashPayments . 

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a  considerable  amount  of  replies.  The  questions  were  designed  with  this  category  in 
mind.  Other  categories,  like  for  example  the  economic  sector  and  law  enforcement 
professionals, were not excluded from the survey and were also given the opportunity to 
contribute. However, these stakeholders were also consulted through a more qualitative 
enquiry in the process of the external study. The public survey was not designed to cater 
specifically for the specificities of these stakeholders. 

The  public  consultation  included  several  questions.  All  the  details  in  relation  to  these 
questions and their answers have been published13. 

The main message from the survey was that at a substantial majority (94.94%) answered 
negatively  to  the  question  "Would  you  agree  to  the  introduction  of  restrictions  on 
payments in cash at EU level?" This was a shared view between respondents, regardless 
of whether restrictions were in place or not in their own country of residence. 

Such  negative  reaction  can  be  explained  by  the  fact  that  the  question  related  to  the 
introduction  of  a  general  prohibition,  which  would  potentially  apply  to  every  citizen 
(unlike  for  instance  a  prohibition  to  produce  certain  chemicals,  applying  be  definition 
exclusively  to  potential  industrial  producers).  Furthermore,  it  is  clear  that  public 
consultations reflect only the opinion of the respondents who spontaneously volunteer to 
answer the survey, unlike opinion polls were respondents are pro-actively contacted in a 
systematic manner... 

In that context, it should be clarified that most respondents originated from three Member 
States:  Austria,  Germany  and  France.  This  was  the  result  of  the  publicity  given  to  the 
consultation in the national media in these countries. The Commission did not pursue any 
targeted  communication.  However,  results  from  other  countries  did  not  differ 
significantly from the general trend observed in these three countries. 

5.  FINDINGS OF THE STUDY  

5.1. 

Findings of the study with regard to terrorism financing  

Cash is extensively used by terrorists and criminals because it helps them to minimise the 
chances of being caught14. Cash offers anonymity and facilitates the ability to conceal not 
only illegal activities, but also ancillary legal transactions that could otherwise be tracked 
by law enforcement agencies. In many terrorist activities, cash plays a significant role. 

However, the detailed analysis of a selection of recent terrorist attacks presented in the 
study also highlighted that restrictions on payments in cash would have had little impact 
on the capacity to prepare these attacks. 

Firstly,  there  is  an  observed  trend  of  the  decreasing  costs  of  terrorist  attacks  since  the 
9/11 attacks, often going below EUR 10,000  being a fraction of the estimated budget of 
the 9/11 attacks which ranged between USD 400,000  and USD 500,000 . 

Secondly, within such a limited budget the amounts of individual transactions are often 
even  lower,  and  would  therefore  not  have  been  impacted  by  restrictions  which  would 

13   https://ec.europa.eu/info/sites/info/files/statistical_overview.pdf 
14   Study, p. 21. 

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concern  only  high  value  payments.  The  case  study  analysis  presented  in  the  study15 
demonstrates this extensively. 

Finally, it must be observed that, when assessing the impact of a prohibition of payment 
in cash on terrorism and other criminal activities, a distinction must be made between the 
impact on illicit and on licit transactions.  

Illicit transactions are transactions that are illegal (such as the acquisition of explosives), 
or seemingly licit transactions where both parties know that they serve an illegal activity. 
To the extent that these transactions are already illegal and that the parties willingly risk 
prosecution and law enforcement measures, it appears doubtful that a prohibition of cash 
payments would be respected or would have any deterrent effect. Criminals, who already 
wilfully  breach  the  law,  are  unlikely  to  be  deterred  by  an  additional  prohibition  with 
regard  to  the  payment  of  the  transaction.  This  is  particularly  so  when  the  sanctions 
associated  with  that  additional  prohibition  are  insignificant  in  comparison  to  the 
sanctions associated with the main criminal activity. 

Licit  transactions  are  ancillary  transactions  to  the  main  criminal  activity  that  are  not  in 
themselves criminal (such as renting a car), and for which the counterpart (e.g. the car-
rental  company)  may  be  presumed  to  be  unaware  of  the  criminal  purpose  behind  the 
transaction (for example the transport of explosives). In that context, a prohibition to pay 
in  cash  could  be  respected  at  the  initiative  of  the  honest  counterpart,  leading  to  the 
transaction  being  paid  by  other  means  or  not  being  carried  out.  Unfortunately,  in  that 
case  one  would  suspect  that,  because  these  transactions  are  licit  and  common,  paying 
them by traceable means would not necessarily allow identifying a suspicious activity. It 
must be observed that many such  common  transactions were actually paid by traceable 
means in the preparation of recent terrorist attacks, without raising red flags16. 

In conclusion, prohibitions on high value cash payments would not significantly hamper 
directly the financing of terrorist activities or other criminal activities. Most transactions 
would  not  be  concerned,  or  the  prohibition  would  likely  be  ignored,  or  would  be 
respected only with regard to transactions which are in themselves so common that they 
are unlikely to trigger any suspicions. 

5.2. 

Findings of the study with regard to tax fraud  

While tax fraud17 and the use of cash are often associated, the study demonstrates that the 
relationship between the two is not always clear-cut18. 

Firstly, while there is some correlation between the use of cash in an economy and the 
level  of  tax  fraud,  it  seems  that  other  factors  also  play  an  important  role,  which  would 
explain the existence of outliers (such as Austria which has a low level of tax fraud but a 
high usage of cash). 

Secondly,  while  cash  is  used  extensively  for  terrorism  financing  and  other  criminal 
activities,  a  significant  form  of  tax  fraud  is  conducted  through  non-cash  transactions, 

15   See study p. 38-54; 
16   See  case studies referred to in the study; 
17   Tax fraud must be differentiated from  tax avoidance, which consists in using sophisticated but legal 

ways of avoiding or reducing tax bills. 

18   Study, p. 64-67. 

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with  the  fraud  relying  on  complex  legal  structures  and  operations  which  are  often  of  a 
multinational  nature  and  which  do  not  involve  any  use  of  cash.  In  these  cases,  a 
prohibition on payments in cash would be totally ineffective. 

Finally, in the cases where cash is indeed used for tax fraud purposes, two cases can be 
distinguished.  In  both  cases,  cash  restriction  would  not  appear  to  meet  the  purpose  of 
limiting fraud. The first case involves transactions where both parties are involved in the 
tax  fraud,  such  as  undeclared  labour.  Such  transactions  may  be  of  high  value  (such  as 
salary payments), but because both parties are already exposed to the penalties associated 
with  the tax fraud, a prohibition of  payments  in  cash would exert  little deterrence. The 
second case involves transactions where only one party relies on the cash-nature of the 
transaction  to  carry  out  tax  fraud  (generally  a  seller),  while  the  other  party  remains 
uninvolved and unaware of the fraud. It appears to the Commission that cash restrictions 
could have an impact in such cases. However, given that the amounts involved in these 
kinds  of  transactions  are  often  low  (e.g.  restaurant  bills),  they  would  in  general  not  be 
covered by a prohibition on high value payments in cash19. 

In  conclusion,  it  would appear  that a  restriction  on  high  value  payments  in  cash  would 
have only a limited impact on tax fraud, unless the threshold is put at a very low level. 

5.3. 

Findings of the study on money laundering 

Many criminal acts are perpetrated with the goal of generating profits for the individual 
or  group  that  carries  out  the  act.  Money  laundering  is  the  processing  of  these  criminal 
proceeds20 to disguise their illegal origin, so that the resulting money appears legal and 
can  be  spent  in  the  real  economy21.  As  indicated  in  the  study22,  it  is  clear  that  cash 
transactions  play  an  important  part  in  money  laundering,  the  main  reason  being  that, 
despite  the  steady  growth  on  non-cash  payment  methods  and  the  changing  face  of 
criminality  (with  a  rise  of  cybercrime,  online  fraud  and  illicit  online  market  places), 
criminal activities continue to generate profits in the form of large amounts of cash. Cash 
is thus often the starting point of money laundering, which therefore requires some cash 
transactions,  often  through  the  acquisition  of  high  value  goods.  The  European 
Commission’s Supranational Risk Assessment Report23 also highlights the important role 
played by cash in money laundering (see in particular chapters 2.1.4 and 2.2.1).  

Despite  the  fact  that  not  all  cash  transactions  would  be  impacted  by  a  cash  restriction, 
transactions  related  to  money  laundering  are  often  of  high  value.  A  prohibition  or 
declaration obligation would remove the anonymity of the transaction and would render 
money  laundering  via  the  purchase  of  high-value  goods  more  difficult.  However  the 
overall  value  of  these  transactions,  and  the  impact  of  a  cash  restriction  on  money 
laundering  in  general,  cannot  be  precisely  quantified.  In  this  context,  a  declaration 

19   Study, p. 133. 
20   Criminal proceeds should be understood in the widest sense and include in particular tax fraud profits. 
21   This is an important difference with terrorism, where the objective is not enrichment of the individual 
or the group, but terror. In the case of terrorism, income is not an objective but a means to achieve the 
objective. Terrorists are in general less concerned with laundering their funds since they do not plan to 
spend them legally. Recent terrorist plots did not appear to have had any for-profit criminal purpose. 
Criminals typically obtain funds illegally with the aim of introducing them in the legitimate financial 
system.  Terrorists  obtain  funds  legally  (salaries,  loans,  sale  of  goods,  etc.)  and  spend  them  on  a 
criminal activity. 

22   Study p.57-64 
23   COM (2017) 340 

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obligation  would  already  provide  law  enforcement  with  intelligence.  However,  the 
effectiveness  of  a  declaration  obligation  would  depend  on  the  levels  of  compliance  by 
high-value  dealers  and  the  extent  to  which  the  reports  are  actually  analysed  and 
effectively  used  as  intelligence,  information  or  evidence  in  money  laundering 
investigations. Compliance costs are expected to be higher in comparison with the costs 
arising from a plain cash prohibition24. 

One  specific  feature  of  money  laundering  is  its  international  aspect  and  the  fact  that 
criminals  exploit  differences  between  national  laws  regarding  cash  transaction  reports 
and limits on cash payments25. The differences between EU Member States' laws on cash 
limitations not only hamper the proper functioning of the internal market (see below), but 
also provide opportunities to circumvent controls in their country of origin by investing 
in cash intensive businesses in another EU Member State with no or a lower control of 
cash  expenditures.  In  other  words,  the  existence  of  cash  payments  limitations  in  some 
Member  States,  and  their  absence  in  other  Member  States,  creates  the  possibility  to 
bypass the restrictions by moving to another EU Member State. 

In conclusion, it appears that homogeneous restrictions on high value payments in cash, 
whether  in  the  form  of  a  prohibition  or  declaration  obligation,  would  have  a  positive 
impact  on  the  fight  against  money  laundering,  even  though  this  impact  could  not  be 
exactly  quantified.  Given  that  money  laundering  is  typically  a  by-product  of  other 
criminal or illicit activities, such positive impact would extend indirectly to the fighting 
of these activities, even though the restrictions would not affect the activities themselves. 

5.4. 

Findings  of  the  study  with  regard  to  the  internal  market,  distortion  of 
competition and restrictions to payments in cash 

The  existence  of  diverging  national  restrictions  raises  the  question  as  to  whether  these 
restrictions  induce  displacements  of  activities  across  borders.  The  study  answers  this 
question in the positive. 

A well-functioning Internal Market requires maintaining a level playing field across EU 
Member States, which is not possible to achieve when having largely varying legislation 
at Member State level. Distortions  of the functioning of the Internal Market may affect 
consumers as well as businesses. 

Different  restrictions  on  payments  in  cash  may  lead  to  consumers  and  businesses 
switching  to  an  alternative  method  of  payment,  not  performing  the  transaction  at all  or 
relocating the transaction to a jurisdiction where such restrictions do not exist.  

This aspect has been examined in the study26, which analysed the cross border behaviour 
of buyers and sellers and conducted an econometric assessment of some specific sectors 
relying significantly on cash. 

Overall, the results, particularly for euro area countries, show support for the assumption 
that  cash  restrictions  have  an  impact  on  displacement  of  turnover  from  one  country  to 
another in case of diverging cash restrictions. This is true for domestic cash restrictions, 
as  well  as  for  cash  restrictions  in  neighbouring  countries,  with  the  former  having  a 

24   Study p. 10 
25   Study p. 67-70 
26   Study, p. 70-77. 

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negative and the latter a positive impact on the turnover of cash intensive sectors. Against 
this  background,  the  study  concludes  that  national  cash  restrictions  distort  the  internal 
market27. 

It  should  be  highlighted  that  such  displacement  of  turnover  concerns  both  legitimate 
transactions and transactions performed for the purpose of money laundering. The latter 
ones  are  not  illegal  transactions  per  se,  but  regular  transactions  performed  for  the  sole 
illegitimate purpose of money laundering where the other party (generally a seller) is not 
complicit or aware of the illegitimate purpose of the transaction. Nevertheless, both sorts 
of  displacements  of  transactions  have  an  impact  on  the  integrity  of  the  internal  market 
and lead to an uneven playing field, which might distort competition. But it is important 
to  consider  that,  in  addition  to  affecting  the  internal  market,  the  cross  border 
displacement of transactions aimed at laundering money also lowers the effectiveness of 
the national restrictions in fighting money laundering . 

Based  on  the  study,  it  appears  that  diverging  restrictions  across  Member  States  lead  to 
artificial  displacements  of  business  activities  across  borders28.  This  affects  both  the 
integrity of the internal market and the efficiency of national measures in reaching their 
public-policy objectives. 

6.  CONCLUSIONS 

Based  on  the  study,  it  can  be  concluded  that  cash  restrictions  would  not  significantly 
address  the  problem  of  terrorism  financing.  The  ineffectiveness  of  the  measure  stems 
from  the  fact  that  transactions  targeted  under  these  objectives  are  either  of  a  value  too 
low  to  be  covered,  or  are  already  illegal  transaction  where  an  additional  prohibition 
would have little impact, or both. 

However,  preliminary  findings  of  the  study  indicate  that  a  prohibition  of  high  value 
payments  in  cash  could  have  a  positive  impact  on  the  fight  against  money  laundering. 
Given  that  money  laundering  typically  concerns  funds  originating  from  criminal 
activities  or  tax  fraud,  restrictions  on  payments  in  cash  could  possibly  have  an  indirect 
impact on such activities.  

However, a further targeted assessment of this matter would be required, given that the 
focus of the current initiative was to counter terrorism financing. 

Another important conclusion is that diverging national provisions on payments in cash 
distort  competition in  the internal market, leading  to  potential  relocations of businesses 
across  borders,  in  particular  for  some  specific  sectors  relying  significantly  on  cash 
transactions, such  as  jewellery  or  car dealers. These  diverging national  restrictions also 
potentially create loopholes allowing the bypassing of national cash payment limits, and 
therefore decreasing their efficiency. 

Finally,  it  must  be  observed  that  restrictions  on  cash  payments  is  a  sensitive  issue  for 
European  citizens  and  that  many  of  them  view  the  possibility  to  pay  in  cash  as  a 
fundamental freedom, which should not be disproportionally restricted. 

27   Study, p. 77. 
28   Study, p. 70-77. 

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Considering  the  internal  market  aspects  and  the  significance  and  sensitivity  of  such  a 
potential measure, this matter requires further assessment. At this stage, the Commission 
is not considering any legislative initiative on this matter. 

9