Opinion of the European Central Bank of 12 February 2019 on banning the use of euro 500 denomination banknotes and on certain amendments to antimoney laundering legislation (CON/2019/5)
Date: 2019-02-12
Institutions: European Central Bank
Subjects: Denmark, euro, fight against crime, money, money laundering, national law, payment

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 February 2019  

on banning the use of euro 500 denomination banknotes and on certain amendments to anti-
money laundering legislation 

(CON/2019/5) 

Introduction and legal basis 

On  18  December  2018,  the  European  Central  Bank  (ECB)  received  a  request  from  Finanstilsynet  (the 

Danish Financial Supervisory Authority) for an opinion on a draft law amending the Law on measures to 
prevent money laundering and financing of terrorism1 and the Law on financial business2 (hereinafter the 

‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  (TFEU)  and  the  second  indent  of  Article  2(1)  of  Council  Decision 
98/415/EC3, as the draft law relates to means of payment. In accordance with the first sentence of Article 

17.5  of  the  Rules  of  Procedure  of  the  European  Central  Bank,  the  Governing  Council  has  adopted  this 

opinion. 

1.  

Purpose of the draft law 

1.1  The three main purposes of the draft law are to: (i) implement certain provisions of Directive (EU) 
2018/843 of the European Parliament and of the Council4, which amended Directive (EU) 2015/849 
of the European Parliament and of the Council5, into  Danish  law; (ii) implement certain parts of a 

political  agreement  made  on  19  September  2018  between  the  majority  of  the  Danish  political 

parties,  including  the  parties  of  the  Danish  government,  to  further  strengthen  initiatives  against 
money laundering and terrorist financing (hereinafter the ‘Political Agreement’) into Danish law6; 

and (iii) ensure further alignment of Danish legislation with Directive (EU) 2015/849.  

1.2  As part of the implementation of the Political Agreement, the draft law proposes to  ban the use of 

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Lov om forebyggende foranstaltninger mod hvidvask og finansiering af terrorisme. 
Lov om finansiel virksomhed. 

Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

Directive  2018/843  of  the  European  Parliament  and  of  the  Council  of  30  May  2018  amending  Directive  (EU) 
2015/849  on  the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist 
financing, and amending Directives 2009/138/EC and 2013/36/EU (OJ L 156, 19.6.2018, p. 43). 

5     Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use 
of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing,  amending  Regulation  (EU)  No 
648/2012  of  the  European  Parliament  and  of  the  Council,  and  repealing  Directive  2005/60/EC  of  the  European 
Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73. 
Aftale  mellem  regeringen  (Venstre,  Liberal  Alliance  og  Det  Konservative  Folkeparti)  og  Socialdemokratiet,  Dansk 
Folkeparti,  Radikale  Venstre  og  Socialistisk  Folkeparti  om  yderligere  initiativer  til  styrkelse  af  indsatsen  mod 
hvidvask og terrorfinansiering, af 19. september 2018. 

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euro  500  denomination  banknotes  (hereinafter  ‘€500  banknotes)  in  Denmark7.  The  proposed 

provision provides that €500 banknotes must not be ‘used’. A list of means of use in the provision 

includes, but is not limited, to dispensing, depositing, exchanging, using as a means of payment or 

transferring, in Denmark. According to the explanatory notes to the draft law, simple possession of 

€500  banknotes  is  permitted,  which  includes  bringing  €500  banknotes  into  and  out  of  Denmark. 

Furthermore,  the  ban  only  applies  in  Denmark  and  does  not  limit  the  use  of  €500  banknotes 

outside  of  Denmark.  The  explanatory  notes  also  state  that  the  ban  is  worded  as  broadly  as 

possible  to  ensure  that  it  cannot  be  circumvented,  e.g.  by  transferring  €500  banknotes  as  a  gift. 

Intentional  or  grossly  negligent  violation  of  the  ban  will  be  punishable  by  a  fine,  except  in  such 
cases  where  a  higher  punishment  applies  pursuant  to  the  Danish  Penal  Code8.  The  ban  is 

proposed on the basis of the Political Agreement and is also included in the Danish strategy for the 
combatting of money laundering and terrorist financing from 2018 to 20219. 

1.3  The explanatory notes further state that reports10 show that €500 banknotes are primarily used by 

criminals and that a number of specific cases in Denmark and abroad in recent years  have shown 

that €500 banknotes have been used for criminal activities to a great extent. The explanatory notes 

also  refer  to  the  fact  that  on  4  May  2016,  the  ECB  Governing  Council  announced  that  the  ECB 
would  stop  producing  €500  banknotes11  and  that  the  Financial  Action  Task  Force  has 

recommended that producing the 500-euro banknotes be stopped. 

1.4  The  explanatory  notes  also  consider  the  proposed  ban  in  relation  to  Union  law12.  These  notes 

mention  that  the  ban  constitutes  a  restriction  on  the  movement  of capital  and  payments  between 

Member  States  and  also  between  Member  States  and  third  countries  which,  as  a  main  rule,  is 

prohibited under Article 63(1) TFEU. However, the notes also state that the ban is justified as it is 

introduced  for  compelling  public  interest,  namely  for  public  order  and  safety  in  order  to  prevent 
€500 banknotes being used for criminal activity13. The ban is also found to be proportionate to the 
interest it is seeking to protect14. 

1.5  The  draft  law  does  not  propose  to  ban  high  denomination  banknotes  issued  in  currencies  other 

than the euro. 

1.6  As part of the implementation of Directive (EU) 2015/849, as amended, the draft law also proposes 

to  introduce  a  new  exemption  from  the  confidentiality  obligation  imposed  on  Finanstilsynet 

whereby  exchange  of  information  between  Finanstilsynet  and  the  ECB  will  not  constitute  a 
violation  of  that  obligation15.  This  provision  implements  Article  57a(2)  of  Directive  (EU)  2015/849, 

pursuant  to  which  the  obligation  of  professional  secrecy  shall  not  prevent  the  exchange  of 

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See Section 1, no. 11 of the draft law. 
See  Section  1,  no.  75  of  the  draft  law,  which  amendments  the  second  sentence  of  Section  78(1)  of  the  Law  on 
measures to prevent money laundering and financing of terrorism. 
See page 2 of the Political Agreement. See also page 20 of Annex 1 to the Political Agreement.  

See  Anklagemyndigheden,  Statsadvokaten,  Hvidvasksekretariatet  og  Sporingsgruppen,  Årsberetning  2010.  See 
also Europol, ‘Why is cash still king?’, European Police Office, 2015. 

See the ECB press release of 4 May 2016, available on the ECB’s website at www.ecb.europa.eu. 
See pages 39-40 of the explanatory notes to the draft law. 

See the second paragraph on page 40 of the explanatory notes to the draft law. 
See the second paragraph on page 40 of the explanatory notes to the draft law. 
See  section  1,  no.  59  of  the  draft  law,  which  amends  section  56(3)  of  the  Law  on  measures  to  prevent  money 
laundering and financing of terrorism. 

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information  between  competent  authorities  supervising  credit  and  financial  institutions  in  different 

Member States in accordance with this Directive or other legislative acts relating to the supervision 

of credit and financial institutions, including the  ECB acting in accordance with Council Regulation 
(EU) No 1024/201316. 

2.  

Scope of the opinion  

This opinion focuses on the provisions of the draft law concerning: (a) the proposed ban on the use 

of €500 banknotes in Denmark; and (b) Finanstilsynet’s sharing of confidential information with the 

ECB.  The  ECB  stresses  that  it  does  not  opine  on  whether  the  draft  law  effectively  implements 

Directive  (EU)  2015/849  or  the  amendments  introduced  by  Directive  (EU)  2018/843  into  Danish 

law. 

3.  

Proposed ban on use of €500 banknotes in Denmark 

3.1 

In May 2016, the ECB Governing Council concluded a review of the denominational structure of the 

Europa  series  of  the  euro  banknotes.  It  has  decided  to  permanently  stop  producing  the  €500 

banknote and to exclude it from the Europa series, which is the second series of euro banknotes, 

taking  into  account  the  concerns  that  this  banknote  could  facilitate  illicit  activities.  In  view  of  the 

important circulation of this denomination, also at international level, and to safeguard the trust in 

euro  banknotes,  the  €500  will  remain  legal  tender  and  can  therefore  continue  to  be  used  as  a 

means  of  payment  and  store  of  value.  The  €500  banknote,  like  the  other  denominations  of  euro 

banknotes, will always retain its value and can be exchanged at the national central banks of the 

Eurosystem  for  an  unlimited  period  of  time.  Credit  institutions,  bureaux  de  change  and  other 

professional cash handlers may recirculate €500 banknotes. 

3.2  Under  Article  3(4)  of  the  Treaty  on  European  Union,  the  ‘Union  shall  establish  an  economic  and 

monetary union whose currency is the euro’. Denmark has an exemption from participating in the 

third stage of the economic and monetary union, pursuant to the Protocol (No. 16) of the TFEU on 

certain provisions relating to Denmark. The effect of the exemption for Denmark is that all articles 

and  provisions  of  the  Treaties  and  the  Statute  of  the  ESCB  referring  to  a  derogation  shall  be 
applicable  to  Denmark17.  Therefore,  in  accordance  with  Protocol  (No  16)  and  Article  139(2)(d) 

TFEU, Article 128 TFEU, which states that the euro banknotes issued by the ECB and the national 

central banks shall be the only such notes to have the status of legal tender within the Union, is not 

applicable to Denmark. 

3.3  Under the principle of sincere cooperation set out in Article 4(3) of the Treaty on European Union, 

Member States shall facilitate the achievement of the Union's tasks and refrain from any measure 

which  could  jeopardise  the  attainment  of  the  Union's  objectives.  The  recognition  of  the  monetary 
law (lex monetae) of a State is a universally recognised principle of customary international law18. 

16  

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18  

Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

See paragraph 1 of Protocol (No. 16) of the TFEU on certain provisions relating to Denmark. 
See, for example, Recital 8 of Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to 
the introduction of the euro (OJ L 162, 19.06.1997, p. 1); see also the European Commission’s Communication on 
‘The  impact  of  the  introduction  of  the  euro  on  capital  markets’  (COM(97)0337  final)  (Euro  Papers  3.  July  1997. 

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The  law  of  the  country  issuing  a  currency  determines,  inter  alia,  the  questions  concerning  the 

identity  of  the  currency  and  the  currency's  status  as  legal  tender,  including  which  banknotes  and 

coins constitute legal tender. The principle of lex monetae generally applies regardless of the place 

of payment or the governing law of a contract setting out a payment obligation. 

3.4  Against  this  backdrop,  the  Danish  authorities  are  respectfully  invited  to  refrain  from  introducing  a 

ban on the use of the €500 banknote in Denmark. No such ban has been introduced at Union level. 

On the contrary, and  as noted  above,  while the  ECB has decided to permanently stop  producing 

the  €500  banknote,  the  €500  banknote  will  remain  legal  tender  and  can  therefore  continue  to  be 

used  as  a  means  of  payment  and  store  of  value.  Insofar  as  Danish  parties  have  entered  into 

commercial transactions denominated in euro, often with counterparties in the euro area, the ECB 

respectfully  suggests  that  the  Danish  authorities  should,  in  line  with  the  principle  of  sincere 

cooperation  and  the  monetary  law  of  the  Union,  acknowledge  that,  notwithstanding  the  fact  that 

production  of  the  €500  banknote  will  cease,  it  is  still  legal  tender  for  the  discharge  of  debts 

denominated in euro and may continue to be used as a means of payment and exchange. 

3.5  Data  on  the  flows  of  €500  banknotes  between  the  banking  sector  and  the  non-banking  sector 

within  and  outside  the  euro  area  suggest  that  there  are  legitimate  reasons  for  using  €500 

banknotes  including,  among  others,  the  instant  settlement  of  common  high-value  payments  or  to 

temporarily hold assets in central bank money. The legitimate use of €500 banknotes is supported 

by results from an ECB survey on the use of cash in the euro area, which indicate that a distinctly 

larger-than-expected  share  of  the  population  possessed  high-denomination  banknotes  and 
received  and/or  spent  them for  legitimate  purposes19.  Although  €500  banknotes  may  be  used  for 

money-laundering  activities,  so  may  any  other  denomination  as  well  as  non-cash  means  of 

payment. Therefore, the assumption that €500 banknotes are predominantly used by criminals is 

unsubstantiated. No evidence has been provided by authorities that €500 banknotes are used for 

illegal  activities  in  Denmark  to  a  larger  extent  than  the  national  currency,  other  euro  banknote 

denominations or electronic means of payment.  

3.6  Furthermore,  the  ECB  considers  that  the  draft  law  treats  high-value  banknote  denominations 

unequally  as  it  does  not  extend  the  proposed  measures 

to  other  high-value  banknote 

denominations, such as the 1000 Swiss francs banknote which has higher purchasing power. 

4.  

Finanstilsynet’s sharing of confidential information 

4.1  The ECB welcomes section 1, number 59 of the draft law which, in accordance with Article 57a of 

Directive  (EU)  2015/849,  as  amended,  contains  explicit  permission  for  Finanstilsynet  to  share 

confidential information acquired within its supervisory tasks under the existing law on measures to 

prevent money  laundering and financing of terrorism with the ECB. The task of supervising credit 

institutions in relation to the prevention of the use of the financial system for the purposes of money 

laundering  and  the  financing  of  terrorism  has  not  been  conferred  upon  the  ECB.  However,  the 

Brussels. Tab. Ann. Free.), p. 63. 

19   

See Esselink, H., Hernández, L., ‘The use of cash by households in the euro area’, ECB Occasional Paper Series 
No 
at: 
https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf. 

November 

European 

Available 

Central 

Bank, 

2017, 

2017. 

201, 

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outcomes of the anti-money laundering and counter-terrorism financing (AML/CFT) supervision are 

important to consider for the discharge of the specific tasks conferred upon the ECB concerning the 

prudential  supervision  of  credit  institutions  under  Article  127(6)  TFEU  and  Regulation  (EU)  No 

1024/2013.  It  is  therefore  of  utmost  importance  that  the  ECB,  as  well  as  other  prudential 

supervisors,  receive  timely  and  reliable  information  about  money  laundering  and  financing  of 

terrorism  risks  and  breaches  of  AML/CFT  requirements  by  supervised  entities  from  AML/CFT 
supervisors20. In order to facilitate the exchange of information between the ECB and the AML/CFT 

supervisors  within  the  European  Economic  Area,  including  Finanstilsynet,  an  agreement  on 

practical modalities of exchange of information was prepared in line with Article 57a(2) of Directive 

(EU)  2015/849,  as  amended,  with  the  support  of  the  European  Banking  Authority,  European 

Securities  and  Markets  Authority  and  European  Insurance  and  Occupational  Pensions  Authority, 
and subsequently signed by the ECB on 10 January 2019.21 

4.2  As  regards  the  implementation  of  Article  57a  of  Directive  (EU)  2015/849,  as  amended,  it  is  not 

entirely  clear  how  the  remaining  parts  of  that  Article  are  to  be  implemented  into  Danish  law.  In 

particular,  it  is  unclear  whether  Finanstilsynet  is  permitted  to  disclose  confidential  information 

received  within  its  AML/CFT  supervision  only  to  the  ECB  or  whether  it  may  disclose  such 

information  to  other  competent  authorities  supervising  credit  and  financial  institutions  in  different 

Member States in accordance with legislative acts other than Directive (EU) 2015/849 as well. This 

would include disclosure to  competent authorities  in accordance with Directive 2013/36/EU of the 
European  Parliament  and  of  the  Council22.  Current  Danish  legislation  on  disclosing  confidential 

information  to  Union/European  Economic  Area-based  authorities  appears  to  be  limited  to 

authorities  that  are  responsible  for  ensuring  compliance  with  AML/CFT  legislation  and  does  not 

cover  disclosure  to  authorities  responsible  for  supervising  compliance  with  other  legislative  acts 
relating  to  the  supervision  of  credit  and  financial  institutions23.  As  the  Single  Supervisory 

Mechanism consists of the ECB and  national competent  authorities,  it  is important to ensure that 

the national competent authorities can receive confidential information acquired by Finanstilsynet in 

its  AML/CFT  supervision,  as  envisaged  in  Article  57a  of  Directive  (EU)  2015/849.  The  ECB 

therefore  recommends  that  the  draft  law  should  be  amended  to  ensure  that  disclosure  of 

confidential information by Finanstilsynet to authorities responsible for the supervision of credit and 

financial  institutions  is  permitted  where  such  authorities  are  not  responsible  for  the  AML/CFT 

supervision. 

4.3  Currently,  the  Union  legislative  framework  on  the  exchange  of  AML/CFT-related  information  is 

currently undergoing revision by the legislators to facilitate the flow of information between relevant 

authorities.  The  Danish  legislators  may  therefore  consider  authorising  the  Danish  Financial 

20  

21   

22  

23  

See  paragraph  1.2  of  Opinion  CON/2018/55.  All  ECB  opinions  are  published  on  the  ECB  website  at 
www.ecb.europa.eu.  
See  Multilateral  agreement  on  the  practical  modalities  for  exchange  of  information  pursuant  to  Article  57a(2)  of 
Directive  (EU)  2015/849  concluded  between  the  European  Central  Bank  and  the  undersigned  Competent 
Authorities. 

See Article 56 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to 
the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending 
Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 

See Section 56(3) number 18 of the Law on measures to prevent money laundering and financing of terrorism.  

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Intelligence Unit, Statsadvokaten for særlig økonomisk kriminalitet (the Danish State Prosecutor for 

Serious  Economic  and  International  Crime),  to  share  confidential  information  with  the  competent 

authorities supervising credit and financial institutions under other legislative acts in other Member 

States,  including  the  ECB,  where  such  information  is  relevant  to  the  performance  of  their  tasks. 

The European Commission noted that divergent national transposition  of Directive (EU) 2015/849 
leads to important differences in access to AML/CFT-related information24.  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 12 February 2019. 

[signed] 

The President of the ECB 

Mario DRAGHI 

24  

See  paragraph  2b  of  the  European  Commission’s  Communication  on  ‘Strengthening  the  Union  framework  for 
prudential  and  anti-money  laundering  supervision  for  financial  institutions’  (COM(2018)  645  final)  (12  September 
2018, Brussels), p. 4. 

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