Police want 500 euro banknotes taken out of circulation | Yle Uutiset | yle.fi

The Finnish Police are concerned that larger banknotes, like the 200 euro and 500 euro banknotes, encourage criminal activity and should therefore be removed from the Finnish market.

“In practice they enable and fortify the grey economy and money laundering. For this reason, we believe their circulation should be phased out,” says National Bureau of Investigation’s Markku Ranta-aho, head of the Money Laundering Clearing House of Finland.  

“Criminal activity almost exclusively deals in cash. Criminals do not pay out from one bank account to another; they use cash. Larger bills make it easier to carry large quantities of money in a small space across borders, both within and outside Europe,” he says.

Chief Inspector Ranta-aho says criminals prefer cash because it is harder for police to trace its movements. A record of all electronic money transfers always remains in the banking system, which makes the police’s job considerably easier.

Ranta-aho says that 200 and 500 euro banknotes should also be removed because Finnish residents no longer use them to pay for their purchases now that bankcards have become more common. In his opinion, no one needs a banknote higher than one hundred for everyday use anymore today.

Bank of Finland says no

The Bank of Finland admits that the use of larger banknotes as a form of payment has diminished in recent years in Finland and the euro zone.

“The demand and need for 500 and 200 euro banknotes in Finland’s circulation is small and their use in normal payment traffic is very minimal,” says the Bank’s advisor Kari Takala.

The Bank of Finland is sceptical about the ability of a ban on 500 euro banknotes to eliminate underground labour and trade in Finland, however.

“Removing larger banknotes could make things more difficult for the grey economy, but it would certainly not do away with it or even affect it much. They would just switch to smaller bills,” says Takala.

“There must be other ways to prevent people being paid under the table than by taking larger banknotes out of circulation. It seems they play a pretty negligible role in the parallel market overall. More illegal transactions take place via bank transfers,” he says.

The Bank of Finland’s Takala says the larger banknotes will remain in circulation for the time being because the benefits are still seen to outweigh the perceived disadvantages.

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