When Roberto Scarpinato, the mafia-hunting Italian magistrate, came to speak at the German parliament in October 2012, you could hear a pin drop in the committee rooms. He came to advise parliamentarians on how to reform money-laundering laws.
“Our information shows clearly that, for some years now, Germany has been one of the Mafia’s favorite places to invest its money,” said Mr. Scarpinato.
One theory says the country is a favorite money-laundering destination because Germans are still so fond of using cash. In 2014, just 18.5 percent of payment transactions in Germany were made with cards, less than any other E.U. country and compared to more than 60 percent in Britain, according to the European Central Bank.
But this may change if the Social Democrats have their way – at least for larger sums. The junior partner in Chancellor Angela Merkel’s coalition government is proposing to fight illegal transactions with an upper limit on cash transactions. In a position paper seen by Handelsblatt, the party proposes an upper limit of €5,000 (around $5,400) for cash payments. They also want to abolish the €500 note in the 19-nation euro currency zone.
“Limits on cash transactions would discourage foreign criminals from coming here to launder money,” says the Social Democrats’ paper. If sums over €5,000 have to pass through traceable bank transactions, laundering would be severely hampered, it adds.
Other European states have already imposed such restrictions. In 2011, Bulgaria was the first country to set a limit, restricting cash deals to €2,500. Italy followed suit a year later, with a radical limit of €1,000, although this was later relaxed to €3,000. Portugal is considering similar measures.
Some pundits have gone much, much further, predicting the end of all cash. John Cryan, the co-chief executive of Deutsche Bank, last week predicted that cash would disappear as a method of payment within 10 years.