Earlier this year, the European Central Bank ceased production of the 500 Euro Note, a move driven by years of mounting concerns from various bodies, including academics, international law enforcement agencies, and EU finance ministers. The core allegation? The 500 euro note had become excessively popular as a tool for funding and facilitating serious crimes like drug trafficking, human smuggling, and terrorism. Its notorious reputation, coupled with its relative obscurity in everyday life – as famously noted, many know of its existence but few have ever actually seen a 500 euro note – led the European media to give it a chilling nickname: “the Bin Laden.”
This is an unusual narrative of an underdog currency. Popular culture often portrays the U.S. dollar as the lifeblood of international crime. However, for a significant period, roughly from the early 2000s until recently, authorities suggest that the euro, specifically the 500 euro note, became the underworld’s preferred currency. The rationale is straightforward: transporting large sums of money is significantly easier with 500 euro notes, each worth approximately $560, than with $100 bills. To illustrate, $1 million in $100 bills weighs about 22 pounds. The same amount in 500 euro notes? A mere 4.4 pounds.
A close-up of a 500 euro banknote, highlighting its high denomination and purple color, factors contributing to its use in illicit activities.
So, how exactly did the 500 euro note ascend to become the kingpin of the criminal financial world? And to what extent will halting its production truly impact the landscape of international crime?
The Genesis of a Criminal Currency: The 500 Euro is Born
The euro officially became legal tender on January 1, 2002. Even prior to its physical introduction, the 500 euro denomination was already raising eyebrows. As early as May 2000, Kenneth Rijock, a former money launderer from Miami, cautioned a U.S. House Subcommittee on Financial Institutions about the looming threat of the 500 euro note. He predicted it would incentivize money launderers to simply switch from U.S. dollars to this new, higher-value currency. Subsequent years unfortunately validated these early warnings, with a growing body of evidence pointing towards the increasing prominence of the 500 euro note in illicit financial activities.
Instances of the 500 euro note’s involvement in crime began to surface. In 2004, a drug mule traveling from Spain to Colombia was apprehended with a staggering $197,000 worth of euros internally concealed. In 2007, in Miami, a cache of over 12,000 500 euro notes was discovered, meticulously packaged in tamper-proof plastic bags. An Angolan general, suspected of involvement in money laundering in Lisbon, was found to have 8 million euros stashed in one of his residences, overwhelmingly composed of “Bin Ladens”. Authorities have since uncovered 500 euro notes hidden in an array of ingenious locations, from secret truck compartments to everyday items like cereal boxes, chocolate bar wrappers, and Kinder eggs.
A visual representation of the challenge law enforcement faces in detecting illicit cash, showing euro banknotes concealed within various everyday items, highlighting the need to combat the flow of 500 euro notes.
The Underworld’s Embrace: Why Criminals Loved the 500 Euro Note
A 2010 study by the UK’s Serious and Organized Crime Agency provided stark figures, estimating that “90% of the [500 euro notes] sold in the United Kingdom are in the hands” of criminal organizations. Similarly, an analysis from Germany’s central bank, Bundesbank, revealed that between 2002 and 2009, over 70 percent of the 500 euro notes issued in Germany were sent abroad, with half of this amount specifically destined for Russia. Europol, the European Union’s law enforcement agency, has even reported that the 500 euro note trades among criminals at a premium, above its face value, further indicating its high demand in the illicit economy.
Given this growing evidence, the question arises: why wasn’t stronger action taken against the 500 euro note sooner? One potential, albeit controversial, explanation lies in the economic benefits that European economies may have inadvertently derived from these illegal transactions. As the Wall Street Journal reported in 2010, the demand for high-denomination euro banknotes by “gangsters, drug dealers, and money launderers” was, paradoxically, “shoring up the financial stability of the eurozone.”
This phenomenon is linked to “seigniorage,” the profit banks make from issuing banknotes. Seigniorage is the difference between the cost of producing a banknote and its face value. Following the financial crisis, “the ECB’s gains from seigniorage are becoming increasingly important,” as Stephen Fidler noted in the Wall Street Journal. “In 2008, the year of the Lehman Brothers crisis, it was €80 billion.” While a minor factor in the larger economic landscape of the eurozone, it nonetheless played a role.
Bulk Cash Smuggling: An Expert Perspective
Kenneth Rijock, the former money launderer, offered insights into the mechanics of cash cleaning in a phone interview from Florida. “Bulk cash smuggling, it’s virtually bulletproof!” he exclaimed. “I spent 10 years of my life in the Miami Vice days doing bulk cash smuggling and I can tell you that it works!”
Rijock detailed his personal experiences ferrying drug money, sometimes exceeding $10 million per trip, from Miami to Caribbean tax havens via private planes. This “placement” stage is the initial step in money laundering. Disguised as a tourist in Hawaiian shirts and cargo shorts, Rijock would make trips from Friday to Monday. Despite his extensive career, Rijock, a lawyer by profession, served less than two years in the Federal Prison Camp at Eglin Air Force Base in Florida, often described as a comfortable prison environment. His arrest only occurred after a co-conspirator provided incriminating information; he was never caught red-handed.
From these tax havens, the laundered money would be further moved into the global banking system – a process known as “layering.” “It goes to Panama, then somewhere in Asia, and it ends up back in the city of London,” Rijock explained, giving hypothetical examples. “And once you’ve cleaned your money, you use it for a civilian transaction, like borrowing money against an office building.” This final stage, “integration,” completes the money laundering cycle.
The appeal of this system for criminals is evident. Roberto Escobar, brother of Colombian drug lord Pablo Escobar, revealed that Escobar’s operation would lose up to 10 percent of its cash earnings annually – billions of dollars – partly due to rats consuming the stored cash. In a contrasting example, the arrest of Chinese Gen. Xu Caihou in 2014 on bribery charges involved millions of U.S. dollars stored, rather conspicuously, in Chinese renminbi, where the highest denomination note is worth approximately $16. It required 12 trucks to transport the confiscated cash. This starkly illustrates the logistical advantages of using high-denomination notes like the 500 euro. Even in popular culture, the Netflix movie Triple Frontier highlighted the challenges of moving massive amounts of drug money, suggesting that if the characters had been using “Bin Ladens” instead of dollars, their escape might have been significantly smoother.
The Digital Age and the Future of Criminal Cash
However, in today’s digital age, the question arises: why do criminals still rely on cash at all?
A 2016 Europol report, “Why Cash Is Still King,” acknowledged the growing threat of “virtual currencies” like Bitcoin, which could potentially allow criminal organizations to bypass cash entirely. Such systems, the report noted, “would eliminate the need to cash in or out, as income and expenditure could take place within a closed system which does not interact with ‘real world’ finances.” Despite these emerging alternatives, the report concluded that “almost all criminals use cash at some stage during the money laundering process.” Even criminal enterprises that do not generate cash initially often convert their illicit gains into cash for transfer, as cash provides unparalleled anonymity and effectively “break[s] the link between the crime and the proceeds.”
The Ban’s Impact: Will Ending the 500 Euro Note Stop Crime?
Despite its negative image, there are reasons to believe that discontinuing the 500 euro note may not yield the dramatic results its proponents hope for. The EU has specifically investigated the 500 euro note’s role in funding international terrorism. However, despite its “Bin Laden” nickname, its significance in terrorism financing is likely overstated. Terrorism typically does not involve the vast sums of cash seen in drug trafficking. While exceptions exist, such as the 2014 case of Amal el-Wahabi, who was convicted in the UK for attempting to move 20,000 euros in 500 euro notes to fund her ISIS fighter husband in Syria, these instances are less common. Even in such cases, while 500 euro notes offer convenience, smaller denominations could also be used.
Moreover, money launderers are notoriously adaptable. Some even operate in plain sight. The 2016 Europol report detailed the case of a Ukrainian group from the same small town who would travel to the border in rented minivans. One individual would declare large sums of money on behalf of the other passengers. While technically legal as the money was declared, “the vast sums of cash transported are not commensurate with the living standards of the couriers.” Despite the obvious red flags, this technically legal loophole has persisted, allowing the Ukrainians to move over $550 million and over 14 million euros since 2008.
This leads to a broader perspective beyond just the 500 euro note. Friedrich Schneider, a retired economics professor from Austria’s Johannes Kepler University, argues, “This is nothing to do with crime… It’s a nice story, which is good for newspapers but not for effect. It’s an action for TV. It’s an action to show people, ‘I’m doing something’ while in principle doing nothing.”
Schneider suggests more fundamental approaches to combating crime, such as addressing shadow economies. “It’s quite difficult to fight shadow economies, but it can be managed,” he states. “It’s a political issue.” He points to the decriminalization of marijuana in the U.S. as an example: “Liberalize drugs; crime rates go down.” His broader argument suggests that legalizing all drugs would significantly reduce illegal money flows.
Conclusion: A Symbolic Gesture or Real Change?
European authorities have long campaigned against the 500 euro note, and they have now succeeded in halting its production. But what tangible changes will this bring? Kenneth Rijock, the early critic of the 500 euro, concedes that in a world with a limited supply of “Bin Ladens,” “the $100 bill will end up [again] being the currency of choice.” Even optimistic assessments suggest that this action will merely require criminals to adapt and work slightly harder.
The 500 euro note is not being recalled; Eurozone banks will continue to accept it as legal tender. As of June, over 480 million 500 euro notes were still in circulation. However, this number is steadily declining, and these notes will become increasingly scarce. Anecdotally, even during the writing of this article, sources reported increasing difficulty in obtaining 500 euro notes.
When asked about the need for 500 euro notes, one individual simply stated, “You can move a lot of money.” Pressed further about the purpose of needing such large sums in cash, the reply was, “Nothing. Just for safety. I always carry $10,000 on me. Just for when the shit happens.” Illustrating the physical difference, the individual gestured, “With 100 USD, $10,000 is about that much,” holding his fingers an inch apart. “But with euros, it’s that much,” narrowing the space to a fraction of an inch, revealing a sense of nostalgia and appreciation for the efficiency of high-denomination, anonymous cash flow – a relic of a fading era.
