The European Parliament and member states agreed on Thursday to limit cash payments in the European Union to 10,000 euros as part of anti-money laundering legislation, AFP reported.

Some countries, such as France, already have stricter rules than the new European regulations on cash payments.

But in other countries, for example in Austria and Germany, cash payments have not been limited until now. Burkhard Baltz, a member of the Bundesbank’s board of directors, told a press conference in Frankfurt am Main on Wednesday that cash is indispensable and part of the country’s necessary infrastructure.

The provision is part of a text that also aims to more effectively fight the financing of terrorism, which was agreed after two and a half years of negotiations and is due to enter into force this year.

The aim is to harmonize the existing, widely divergent rules in the 27 EU countries to identify and limit questionable transactions.

The deal “will ensure that fraudsters, organized crime and terrorists can no longer legitimize their profits through the financial system,” said Belgian Finance Minister Vincent Van Peteghem, whose country holds the EU Council presidency every six months.

Professional football clubs and their agents are also targets

The new legislation also harmonises and strengthens anti-money laundering and anti-terrorist financing rules for banks, estate agents and casinos. These organizations will need to be able to identify their customers or asset owners hiding behind opaque financial arrangements.

The application of these rules will be extended to the crypto-asset sector to ensure traceability in this area as well.

They will also cover the trade in luxury goods such as precious metals, jewelery and watches, as well as luxury cars, private jets and luxury yachts.

Finally, professional football clubs and their agents are also subject to stricter rules, but only after a five-year transition period after the entry into force of the text, i.e. from 2029.

The new legislation will also strengthen the powers of financial intelligence units.

In December, the European Parliament and member states approved the creation of an EU agency to combat money laundering and terrorist financing. The future headquarters of this organization is desired by several countries, in particular France and Germany.

The new agency, known by its English acronym AMLA (Anti-Money Laundering Authority), will be responsible for overseeing and coordinating national authorities to better identify and combat suspicious cross-border activity.

This package of measures was proposed by the European Commission in July 2021. On Thursday, Financial Services Commissioner Mairead McGuinness welcomed “an important step forward in the fight against dirty money in the EU”.

• Read also: A campaign for cash has started in Germany. The Fed says cash is part of the nation’s essential infrastructure

Scenarios of the future of cash

An ongoing study by the Bundesbank outlines three different scenarios for cash settlements in 2037.

scenario “The world of hyper-digital payments” describes a highly digitized world where cash has almost disappeared from most people’s daily lives. Due to geopolitical changes and digitalization, economic and social changes have taken place. Digitization and the use of artificial intelligence ensure prosperity. All areas of life, including payments, are heavily digitized. There are only a few bank branches or ATMs left, and it is no longer possible to withdraw money from an ATM, because people can hardly pay with cash in shops anymore.

The second scenario, “The world of payments in the era of the cash renaissance”, describes partial cashback and its benefits. In response to global supply chain challenges, people are once again buying products locally and regionally. In addition, recent experience has increased public awareness of disaster and crisis preparedness. After the abolition of 1 and 2 cent coins, the introduction of rounding rules and the increased use of payment machines, it became easy and fast for people to use cash. In this scenario, cash use initially declines but stabilizes in the 2030s.

scenario “The world of hybrid payments”, on the other hand, reflects an environment where the use or non-use of cash is highly dependent on people’s living conditions and attitudes. In retail trade, customers are encouraged to pay cashless. Access to cash is continually restricted and the use of cash is declining.

Under all three scenarios, the share of cash in total transactions will decline over the next 15 to 20 years compared to today. However, cash will not disappear completely in any future, Burkhard Baltz commented on the research results.

In two of the three scenarios, cash access and acceptance will not be fully guaranteed. This would mean that freedom of choice would be practically non-existent and the stabilizing function of cash would be threatened during a crisis.

On the same topic:

• Why Çolaku wants to limit cash payments at the worst time for Romania / What Isarescu said about a cashless society