LONDON (Reuters) - British money exchange offices have stopped selling 500 euro banknotes after police discovered the notes were being used almost exclusively by criminals, officials said on Thursday.
The Serious Organised Crime Agency (SOCA) said more than 90 percent of the banknotes’ use had been by criminal gangs, drug dealers and money launderers.
It added: “SOCA has concluded that there is no credible legitimate use for the 500 euro note in the UK in the volumes currently supplied, and that easy access to them in the UK is a key enabler of criminal activity, allowing criminals operating here to move large volumes of cash effectively.”
The action does not mean the banknote is banned in Britain — tourists will be able to sell them if they bring them into the country — but it will not be possible to buy them from exchange offices.
SOCA said its analysis had found the 500 euro note, worth about 425 pounds or 630 dollars, was used in all stages of money laundering as well as in low level criminality and tax evasion.
The denomination is particularly attractive to criminals in Britain because it takes up less than a tenth of the space of the alternatives in sterling, making smuggling much easier.
An adult male “mule” could stuff and swallow 150,000 euros (127,705 pounds) while 20,000 euros could be hidden in a cigarette packet.
In Britain, most of the notes had been supplied by small independent money service businesses (MSB) rather than large high street outlets, SOCA said.
It found one such MSB in London, which had a single outlet with no street frontage, had purchased about 4 million euros in 500 euro notes for onward sale, with its demand for the note exceeding that of a national retailer with 12,500 branches.
One money laundering gang had been able to source about 24 million pounds in 500 euro notes from MSBs between 2007 and 2009.
“Access to the 500 euro note will be much more difficult and anyone trying to source them in quantity will attract attention,” SOCA said. “There will be significant increase in the risk to criminals attempting to move and launder money.”
The agency said it would now be monitoring the demand for 200 euro notes to see if there was any increase in demand for them instead.
Editing by Steve Addison