Security Implications of Cash

I saw two related stories today. The first is about high-denomination currency. The EU is considering dropping its 500-euro note, on the grounds that only criminals need to move around that much cash. In response, Switzerland said that it is not dropping its 1,000-Swiss franc note. Of course, the US leads the way in small money here; its biggest banknote is $100.

This probably matters. Moving and laundering cash is at least as big a logistical and legal problem as moving and selling drugs. On the other hand, countries make a profit from their cash in circulation: it’s called seigniorage.

The second story is about the risks associated with legal marijuana dispensaries in the US not being able to write checks, have a bank account, and so on. There’s the physical risk of theft and violence, and the logistical nightmare of having to pay a $100K tax bill with marijuana-smelling paper currency.

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Posted on February 19, 2016 at 6:34 AM • 71 Comments

Comments

Jeroen • February 19, 2016 7:04 AM

Disclaimer: I work at a coffeeshop.

The way Dutch coffeeshops work is as follows: they’re legal on the front where customers buy albeit with strict regulations. The back door is illegal which means essentially we’re (well, my boss) buying cannabis illegally from growers who are in essence criminals. Its the way the law works.

Dutch coffeeshops also only accept cash, and it has been this way for ages. We don’t have more muggers or anything. A gram goes for about 10 EUR, half a gram for about 5 EUR (it differs a bit per species). The legal limit of carrying around cannabis is 5 gram. So you never have to carry around more than 50 EUR of cash. There’s also ATMs and grocery stores where you can withdraw money. I got regular customers who buy a lot every few days, I also get tourists whom I never see again. I don’t understand why a customer would have to be afraid of muggers more so that any other person on the street. Especially the ones running around with expensive iPhones.

I get my wage by wire transfer, very normal here for any job. I don’t know how my boss pays his bills but I can speculate on it. He has several businesses, and this is the ‘shady’ one so to say (because the back door is illegal).

I can tell you this though: the money doesn’t smell like marijuana. Even I don’t; I barely touch marijuana. Cannabis is sealed in standardized bags. The shop smells a bit, but that’s about it. Those bags come from storage and the people who put it in there wash their hands well. When I come home from work I don’t smell like marijuana (although in our shop I don’t get in contact with smoking customers). So why can’t it be deposited on a bank account? I read paper money apparently contains drugs like cocaine in trace amounts.

Jim Andrakakis • February 19, 2016 7:20 AM

@Jeroen very nice to know the insider view, thanks a lot.

One question: would it make your life harder if the EUR 500 bill was removed from circulation? Basically, would you care?

keiner • February 19, 2016 7:27 AM

Actually, Mr. Summers wants to kill even then 100$ note

😀

..but this has nothing to do with drugs or stuff. It’s about cash as the only way to escape from negative interest rates, which will come for John Doe during the next (looming) banking crisis.

Dave Oldcorn • February 19, 2016 7:43 AM

$100, small money? Pffft. The UK’s effective largest note is the £20.

If someone offered me a £50 I’d assume it was a fake. Indeed, the last time I saw one (and the only time I have in at least 15 years) it transpired it had been bought in a pub for £20.

Michael • February 19, 2016 8:18 AM

I don’t think it’s fair to say the US leads the way in small money! China’s largest banknote is 100 RMB (about $15). They’re also a much more cash heavy economy than some other countries and it’s practically normal for some Chinese transactions to involve a briefcase of bills.

Andrew • February 19, 2016 8:24 AM

@Dave in Scotland we also have GBP 100.00 notes [1][2][3] as the possible maximum, to make it more complicated. They’re issued by all three Scottish banks, although again I have to admit to not ever seeing one in circulation, and also the Bank of England GBP 50.00 notes are more common than Scottish fifties…

[1] http://www.scotbanks.org.uk/banknoteapp/BoS_100.html
[2] http://www.scotbanks.org.uk/banknoteapp/RBS_100.html
[3] http://www.scotbanks.org.uk/banknoteapp/CLYDE_100.html

Mattheus • February 19, 2016 8:31 AM

Bitcoin obviates these authoritarian restrictions on free trade. As physical cash becomes more marginalized, cryptocurrency can provide the financial freedom so desperately needed.

Doform • February 19, 2016 8:33 AM

Back in 2012 in Uzbekistan the highest was the 1000 Som bill worth about 0.35 US$. So everybody run around with big packets of money and became really good at counting bills. If you wanted to rob a bank, better bring a big truck or you won’t get enough to cover your gas costs.

This is actually a quite good plan to encourage people to stay away from cash.

Bruce Schneier • February 19, 2016 8:44 AM

“What happened to the Friday Squid? Are they finally extinct.”

It only gets posted on Fridays.

Earwig • February 19, 2016 8:45 AM

“a quite good plan to encourage people to stay away from cash”

That is to say, a quite good plan to put everyone further under the eye of the state.

Riccardo Cabeza • February 19, 2016 8:53 AM

Ha ha ha!! marijuana-smelling paper. so droll.

On the other hand, I now imagine a costly government mashup of “Where’s George” and DNA testing to track evil doers, the results of which will be hidden from federal judges, of course.

(note to self, talk to that ACLU stooge we keep on house council ASAP. See if this program exists and if not, have him submit federal grant applications, pronto)

phanmo • February 19, 2016 8:54 AM

@Dave
When I lived in the UK, there was one bank (I think Natwest) whose ATMs had the extremely annoying habit of always giving £50 notes if mathematically possible. Very difficult to break them, until I learned that touristy pubs always accepted them, since tourists usually get nice fresh 50s from their bank at home, thinking they’ll be more convenient.

When I worked in the automotive industry in Toronto, we’d often see very large quantities of $1000 bills, usually people buying brand-new customized pickup trucks for cash.

Rob Davidson • February 19, 2016 8:58 AM

€500 notes comprising 30% of all Euro notes in circulation is ridiculous. This is not an issue of anonymizing consumer transactions nor the psychology of Euro nations with hyper-inflationary pasts. They are instruments liquidity for the grey, black and criminal markets. The behaviour of the Luxembourg central bank in the proliferation of €500 notes needs greater scrutiny and transparency. Sounds like the same kind of dark arts that are rife within the FIFA organization

CallMeLateForSupper • February 19, 2016 9:04 AM

Geez… The current $100 bill began circulating only last October! All the work, all the expense, and four months later “experts” suddenly rouse themselves, look around, and advise that the franklin must go because terrorists and because organized crime. Absolutely screw every legitimate use of that currency, with the expectation that bad actors will be inconvenienced. This is yet one more case of “Something must be done; this is something; let’s do this.” I declare, the older I get, the smarter my parents become and the dumber “experts” – and politicians – become.

I use C-notes all the time and have done so continuously since January 2013. Before then, I endeavored to pay with CC in every face-to-face transaction. The rise of CC skimming and merchant hacks made me re-think.

paul • February 19, 2016 9:16 AM

If you’re going to do the comparisons of who has the smallest biggest bill (ahem) you’re probably going to have to use some kind of purchasing-power-parity adjustment. Also an adjustment for the smallest plastic transaction merchants will accept without making life difficult.

But I’m wondering whether at some point this leads to the opposite logistical problem: if all the physical bills are in the subsector of the economy that’s within a few degrees of separation from drug dispensers, will there be a shortage of currency for use in other sectors of the economy? Shortages of bills as things to pass around used to be a chronic problem in parts of the US even when shortage of money wasn’t.

Bernard • February 19, 2016 9:25 AM

Here in Ireland, the 50EUR note is as common as a 20GBP note in England, to such an extent that it is the default note in ATMs. The other note in the ATM, probably in only one casette, is the 20EUR. 100EUR and occasionally even 200EUR notes are dispensed at the Post Office for those people on social welfare payments who might have a large family but have not opted to be paid electronically.

I was part of a euro conversion team for the postal service at the time of changeover (2002?), and I’ve seen and even handled both the 100 and 200 since. I know what the 500 looks like, but have never seen one IRL. I expect the bookmakers at big horse racing meetings might see them from time to time. But for everyone else, you’re at least as likely to have a 50 in your purse/wallet as a 20.

We are being slowly brainwashed into doing everything electronically though. Because Terrorists, or Children, or Money-Laundering or something.

R • February 19, 2016 9:55 AM

Since we’re talking about “security implications of cash”…. there’s another one that I’ve never seen anyone mention: HOW DO WE KNOW THEY ARE NOT TRACKING CASH???

Every bill has a serial number… all you have to do is have the ATM’s record serial numbers as it dispenses it, and log who got what numbers… and then as cash is deposited by various businesses and individuals, have every deposit also do the same log as cash comes into the bank… You then combine the two logs country-wide and you have a fairly clear picture of who spent their cash at what store and when… It will not be perfect, but it will be pretty good. How do we know this is not being done?

Alien Jerky • February 19, 2016 10:00 AM

Aside from the hacking issues, waking up one morning to find your bank account gone, or simply the internet is offline because of a failure, a bigger issue exists with non-cash transactions.

People do not realize that most of a banks profit comes from credit card transactions. Those cash-back reward cards? the banks are not being nice. Aside from your annual fee, monthly fee, and interest you pay on your card, the banks get 3%-5% of the TRANSACTION AMOUNT every time you use your card.

I used to own a hobby store for a few years. My monthly statement for my merchant services account (credit card processing account) read like an NSA encrypted communication.

Those rewards cards the banks charge merchants an additional 1% on top of the 3%-5% they are already charging of the TRANSACTION AMOUNT for processing. If I sold a $1000 RC Helicopter, and the customer paid with a rewards card, I had to forfeit about 5% of my 15% profit margin to the bank as a transaction charge.

I once had a customer come in to buy a small tube of glue. Costs almost a dollar. I lose less money by giving away the tube of glue for free than to run his rewards card for the transaction.

Cash is king. The banks want to do away with cash because they do not get a service charge on every transaction. screw them. use cash. Credit should be used very sparingly. I have a credit card, but mostly only use it for emergencies, buying airplane toickets (they think you are a terrorist if you write a check or pay cash) and renting a car (impossible to rent without a credit card)

The power may go out, your computer may crash, you may be stranded in the middle of nowhere without a cell phone, but cash still works.

Jeroen • February 19, 2016 10:11 AM

Jim, short answer: No.

It would be practically irrelevant for me. I have never seen a 500 EUR bill in my life, same for 200. I don’t think they’re used much. I would even support the removal because I know we don’t have a sign which says ‘we don’t accept bills higher than X.’ You see, if we don’t want to accept bills of say 500 EUR we need to have a sign which informs the customer, before a transaction was made. I learned that the other day from a lawyer, and should inform my boss on that one.

I know many stores in this country have the sign where they say they don’t accept bills higher than 100 EUR. The reasons for that are two fold: for security reasons we don’t have that amount of cash in store to give back to customers. Especially not at the start of the day when we haven’t made any transactions yet. Second, I want to keep small cash amounts for customers who pay small and large bills may hurt my small cash amounts. If I get 3+ customers who each buy very little and pay with 50 EUR at the very start of the day, I’m screwed. That is unlikely to happen though and because we get a lot of customers when we open they’d maybe just have to wait a few minutes till I got more cash. Customers are generally relaxed and understanding about things like that, they don’t even complain much about us only accepting cash.

Customers whom I know just went to withdraw money from ATM generally buy with 20 and 50 EUR bills. Seeing a 100 EUR bill is a rare experience. Per instruction any bill of 20+ should be scanned to see if its forged for which we use a device and a marker. We don’t check 5 or 10 EUR bills. Personally, I check all 50+ and check the 20 ones irregularly. From hearsay I heard 5 EUR is the one mostly forged, but I didn’t verify and as long as my boss doesn’t complain I’m good.

I don’t think its different in other stores, just the difference being my branch of stores (coffeeshops) is 100% cash. I can imagine stores which are not 100% cash (almost all stores these days) have it more difficult! Maybe you’re asking the wrong person. Maybe someone who is using huge amounts of cash should answer. Or someone who isn’t working with 100% cash because from my reference point it seems like more of a problem.

I’m not entirely sure how bills are counted by my boss, he could do it manually like I do when I close, or use a machine.

One important difference with USA is coffeeshops don’t sell medical marijuana. We sell recreational (which, of course, could be used for medical reasons). Medical is government regulated and 100% legalized. AFAIK you can pay with that in any regular way. I don’t see why not.

keiner • February 19, 2016 10:13 AM

@Tqft

When the next crisis REALLY goes wrong, TTIP and TTP could be the starting point for a new, global monetary union. So that the US in fact get their colonies under (fiscal) control. 😉

Warren • February 19, 2016 10:21 AM

The real reason is that national interest rates are going negative all over the planet. IOW, since the banks will start charging you for the privilege of depositing your $$$ with them. In which case, there is a financial incentive for bank runs, where people will hoard their wealth in cash in a safe at their home. Cash may not earn you any interest, but at least it does not cost you anything either.

Jeroen • February 19, 2016 10:33 AM

muggae, I don’t know the difference between the mugging percentage of USA vs The Netherlands. I think in The Netherlands its going to differ a lot based on which city. I’m curious on the reasons why people get mugged as in what the goal of the muggers is. Is it only money, or more? Are stolen goods like phones quickly resold these days, without being disabled remotely? I don’t know.

I’m from Amsterdam and I can guarantee you: Amsterdam has muggers. There’s even signs on the street about that in tourist areas. If there’s tourists, there’s muggers. One must secure (the contents of) their wallet, and stay alert regardless of if they carry around cash, or the amount, or what kind of bills. Not only their wallet, also their phone and other personal belongings.

In my opinion if you walk around with your (expensive) smartphone or tablet in the open you’re pretty much trolling to get mugged at that point. My devices are cheap for that reason, and I am also a bit clumsy when it comes to not letting electronics drop. Heck, on the street someone may (accidentally or not) bump into me. I also own a cheap smartwatch to control my smartphone so I don’t have to grab it, and keep it secure instead.

There’s good guides for tourists who come to Amsterdam -including security-related advice- on e.g. Reddit and Wikitravel, I can highly recommend them.

ianf • February 19, 2016 10:48 AM

@ Jeroen, as muggee said, you don’t understand the street insecurity differences in the US. Were “ganja-coffeeshops” common there, small-fry street robbers would soon zoom in on their prospective customers with $20 in pockets, even at a distance of a block or two. That’s presumably also why the majority of street drug sales in the US seems to be to car-borne clients, with the motor running.

Banning Cash • February 19, 2016 11:09 AM

Real reasons for the world-wide crackdown on cash:

  • Banks are insolvent. The extend and pretend is coming to an end and the bankster elite need to bail-in creditors (read depositors) in the near-term. This is much more easily done with limited cash in circulation.
  • Eliminating cash completely is no doubt the end game. It means that bank runs will become a thing of the past. TBTF banks will be given a get-out-of-jail free card, to go along with the permanent one from the DoJ for their drug money laundering and 1000s of other crimes for which they never face prosecution.
  • Banks intend to monopolise block-chain financial transactions in the future and become the new bitcoin masters. Look at their sudden interest and research in this area. Rather than technology displacing the banks for financial intermediation, new technology will fall into their hands and become the new SWIFT replacement, with a suitable price-gouging fee of course.
  • Banks get hot & horny for skimming every financial transaction, as noted by another commentator. Banning cash is a perfect way to steal more of your hard-earned via the legal rentier privilege granted to them by parasites in Parliament/Congress.

  • If the insanity of negative interest rates go global, then the bankster elite can force you to spend money at a whim and prevent hoarding of cash. Essentially, they will be able to steal more of your hard-earned – well – because they said so.

  • Governments rail on about black markets, but they really want to target ‘gray markets’ that avoid the taxman so they can prop up wealth transfers to the .01%. You know islands in the Caribbean are expensive these days right?

  • That Stasi can’t stand not knowing every facet of your pathetic life. They must have every intimate detail e.g. when you buy a 50 pack of flavored condoms with lube & screw that secretary from work, or when you purchase hemorrhoid cream from the local drugstore. Because… ‘terrorism’. Yeah, something like that.

Of course, this will do fuck all to stop terrorists (like the CIA) or other hard-core criminals. They will simply do transactions in precious metals – physical gold or silver primarily – instead of digital currencies. Or, simply swap drugs for arms or vice versa in predetermined ratios based on assessed value of the commodities in the trade.

Dependent on the area, local currencies or community-issued scrips are also likely to come into being to form a substitute currency, due to the ease of transactions with physical tokens and removing government oversight.

Sasparilla • February 19, 2016 12:35 PM

Have to say, I don’t agree with this idea of phasing large bills out of the economy – simply because we are gradually removing the option to the average citizen to buy things with some semblance of privacy. Good for the Swiss. I would like the option to buy larger expensive things with cash.

Business and the governments would definitely want to get rid of private buying transactions and as Mr. Summers is showing here are pushing for it.

Their arguments for this sound much like what is said about Tor and the darkweb. With regards to criminals and money laundering – that’s more of a treating a symptom than the cause (the criminals and their actual wrongdoing prior to trying to “whitewash” it) – and they’ll just find a way around it…but the citizen will gradually loose their ability to have private cash transactions.

Cash • February 19, 2016 1:01 PM

@ Mr. Schneier

Cash is a privacy-preserving technology. Are you suggesting that eliminating cash will increase the privacy of the people? I really thought you are a privacy advocate. But it seems that you are in favor of total surveillance of consumer transactions in a cashless society.

Marcos El Malo • February 19, 2016 1:28 PM

@Alien Jerky
Don’t forget hotels and motels. Even if you pay cash they want your CC or DC and will put a hold on your funds. I found this out the hard way: they didn’t release the hold for several days (weekend) after I paid cash, leaving me without funds to pay for gas on my trip. (I use a debit card and dont have a CC)

Erik • February 19, 2016 1:30 PM

Unfortunately all of the tinfoil-hattery in this thread is … probably correct. Allowing negative interest rates and eliminating under-the-counter transactions for taxation purposes are the most likely real big reasons. The War on Drugs will be over in a few years, and good riddance – it made about as much sense as a War on Gravity or a War on the Color Blue – and so they’re just beating that dead horse while it’s still around. As mentioned, the banks love to get a bite of each transaction, but that just gets them on board. The privacy issues are most likely just a happy side-effect for those who can snoop in on the financial flow.

boog • February 19, 2016 1:32 PM

@Cash “Are you suggesting that eliminating cash will increase the privacy of the people? …it seems that you are in favor of total surveillance of consumer transactions…”

Doesn’t seem like he’s suggesting that or in favor of that at all.

Ray Dillinger • February 19, 2016 1:44 PM

For what it’s worth, I haven’t seen anyone mention this, but in the US businesses are required to record the serial numbers of $50 and $100 bills whenever customers spend them at that business, and report them to their banker within 24 hours. The banks, in turn, provide the lists to some federal authority (secret service? It seems weird but secret service IIRC; isn’t their remit the security of government officials against assassination attempts?)

Anyway, I remember this because years ago we used to make the lists of serial numbers by hand, and the lists of serial numbers went into the bag at the end of the day with the bank deposit. These days of course it’s automated, and the serial numbers are recorded and reported electronically by the same machines that count the cash – usually within an hour of any change of cashier (which entails a new cash drawer in the register, as the old one is removed for the count).

Slime Mold with Mustard • February 19, 2016 2:15 PM

A more recent article on banning the US $100 bill, because – bad guys (such as people who like their privacy).

@R

” HOW DO WE KNOW THEY ARE NOT TRACKING CASH???”

A couple of years ago, I was trying to track down the customer whose 20 crisp, sequential, $20 bills had wound up in a deposit instead of the check that belonged there (it’s complicated). They had to be from an ATM. I was certain which bank they had come from, I actually worked in the bank, although I was not an employee. I knew the bank officers and employees well. They swore up and down, repeatedly, that there was no way to link the bills to the customer. I don’t see how that’s possible. Maybe they are all sworn to secrecy or whatever.(I should note that the theft always turns out to be much larger than the first discrepancy found).

Alien Jerky • February 19, 2016 2:43 PM

@Ray Dillinger

For what it’s worth, I haven’t seen anyone mention this, but in the US businesses are required to record the serial numbers of $50 and $100 bills whenever customers spend them at that business, and report them to their banker within 24 hours.

Absolutely not true. I own several businesses. That is just not true in the slightest.

Some businesses may be required, such as gaming, financial services, but normal businesses there is absolutely no requirement for doing such.

dragonfrog • February 19, 2016 2:58 PM

This is ridiculous. Of course large denomination banknotes are used by criminals. So are comfortable shoes, backpacks, public transit, frying pans, screwdrivers, lightbulbs, laptop computers, and fitted sheets. Because those things are universally useful.

Abolishing a particular useful banknote would not reduce crime in the least, it would just cause people whose economic needs make it most convenient to use large denomination banknotes, to continue the exact same activities with the next banknote down, or with electronic transactions – some would go one way, some the other.

The only thing that would change by lowering the size of transactions that can usefully be done in cash, is that the banks would be involved in slightly lower tiers of money laundering. The bottom layers of the crime economy would still happen in cash, the top layers would still happen via banks, but the current topmost cash layer would largely become a bank layer. So the banks would collect fees on a slightly bigger slice of the underground economy than they already do.

Tony H. • February 19, 2016 3:03 PM

Amusing how the notion of negative interest rates and one way or another having to pay the bank to store your cash approaches the ideals of Islamic Banking. Interest = Usuary = Sin, etc.

bob • February 19, 2016 3:08 PM

Cash is freedom and liberty. Cash is anonymity. Cash doesn’t carry extra fees. That is why they want to get rid of cash. So the big banks can get a piece of the action between you and your merchant. Next it will be smaller bills until we’re all using bank plastic. Big banks, big insurance, big government and a bunch of sheople.

bigmacbear • February 19, 2016 4:00 PM

@Ray Dillinger:

(secret service? It seems weird but secret service IIRC; isn’t their remit the security of government officials against assassination attempts?)

The Secret Service was founded to combat counterfeit money, so this actually makes perfect sense. Acting as bodyguards for government officials didn’t start until after the Lincoln assassination.

Tõnis • February 19, 2016 4:42 PM

In the fifty states, there may be legal reasons that preclude the elimination of cash. A few examples:

  1. Pursuant to legal tender laws and absent an agreement to the contrary (i.e. a contract that specifies another form of payment), a person must accept cash as payment on a contract. What this means is that if I do a job for someone, absent contract provisions that specify another form of payment, I must accept his cash payment and can’t demand his Corvette instead. And yes, I can demand cash and refuse his check, bank/credit card, or other electronic transfer. I am not obligated to accept his check; a check is not payment, it is merely promise of payment: a promissory note. If I choose to accept his check, it is a courtesy, a convenience to him. It is an inconvenience to me. Even then, I have not been paid until his check has been cashed. If his bank refuses to cash his check for whatever asinine banking bs reason (e.g. too large an amount; I refuse to give it a fingerprint, other biometric data, and/or fill out its additional forms demanding taxpayer ID numbers or other data; or I refuse to pay the bank a fee for cashing its customer’s check; etc.), then I have not been paid, and I can demand cash from my customer.

  2. Constitutionally, a person cannot be compelled to business with another person. If cash is eliminated, electronic currency would compel every person to do business with a bank. Everyone always points to auto insurance: “You can be compelled to buy insurance from a private insurance company if you want to drive a car!!!” Not true. If you check your state law, you will find a provision around buying auto insurance. A motorist can post a bond in some amount set by the state — it might be $70K or an amount equivalent to his state’s mandatory financial responsibility requirement — but constitutionally you cannot be compelled to buy insurance. There always has to be a way around. Another one — a natural person must be allowed to represent himself in court. He cannot be compelled to do business with an attorney from that private labor monopoly, the Bar association. True that it’s not always easy, convenient, or practical to use the ways around, but they have to be there. The tyrants, totalitarians, banking parasites, etc. are counting on people sacrificing privacy and opting for the convenience of the cashless products. It’s unlikely they want the alternatives known to or understood by Joe Public, much less to have the proper arguments litigated thereby exposing their schemes.

Tõnis • February 19, 2016 5:31 PM

@CarpetCat, the “mandate” for health insurance is built into the income tax scheme, and there’s the con. “Taxpayers” may buy insurance or pay a “penalty.” Without having to reach the income tax issue (i.e. any purported requirement to participate in the tax scheme), one can readily agree that there are people who do not work.

Desmond Brennan • February 19, 2016 8:06 PM

Cash affords the end user better effective privacy as it is essentially a cutout

I transfer money as cash between two bank accounts when I need to protect myself from adversaries

Sure, bad actors abuse the technique…but the same is true of anything

Thomas_H • February 20, 2016 2:43 AM

@ Jeroen, as muggee said, you don’t understand the street insecurity differences in the US. Were “ganja-coffeeshops” common there, small-fry street robbers would soon zoom in on their prospective customers with $20 in pockets, even at a distance of a block or two. That’s presumably also why the majority of street drug sales in the US seems to be to car-borne clients, with the motor running.

Haha, yes, I remember walking with family on the sidewalk in one of Minneapolis’ lesser neighbourhoods, and being stopped by police asking us what we were doing, whether we knew that it was dangerous to walk on the sidewalk, both for crime and health (apparently walking a few hundred meters was strange…) reasons.

The neighbourhood in question was about as ‘bad’ as some of the poorer Dutch high-rise neighbourhoods built in the 1960s/1970s: A place where walking at night alone might get you mugged (especially if female) and where flashing your money or hi-tech gadgets during the day would probably get you some unwanted attention.

So we walked on to our destination, and then walked back along the same way (the cops had gone). Nothing happened. I also have never been mugged in any of the “bad” Dutch neighbourhoods I’ve visited, not even at night, but I don’t walk around prancing with fancy stuff. Nor do I walk around with a stance that basically reeks of “I am so weak and insecure, please mug me” or do I antagonistically react to people asking me stuff in the street, even at night.

Andy M • February 20, 2016 5:07 AM

Negative interest rates won’t affect the likes of you and me, they are designed to stop large companies, banks and other financial institutions from sitting on large piles of money. In order to encourage the economy to grow that money needs to be lent out so that companies can grow. Negative rates can be applied to amounts above a threshold to encourage investment. This threshold will be large enough that very few individuals or smaller companies will be affected.

Peter • February 20, 2016 9:43 AM

@Andy M :
You are absolutely wrong, negative interest-rates will affect everyone living in a country where there are no cash-payouts of wages etc etc .
Basically, you will be paying the banksters for the “trouble” of you providing them your money to lend out or “disappear” .

Magnus Falk • February 20, 2016 10:40 AM

The smallest highest denomination I’m aware of is the 100 yuan bill (~$15). Doesn’t stop it from being counterfeited though, I even got a wad of fakes from an ATM at work in Beijing!

albert • February 20, 2016 11:51 AM

Cash and drugs aren’t going away. Laundering drug money is an important business for the worlds biggest banks and gov’t agencies. It’s a ‘cash cow’. The US ‘War on Drugs’ is a huge business for LE and private prisons. Don’t forget asset forfeiture (legalized theft).

“…only criminals need to move around that much cash…”. So the EU is adopting ‘guilty until proven innocent’ thinking. The critics are correct; the EU is it’s own worst enemy. Man, there’s no logic in politics.

The whole system is run by criminals, from top to bottom. Remember that when you start to take their propaganda seriously.

. .. . .. — ….

anon-fin • February 20, 2016 12:52 PM

If cash had already been outlawed, I wonder how US would have handled their money transactions to iraq on 2003 (*)? Or how are things to be handled in any less developed country for that matter? What will happen with price of gold or other valuable metals/gems?

(*)http://www.theguardian.com/world/2007/feb/08/usa.iraq1

In the year after the invasion of Iraq in 2003 nearly 281 million notes, weighing 363 tonnes, were sent from New York to Baghdad for disbursement to Iraqi ministries and US contractors. Using C-130 planes, the deliveries took place once or twice a month with the biggest of $2,401,600,000 on June 22 2004, six days before the handover.

Coyne Tibbets • February 21, 2016 4:02 AM

@Jeroen – I can tell you this though: the money doesn’t smell like marijuana.

Dogs would be able to detect the smell, and dogs are what the authorities in the US would use to detect it. Especially since I suspect many dogs are trained not to “alert on drugs”, but rather to “alert on command.”

From Tribune analysis: Drug-sniffing dogs in traffic stops often wrong:

The dogs are trained to dig or sit when they smell drugs, which triggers automobile searches. But a Tribune analysis of three years of data for suburban departments found that only 44 percent of those alerts by the dogs led to the discovery of drugs or paraphernalia.

@R – How do we know they are not tracking cash???

Governments claim it can’t be tracked, but I think you’re right: I think they do. For example, take a look at the JetScan iFX i100: 1600 bills per minute, with serial number capture. When I get cash from the bank, they always count it using a machine of this type. I don’t know they capture serial numbers at that point, but it would be easy to do so. I think it’s reasonable to suspect ATM’s are set up to capture as well these days.

Simon Leinen • February 21, 2016 7:59 AM

There was a nice article in a renowned Swiss newspaper a few weeks ago about cash as a possibility to evade negative interest rates. It looks at the logistics and costs of storing capital in various currencies as well as in gold. The article is in German, but it includes an interesting infographic that shows how the Swiss CHF 1000 note is the only common banknote with a higher storage density than gold.

http://www.nzz.ch/wirtschaft/wirtschaftspolitik/negativzinsen-und-bargeld-geld-in-kisten-vermessen-ld.4911

When I read this article, I thought it was mostly tongue in cheek/written for fun, but after reading about the high numbers of large banknotes “in circulation” (although mere mortals rarely encounter any), I’m not so sure anymore.

Mark • February 22, 2016 3:46 AM

“Of course, the US leads the way in small money here; its biggest banknote is $100”.

Really? I can think of at least two countries that also have a $100 note as their biggest. You’ve been to both.

bob • February 22, 2016 5:36 AM

@CallMeLateForSupper That is massively arse-backwards thinking. If your credit card gets ripped off, it’s at the cost of the credit card company. If your chase gets taken, there’s no way to get it back.

Gerard van Vooren • February 22, 2016 6:35 AM

@ bob,

I carry cash with me my entire life and my wallet has never been stolen. If you carry small cash does it really hurt if it gets stolen? I don’t get this what if stuff that you yanks like to talk about in depth.

ianf • February 22, 2016 7:22 AM

@ bob, so you chase after cash, but need you be so obvious about it?

(you lame excuse of this being just a typo = attempt to cover up a Freudian slip)

Clive Robinson • February 22, 2016 9:41 AM

@ Thoth, All,

As you mention I do indeed prefere the use of cash where ever I can for ordinary life, let alone OpSec.

But as others have observed there is an increasing probability that ATMs and Bank cashiers are using technology to link account numbers and banknote serial numbers.

Even if they are not currently there is a new “revenue stream” equivalent to that of Google in it as the prize it they can directly link your account ID with a sale of goods or services. So the chances are the governments are going to get a new source of “business records” to play with as a nice little bonus.

Thus it’s in your “Protect your PII” intrest to foster habits that break that “revenue stream” oportunity before it gets to be profitable.

I will assume it’s nolonger possible to stop the banks linking serial numbers an account details and thus look at breaking the chain at the next step.

There are several ways to do this all of which money launders are aware of thus you will find documentation already in existance for large sums of cash.

But hopefully you will not be trying to do more than say 500USD equivalent every couple of weeks.

One old way was to use a large cash float either at home or office, thus quite a large time might pass between cash issue and transactions which would have broken old style analytics. But sadly new style analytics are a lot better, and new legislation makes keeping more than a small amount of cash not just suspicious but grounds for confiscation, so I would suggest any float be small in size such as a jar of “pocket change”.

Thus the idea of “making pocket change” comes to mind. That is you get say twenties from the bank and in various ways break them into pocket change and then “float that” to later “cash up”.

One way to do this is “social engineering” of shop till keepers, and the smaller the shop the more likely the following observations are to be true.

1, Shops need change in the morning.
2, The cashier wants notes at the end of the day to make cashing up easier.

Thus they don’t want to give change in the morning but do at night.

So if you take a late lunch and get your twenties from the ATM/Bank the sandwich shop will be quite happy to take a twenty and give out change, and even a discount on the sandwich. You win three times, you break the chain reasonably and quickly, you likely don’t have to que for the sandwich and if you are not fussy get the sandwich at a discount and make the shop keeper happy twice (you take dead stock and make their cashing up easier).

The reverse applies in the morning, you buy a tea or some such and off load pocket change that the shop will need later and if you ask nicely they might let you make up a ten or a twenty with you pocket change.

With a little practice you can think of a story to spin such as “playing the slots / one armed bandit” at the pub. Which in turn alows you to occasionally “shift a win”.

As you can see with a little “be nice” you can launder your twenties all the time thus launder quite a bit of cash (~500/week) without causing suspicion and without putting your self out in any major way.

There are other ways which have been used in the past such as “Casino chips”, but this is getting harder as prostitution and drugs dealing have over worked the idea. Others such as “Gift Cards” are now even more suspicious and will soon be linked into the cash serial number chain. Also watch out for other secondary linking such as “spend and save” store discount cards, their whole purpose is making you “a known quantity”, this can work both ways but caution is needed if using them for alibis etc due to sexondary surveillance systems such as concealed CCTV etc.

Whilst breaking the cash serial number chain is getting harder with secondary surveillance being on the rise, it’s far from impossible, you just have to think creatively, work tea / coffee / snack / lotto clubs and even getting co-workers lunches etc work well you just have to work out how to put yourself into a cash stream by being nice and helping others, thus getting a double win.

Importantly though it gets you into usefull habits and with care can help establish “back stories” and “legends” you can use if you need to.

Anonymous Cow • February 22, 2016 11:03 AM

…the US leads the way in small money here; its biggest banknote is $100…

FTFY: it’s biggest publicly circulated banknote is $100.00.

Larger notes do exist, though I don’t know if they’re still printed. These notes are basically for bank-to-bank transactions, and yes this pre-dates electronic transfers. You can find 500 & 1000 notes in collector stores and yes they would be taken by a bank as legal tender. The bank would likely remove those notes from circulation.

fajensen • February 23, 2016 7:39 AM

Only the lesser criminals use cash, the real pros use normal banking services such as those provided by HSBC and Citybank.

Seriously rich criminals use “Private Client Services” and “Private Investment Corporations” PIC’s. All electronic and one can move real money through those.

One would think that this would be “a concern”, however, the banks pay around 3% of the profits on the money laundering business (when busted) in a no-fault settlement so nobody goes to jail or is even fired.

So, there is an opportunity to provide an electronic money laundering service with a lower entry-point to absorb the business of the small-timers left without 500 EUR notes.

TRX • February 24, 2016 12:11 PM

I went to mostly-cash some years ago after those little EFT handhelds started coming out. My bank couldn’t or wouldn’t explain how they could prevent anyone who had my account number (prominently printed on every check) from using one of the terminals to vacuum my account. Apparently, unlike credit card transactions, there are no protections other than tha bank’s goodwill. At least, that they would admit to.

So I went to the cashier’s window, drew out all except $100 to keep the account open, and I stop at the bank to get money orders with cash on the way to the post office to mail them. Paper trail all the way.

It has been interesting. Some businesses deal with very little cash; I handed over two $100s to pay a $185 car insurance premium and had to wait while someone drove down their bank to get change…

And, of course, the IRS infamously does not accept cash. Since I’m self-employed I have to pay them a hefty sum every year.

CallMeLateForSupper • February 24, 2016 1:09 PM

@bob
“[Exchewing credit and carrying cash instead] is massively arse-backwards thinking.”

We disagree on that point.

“If your credit card gets ripped off, it’s at the cost of the credit card company.”

True. That does not extend to “the card holder gets off scott free”. There is work involved in setting things right and the process is a big PITA. I don’t recommend it. The last time there was a problem with my card (there have been several), I was the last to find out: I tried to use the card to access an ATM and was denied (with cryptic error code and equally opaque text stating that there was “a problem with the card”). (sigh) Walked a further 8 blocks to the bank and collared a business suit, who, after a hasty phone call, informed me that “the system” had detected possible fraud on my account and therefore had nuked it. I had no credit card, no ATM access, and a large check wanting to be deposited. I was lucky the bank was open at the time. A new (EMV) card took 6 calendar days to arrive. (here’s the kicker: the non-EMV card was 4-5 months old and had been used as a credit card just once.) My point is, not all costs are dollar costs.

“If your chase(sic) gets taken, there’s no way to get it back.”

True. Therefore, one should protect their cash as though it were … cash.

Look, I live in a small, low-crime town. In all my years – and I have seen many – I have never been (successfully) mugged. I have had 5 wallets since the age of 10, 4 of which I put out of their misery and buried; I currently carry #5. I am not advocating that everyone eschew credit or deal in cash. I’m saying this is what I do and it works for me.

Jim Lahey • April 1, 2016 12:47 PM

As others have pointed out, the US is far from leading the way on “small money”. Of the top 20 traded currencies according to Wikipedia, 6 have a largest denomination worth more than US$100, and 13 have a largest denomination lower than US$100. The Euro, Switzerland, Norway, Sweden, Hong Kong and Singapore are the ones with higher denominations. Japan, UK, Australia, Canada, South Korea, Russia and China are among those with only lower denominations. Apparently Singapore has a 10,000 SGD note worth over 7,000 USD – surely the top choice for international cash trafficking.

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