February 8 2016
Governments should consider scrapping high denomination banknotes to combat financial crime and tax evasion, including paying tradespeople in cash, a former bank boss has said.
Criminals move more than $2tn (£1.4tn) around the world each year, corrupt payments amount to $1tn and tax evasion robs countries of up to 70% of their tax income, according to a paper by Peter Sands, the former chief executive of Standard Chartered who advises the British government. Yet efforts to stem the flows by catching perpetrators or detecting payments result in less than 1% of illicit flows being seized.
Eliminating €500, $100, SFr1,000 and £50 notes would scrap a method of payment favoured by wrongdoers, even though it made little sense for legitimate users, Sands argued. Cash was useful for small transactions, such as buying a cup of coffee, or for pocket money, but it could be lost or stolen and people preferred electronic payments for big transactions, he said.
He was one of the architects of the banking bailout in October 2008 and is the lead non-executive director for the Department of Health. The former McKinsey consultant also provides informal advice to 10 Downing Street on matters such as changes in the labour market.