Goodbye to the note of ill-repute

Unless you're a criminal, you may never have seen one. And that's why the €500 note has been taken out of circulation. Mark Hughes and Rob Sharp investigate

You are a hardened drug baron, controlling a network of dealers. Presiding over an operation worth millions of pounds, you struggle with the problems associated with any enterprise, legal or otherwise – your supply, your staff, and, not least, how to deal with your ill-gotten gains. This last part is harder than it sounds. Unlike a conventional business, you cannot just pop to the bank – questions would be asked. Instead, you prefer to deal in cash, the only problem being what to do when the quantities become unfeasibly large. For the serious criminal, the discrepancy in volume between a car boot full of money or a bin bag brimming with notes can mean the difference between getting away with it and an extended jail term.

This is why a little-remarked-upon development in official policy on the denominations in which the euro is issued has sent shockwaves through the world of organised crime. Until last month, many British gangsters stored their spoils in the form of €500 notes. While £1m weighs 50kg in £20 notes, the same value weighs only 2.2kg in €500 notes. This has made life easier for a growing number of criminals, since the euro's introduction in 2002. Should you wish, for example, you can swallow €150,000 in €500 notes, or hide €20,000 of them a cigarette packet, while even £1m can be hidden quite easily in secret compartments in a suitcase.

However, fed up with abuse of the currency, Britain's Serious and Organised Crime Agency (Soca) has decided with the Treasury and Home Office to remove €500 notes from circulation in Britain. Soca's ban follows an investigation which revealed that 90 per cent of the €500 notes in this country are being used for criminal purposes. It's the latest of a number of high-denomination bank notes favoured by villains that have fallen out of favour. Richard Nixon halted the circulation of $10,000 bills in 1969 because of their association with organised crime; these days the 1,000 Swiss franc note, while rare, is another popular choice for those engaging in nefarious deeds, and the 1,000 Dutch guilder note was a black-market favourite before the introduction of the euro.

Soca's research showed that of the €500m worth of €500 notes brought to Britain each year, only 10 per cent were being used legitimately. The remaining €450m, it believes, are acquired by money-laundering operations before being passed on to criminals. "Soca has concluded that there is no credible legitimate use for the €500 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," a Soca spokesman said.

Since its introduction in 2002, economists have warned that the note would cause problems. A June 2009 report published by the Bank of Italy's financial intelligence unit stated: "Cash is the ideal tool for illegal payment and the movement of funds and the high-value banknote simplifies the logistical management of large sums of money." There have since been numerous busts involving seizures of large quantities of the note. Soca highlights a series of examples – details of which it has withheld – including that of a small London business that purchased €4m in €500 notes for onward sale. The store had a single outlet, but its demand for €500 notes exceeded that of a national bureau de change chain with 12,500 branches. In another three operations, Soca took €500 notes totalling €3m from a money-laundering group supplying several organised crime networks. "All these seizures were forfeited unopposed – in effect, the criminals preferred to forego €3m than risk the exposure of criminal activity by attempting to explain its origins and ownership," the Soca spokesman said.

In December two organised crime gang members, Anwar Hardi and Hasiv Rashid, were jailed for their involvement in the laundering of £24m. During an HM Revenue & Customs investigation, €526,000 in €500 notes was seized; at one point the criminals used cereal boxes to hide their funds. Some of the money was contaminated with drugs, suggesting it had been raised through the drugs trade.

The €500 note looks harmless, but it is packed with security measures, befitting of the second-highest value bank note in the world (behind the 1,000 Swiss franc note): it has a watermarks, a hologram strip, a reflective glossy stripe, a matted surface, bar codes, ultraviolet ink, perforations, raised printing, colour-changing ink and a serial number. The notes have gained the nickname the "Bin Laden", because people know they are out there but nobody ever sees them.

According to Colombian financial regulators, in 2006, euros valued at £200,000 were legally imported into Colombia. The same year, nearly £600m worth of euros were exported. The balance went undeclared, as importers paying for cocaine tend not to fill out currency declaration forms. Also in 2006, the Spanish government revealed that 25 per cent of all €500 notes in the world were in circulation in Spain, one of Europe's principle conduits for the import of cocaine. Today, of the €776bn in circulation, about €280bn are in €500 notes. The note's size and high value make transatlantic flights easy for criminals, who often travel in business class to get a higher weight limit for their hand luggage.

The phasing out of the note, which was instituted in late April but officially announced yesterday, is a muted victory for Soca, which admits that drug dealers might just start using the next-largest denomination of €200 notes. But it says the change at least frustrate criminals. "A €500 note is a comfortable choice so the first impact is that criminals will be moved out of their comfort zone," said the Soca spokesman.

Notes for millionaires

* A £1m pile of cash takes up 20 times as much space in £20 notes as it does in €500 notes.

* In £50 notes, the same sum will take up less than half the space – but your stash will still take up nine times as much space as an equivalent pile of €500 notes.

* £1m in £20 notes weighs about 50kg; £1m in £50 notes weighs 22kg; £1m in €500 notes weighs just 2.2kg.

* A spokesman for the Serious and Organised Crime Agency estimates that a grown man could swallow around €150,000 – if they were in €500 notes.

* Smaller sums, of €20,000 or less, can be hidden inside a cigarette packet.

* It has been observed before that if you wish to sneak $1m in $100 bills on to a plane in your hand-luggage, it is best to travel business class, as the weight of the notes (about 10kg) exceeds the hand-baggage allowance for economy class on many airlines.

* Alternatively, you could convert the cash into €500 notes, which would weigh just 1.43kg.

News
A Brazilian wandering spider
news

World's most lethal spider found under a bunch of bananas

News
people
Arts and Entertainment
Tim Wonnacott dancing the pasadoble
TVStrictly Come Dancing The Result
Sport
Mario Balotelli pictured in the win over QPR
footballInternet reacts to miss shocker for Liverpool striker
News
ebooksAn unforgettable anthology of contemporary reportage
Voices
Sol Campbell near his home in Chelsea
voices
News
<p>Jonathan Ross</p>
<p>Jonathan Ross (or Wossy, as he’s affectionately known) has been on television and radio for an extraordinarily long time, working on a seat in the pantheon of British presenters. Hosting Friday Night with Jonathan Ross for nine years, Ross has been in everything from the video game Fable to Phineas and Ferb. So it’s probably not so surprising that Ross studied at Southampton College of Art (since rebranded Southampton Solent), a university known nowadays for its media production courses.</p>
<p>However, after leaving Solent, Ross studied History at the School of Slavonic and East European Studies, now part of the UCL, a move that was somewhat out of keeping with the rest of his career. Ross was made a fellow of the school in 2006 in recognition of his services to broadcasting.</p>
TV

Rumours that the star wants to move on to pastures new

News
Kimi the fox cub
newsBurberry under fire from animal rights group - and their star, Kimi
Arts and Entertainment
filmsIt's nearly a wrap on Star Wars: Episode 7, producer reveals
Life and Style
fashion
Arts and Entertainment
Russell Brand labelled 'left-wing commie scum' by Fox News
TV
News
Paul Nuttall, left, is seen as one of Ukip's key weapons in selling the party to the North of England
i100
Arts and Entertainment
BBC's Antiques Roadshow uncovers a TIE fighter pilot helmet from the 1977 Star Wars film, valuing it at £50,000
TV

TV presenter Fiona Bruce seemed a bit startled by the find during the filming of Antiques Roadshow

News
people

Comedian says he 'never laughed as hard as I have writing with Rik'

News
i100
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past