The EU Is Banning the 500-euro 'Bin Laden' Bill to Try and Stop Terrorists

As the European Union struggles to find a common answer to a rising wave of radicalization and terrorism on the continent, EU ministers are putting together a common plan against terrorists — by hitting their wallets. The plan is to strictly regulate and monitor the anonymous world virtual currencies and prepaid credit cards, and even includes banning 500-euro banknotes, known colloquially as "Bin Ladens."

Mario Draghi, president of the European Central Bank, all but confirmed the rumors of the banknote's withdrawal from printing presses on Monday, when he testified to the European Parliament that the 500 euro bill was "an instrument for illegal activities" and cited "increasing conviction in world public opinion" that it's used almost exclusively for criminal purposes. The central bank's governing council has already taken an informal decision to kill the bill, the Financial Times reported on Tuesday.

The fuchsia bill is one of world's highest-value banknotes still used for everyday transactions — at least in theory: they are so rare that they were dubbed "Bin Ladens" because everyone knows what they look like, but few have ever seen one. (And because, another theory goes, they are so beloved by people with nefarious agendas.) They've also already been banned in one EU country: Great Britain outlawed them in 2010 after a police investigation found that nine out of every 10 notes in circulation were linked to crime, tax evasion, and terrorism.

Weighing in on his always colorful blog, former US Treasury Secretary Larry Summers wrote earlier this week that paying for illicit activities is much easier "when 1 million dollars weighs 2.2 pounds, as with the €500 note, rather than more than 50 pounds as would be the case if the $20 note." Summers recalled that these questions were raised during the euro's design in the 1990s, but "the Germans were committed to having a high denomination note, [and] the issue was never seriously debated in international fora."

And that's a problem: Bin Ladens are very popular in Germany, which just happens to be the continent's biggest economy.

Howls of protest have been appearing in German media against Draghi's testimony and a recently proposed plan to cap maximum cash payments in the fight against terrorism. Germany is one of the few countries in the European Union where cash is still used for high-value transactions, like buying furniture or appliances. An estimated 79 percent of all German transactions are still completed in cash, according to the country's central bank.

Germany's largest daily newspaper Bild launched a campaign called "Hands off our cash!", inviting readers to write the country's finance minister to protest the limits. The campaign's slogans include "cash means freedom," "cash limits put citizens under general suspicion," and "cash always works -- not technology!"

But scrapping the banknote is just one part of a larger attempt by the Union's authorities to stymie terrorist financing. The European Commission, the executive arm of the European Union, presented an Action Plan earlier in February that seeks to enhance powers across financial intelligence units in EU member states. According to the plan, the Commission will immediately begin to regulate transactions made with prepaid cards and virtual currency, and complete traditional cash and banking payments regulation later this year.

Prepaid credit cards were instrumental in the November attacks in Paris; terrorists used them to get lodging, weapons, and supplies anonymously in the city days before the massacre. Current EU law does not require any form of identification to purchase and to reload such cards.

But the plans, while they may be technically sound, may not be truly effective until a greater number of member states agree to share intelligence and to move on a common European security agenda. And that's where another disagreement lies.

France is pushing to get its neighbors to take a harder line against terrorism in Europe, beginning with the Commission's action plan. After the Paris attacks, the National Assembly passed a controversial law permitting the government to strip French citizenship from anybody convicted of terrorist activity, and lawmakers in Paris are eager for France's neighbors to do more and move faster.

In a press conference last week, French finance minister Michel Sapin said the European Commission had offered "good proposals" to stem terrorist financing but urged that "these plans be adopted extremely rapidly at the European level, to allow them to be applied as soon as possible in each of our countries." The Commission likewise urged member states to adopt a 2015 directive on money laundering that it intends to amend later this year, adding stricter provisions for financial surveillance across the union.

Then there's the thorny issue of sharing intelligence.

Belgium revealed Europe's security fissures when its intelligence service divulged that it had questioned two of the terrorists behind the Paris attack in early 2015, but did not detain them. Charles Michel, the country's prime minister, said on Belgian TV that "we didn't know how to properly use the information we had to prevent the act from taking place." He later called for the creation of a European central intelligence agency.

Efforts to build one, in fact, date to the 1990s, but have routinely hit legal and political barriers. Even amid the political firestorm following the Paris attacks in November, Germany's Minister of the Interior Thomas de Maizière said the EU "shouldn't waste energy on a European intelligence agency" and suggested instead "improving the exchange of information through existing institutions."

"There is a real need for intelligence sharing, and this was revealed in the Paris attacks," said Pierre Vimont, senior associate at Carnegie Europe, a Brussels-based think tank. "It is now clear that maybe, in the past, member states haven't done enough to work together on their common security."

But despite this "black hole of information" between member states' intelligence agencies, as Europol's director Rob Wainwright described it in 2014, a pooled intelligence agency inside the European Union seems out of reach.

Not all blame can lie with a lack of solidarity. National intelligence agencies require ironclad secrecy to be effective. National agencies like the UK's MI6 or France's DGSE cannot afford to pool information with others whose practices they may not trust, given the need to protect sources.

"There is a large heterogeneity in the classifications that each nation makes of suspected persons," the chairman of the European Parliament's Subcommittee on Security and Defense, Arnaud Danjean, said. "What's needed is to harmonize the definitions and parameters of dangerousness to make [security] files interoperable." The Commission has hinted as much in its action plan.

But perhaps more importantly, EU nations will struggle to harmonize intelligence agencies until a definitive platform about the state of Europe's borders is delivered. Relocation schemes for migrants in overburdened states have transferred only 500, or 0.05 percent, of the about 1 million people who have entered the EU since 2015. The Commission has also openly criticized Greece and Italy for serious deficiencies in their external border controls. Open-door policies in countries like Germany and Austria have been stretched to the breaking point, and support for xenophobic parties has been rising.

And, on the heels of a report from Germany's domestic intelligence agency that Islamic State militants have slipped into Europe disguised as refugees, a common solution to terrorism is only feasible with a common approach to migration.

"An awareness of common security concerns in the European Union is needed, even if it's tricky," Vimont said. "One way is to start connecting data from migration hotspots and border control with the list of suspects and foreign fighters across member states' intelligence agencies. Unifying intelligence across all 28 member states won't work, but bilateral efforts between those countries with common interests is the most pragmatic approach."

The migration crisis is high on the agenda at an EU summit in Brussels on Thursday, but as often happens with meetings that bring together almost 30 governments, there won't be an decision.

"This summit will largely be taking stock of past legislation intended to solve the migration crisis," said Vimont. "And it is clear that French and German priorities are not in the same basket. Germany is looking for results on common burden sharing across member states, while France is most concerned with fighting terrorism. It is not eager to open its doors."

Vimont also credited the Commission for taking the right first steps in its action plan against terrorist financing, but what comes next is always the real test: will member states comply with harmonized directives not only on paper, but also in practice?

"The biggest issue will be implementation on the member state level. Each banking sector will require the expertise and capacity for an effective system to fight money laundering. And, protecting citizens' privacy rights in financial data collection will be a continuing issue."