Cash limit for the prevention of money laundering
The so-called cash limit is a recurring topic of discussion. In December 2023, representatives of the EU member states voted in favor of a cash limit of €10.000. Now the limit is set to be implemented: In January 2024, the European Parliament and the Council of the EU agreed on the €10.000 limit. This also applies to cryptocurrencies.
Germany abstained in the original vote. However, many experts and politicians are critical of a cash limit.
In other EU countries, however, the limit was set even lower than €10.000. For example, in Portugal only €1.000 and in Greece only €500 are allowed for cash payments.
What exactly Does this mean a cash limit?
Before we look at the regulations in Germany and other EU countries, we would like to explain the term "cash limit." Essentially, it refers to the method of payment used for a purchase. It is irrelevant whether one is buying a bespoke suit, a jeweled necklace, a used car, or a property .
A cash limit of €10.000 means that anything exceeding this amount cannot be paid in cash. Payment must then be made using other methods such as debit and credit cards, or via bank transfer.
Current status of the cash limit in Germany
There is currently no limit on cash transactions in Germany. However, since January 1, 2023, cash payments for real estate purchases have been prohibited. This was enacted with the Second Sanctions Enforcement Act (SDG II). Since then, notaries have been required to verify how the property was paid for during the notarization process.
Despite the lack of a cash limit, several measures to prevent and combat money laundering are implemented in Germany. These are regulated by the Money Laundering Act.
Obligated parties such as banks, insurance companies, real estate agents, but also goods traders and operators of gambling arcades must comply with various obligations.
Obligations to Prevention and prevention money laundering
For cash purchases exceeding €10.000, customers' identities must be recorded. This primarily affects retailers offering expensive goods such as cars, jewelry, or luxury clothing.
If you wish to deposit €10.000 or more in cash at your primary bank, you must provide proof of origin. This can be, for example, a bank statement, a receipt, or a will – in other words, a document that shows how the money was received. For other banks, the limit is €2.500.
Anonymous purchases of precious metals such as gold or silver have been restricted since January 2020. For purchases exceeding €2.000, identity verification and proof of identity are required.
Tip: With KYCnow you can comply with the obligations of the Money Laundering Act in seconds.
Cash and money laundering – Is there a connection?
Anyone following the current discussions on cash will quickly encounter two divided camps. The arguments of those for and against a cash limit always sound similar.
Those in favor of a cash ban see this as an opportunity to make life more difficult for terrorists and criminals. A spokesperson for the Federal Ministry of the Interior told the Tagesschau news program : “By restricting the anonymous payment method of cash, transactions could be more easily traced and connections to crimes could be better identified.”
Furthermore, the measures are intended to curb undeclared work and save on the costs of providing cash. Another advantage: tax evasion will become more difficult.
The opposing side argues that there is no solid evidence that reducing cash actually reduces terrorism and crime. They also view a cash limit as an infringement on privacy and data protection, since anonymous payments would no longer be possible.
And experts agree. The German Savings Banks and Giro Association says : "Cash limits will not lead to a sustainable curbing of terrorist financing or money laundering. We shouldn't be under any illusions about that."
Johannes Beermann, a member of the Executive Board of the Deutsche Bundesbank, also supports this statement: "So far, there is no scientifically sound evidence that limits on cash payments will achieve the goal of combating money laundering."
Cash limits in other countries
The fact is: In hardly any other country is the debate about cash as intense as in Germany. Around 80% of the Swedish population no longer uses cash. In developing countries like Kenya, mobile payment is the only way for many to participate in the payment system.
And many EU countries are also more restrictive than Germany when it comes to cash limits, as the following table shows:
| Country | Cash limit |
| Belgium | EUR 3.000 |
| Bulgaria | EUR 5.100 |
| France | EUR 1.000 |
| Greece | EUR 500 |
| Italy | EUR 5.000 |
| Latvia | EUR 7.200 |
| Malta | EUR 10.000 |
| Portugal | EUR 1.000 |
| Spain | EUR 1.000 |
*Information provided without guarantee, as of January 22, 2024, source: evz.de
Outlook – Will there be a cash limit?
The German government has now also agreed to the €10.000 limit. However, it is still unclear when exactly this will come into effect.
In the fight against money laundering in Germany, the Know Your Customer (KYC) process is a fundamental component. This allows money laundering to be detected and prevented early on, before the money – whether cash or non-cash – changes hands.
Do you want to automate your KYC process? Then please contact us and we will advise you free of charge and without obligation.
Lisa Roczniewski