The European Union is introducing a cash payment limit of €10,000. This agreement was reached by the negotiating teams of the European Council and the European Parliament.
Setting the new maximum limit is part of a broader package of measures (6th EU Anti-Money Laundering Directive) by the European Commission to combat money laundering. This reform is intended to introduce uniform anti-money laundering rules across Europe for the first time and close national loopholes.
Key Points at a Glance
- The EU wants to combat money laundering and is introducing an EU-wide cash payment limit of €10,000.
- For cash payments of more than €3,000, the seller must record the buyer’s details.
- Luxury goods retailers must carry out stricter checks on their customers and will be subject to tighter reporting requirements in the future.
Table of Contents
What does “cash payment limit” mean? A definition:
The “cash payment limit” refers to the maximum amount of cash that a person or business can use or accept in a specific transaction. Governments or financial institutions often set such limits to prevent or make it more difficult to engage in money laundering, illegal financial transactions, and tax evasion.
If there is a cash payment limit, this means that transactions exceeding this amount can no longer be carried out in cash, or that certain measures must be taken to verify the legality of the transaction.
These limits vary from country to country and can change over time depending on political and economic conditions. One aim of such measures is to promote transparency in the financial system and make undesirable activities more difficult.
Cash limit in Germany: the current rules
The cash payment limit is a hotly debated topic in Germany. For years, politicians have been debating its introduction. While the SPD supports a limit, the FDP sees its introduction as a “restriction of freedom”. At the heart of the discussion is the question of how effective such a measure is against money launderers and financial crime in Germany.
At present, there is no cash payment limit in Germany. This means that, in principle, it is permitted to use or accept larger amounts of cash, as long as the transactions comply with existing laws and regulations.
However, it is important to note that there are certain reporting obligations for cash transactions. Banks, financial institutions, goods traders, and other businesses must report transactions over €10,000 to the Financial Intelligence Unit (FIU) in order to combat money laundering and illegal financial activities. This obligation is set out in the Money Laundering Act.
What changes with the new cash payment limit?
- Cash payment limit: The cash payment limit is to be extended across Europe. For all states, the maximum cash payment will be €10,000. Many EU Member States are only partially affected by this rule, as most countries already have a cash payment limit. Germany, however, is set to see significant changes. Until now, it was possible to pay amounts well over €10,000 in cash. This limit has now been lowered to €3,000. The seller must identify the buyer and record the data. Private sales are excluded from this rule.
- Luxury retailers: Retailers of luxury goods are to be more tightly regulated. Whether car dealers, jewellers, or art dealers, all will have to carry out strict checks on their customers in future and will fall under tighter reporting requirements.
- Crypto sector: Providers of cryptocurrencies and trading platforms will have to verify their customers in future for transactions over €1,000.
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