L 94 - 2023-24 - Bilag 4: Orientering om høringssvar fra Den Europæiske Centralbank (ECB) til forslag til lov om ændring af hvidvaskloven (Nedsættelse af kontantforbudsgrænsen), L 94, samt Erhvervsministeriets bemærkninger til dette

Erhvervsudvalget 2023-24
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ECB-PUBLIC

OPINION OF THE EUROPEAN CENTRAL BANK

of 12 January 2024

on the phasing out of the 1 000 Danish kroner banknote

and the lowering of the cash prohibition limit

(CON/2024/2)

Introduction and legal basis

On 1 December 2023, the European Central Bank (ECB) received two requests from the Danish Ministry

of Business (Erhvervsministeriet) for an opinion on a draft executive order on Danmarks Nationalbank’s

withdrawal of certain banknotes (hereinafter the ‘draft executive order’)

and a draft law amending the Law

on measures to prevent money laundering and the financing of terrorism (hereinafter the ‘draft law’)

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the

Functioning of the European Union and the second and third indents of Article 2(1) of Council Decision

98/415/EC

, as the draft executive order and the draft law relate to Danmarks Nationalbank and means of

payment. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European

Central Bank, the Governing Council has adopted this opinion.

1.1.

Purpose of the draft executive order and the draft law

The purpose of the draft executive order is to phase out and withdraw old Danish kroner (DKK)

banknotes issued from 23 July 1945 until 23 May 2011 from the 1944, 1952, 1972 and 1997 series,

together with the 1 000 DKK banknote from the 2009 series, all of which will cease to have legal

tender status after 31 May 2025

. After the withdrawal of these banknotes, they may still be

redeemed by Danmarks Nationalbank for an additional year, up until and including 31 May 2026.

After this date, Danmarks Nationalbank may redeem the banknotes where circumstances justify it

The draft executive order enters into force on 1 January 2024.

1.2

The phasing out and withdrawal of the old DKK banknote series is done with a view to issuing a new

future banknote series based on state-of-the-art technologies to prevent counterfeits

. In this respect,

all existing Danish banknote denominations (500 DKK, 200 DKK, 100 DDK and 50 DKK) will be part

Bekendtgørelse om Danmarks Nationalbanks indkaldelse af visse pengesedler, BEK nr. 1706 af

11/12/2023.

Forslag til lov om ændring af hvidvaskloven.

Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities

regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).

See Section 1(1) and(2) of the draft executive order.

See Section 2(1) and(2) of the executive order. See also Section 8(3) of the Law on Danmarks Nationalbank (Lov om

Danmarks Nationalbank, Lov nr. 116 af 7.4.1936), which likewise regulates an additional redemption period of 12 months

after the period where a withdrawn banknote loses its status as legal tender. Subsequent to this additional 12 month period,

Danmarks Nationalbank may still redeem banknotes which are no longer legal tender ‘if circumstances justify it’.

See Danmarks Nationalbank’s report ‘The role of cash in a society with low usage of cash’, November 2023, page 43.

L 94 - 2023-24 - Bilag 4: Orientering om høringssvar fra Den Europæiske Centralbank (ECB) til forslag til lov om ændring af hvidvaskloven (Nedsættelse af kontantforbudsgrænsen), L 94, samt Erhvervsministeriets bemærkninger til dette

ECB-PUBLIC

of the new series except for the 1 000 DKK banknote, which is currently the highest denomination

banknote in Denmark. According to the explanatory notes to the draft law

, which also include

explanations to the draft executive order (hereinafter the ‘explanatory notes’), Danmarks

Nationalbank has, based on the Law on Danmarks Nationalbank

and with the permission of the

Minister for Business, decided to phase out the 1 000 DKK banknote with a view to withdrawing it

altogether. In this respect, Danmarks Nationalbank is of the view that the 1 000 DKK banknote is not

necessary for Danish citizens and businesses to carry out safe and efficient payments. This is inter

alia reflected by the generally reduced use of cash in Denmark, with the vast majority of cash

payments amounting to less than 500 DKK. According to the explanatory notes, this is also based

on the fact that the 1 000 DKK banknote, to a higher degree than other Danish banknotes, represents

an increased risk of being used for criminal purposes

1.3

The purpose of the draft law is to lower the existing threshold for certain cash payments to

professionals from a maximum of 20 000 DKK to 15 000 DKK. The draft law enters into force on 1

March 2024.

1.4

The lowering of the threshold for certain cash payments applies to professionals who are not covered

by the scope of application of the Law on measures to prevent money laundering and financing of

terrorism

(hereinafter the ‘Law on money laundering’) when receiving cash, and therefore only to

this specific group of business-to-business and customer-to-business payments. According to the

explanatory notes

, all businesses receiving cash will, until the phasing out of the 1 000 DKK

banknote, be extraordinarily exposed to an increased risk of being misused for money laundering

purposes

. However, the enhanced restriction on the cash limitation prohibition applies to all cash

payments, and not only payments in connection with the withdrawal of the 1 000 DKK note

According to the explanatory notes, while the lowering of the threshold is seen to generally have a

positive effect for the fight against money laundering

, the lowering of the threshold may also entail

certain impediments for persons with legitimate cash holdings wanting to use their holdings of

withdrawn notes in retail trades

1.5

According to the explanatory notes

, the cash prohibition limit complies with Directive (EU) 2015

2015/849 of the European Parliament and of the Council

, according to which Member States may

make additional general limitations to the use of cash.

See point 1 of the general comments to the draft law.

According to Section 8(3) of the Law on Danmarks Nationalbank, where the Minister of Business gives his permission, notes

may be withdrawn and shall then cease to be legal tender from the date which might be fixed by ordinance from the Minister

for Business. After the expiration of twelve months from this date, the withdrawn notes shall lose validity as against Danmarks

Nationalbank, provided that Danmarks Nationalbank shall have the right to redeem the notes also after this time, if

circumstances justify it.

See point 1 of the general comments to the draft law and Danmarks Nationalbank’s report ‘The future of Danish cash’,

November 2023, page 4.

Lov om forebyggende foranstaltninger mod hvidvask og finansiering af terrorisme, lovbekendtgørelse nr. 316 af 11. marts

2022, som senere ændret.

See points 1 and 1.1.2 of the general comments to the draft law.

See point 1 of the general comments to the draft law.

See number 1 of the specific comments to the draft law.

See points 1 and 1.1.2 of the general comments to the draft law.

See point 5 of the general comments to the draft law.

See point 8 of the general comments to the draft law.

See recital 6 of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of

the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No

648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European parliament and

of the Council and Commission Directive 2006/70/EC (OJ, L 141, 5.6.2015, p.73).

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2.1

General observations

Denmark is exempted from participating in the third stage of the Economic and Monetary Union,

pursuant to the Protocol (No 16) of the Treaty on the Functioning of the European Union (TFEU) on

certain provisions relating to Denmark. As for any abrogation of the exemption, the procedure set

out in Article 140 TFEU will only be initiated at Denmark’s request

. Therefore, in accordance with

Protocol (No 16) and Articles 139(2), point (d) TFEU, Article 128 TFEU, which states that the euro

banknotes issued by the ECB and the national central banks (NCBs) shall be the only such notes to

have status of legal tender within the Union, is not applicable to Denmark

. Against this specific

institutional backdrop, the ECB has prepared an assessment of the relevant provisions of the draft

executive order and the draft law against relevant practices in the euro area, in particular the legal

requirements for the euro and the legal tender status of euro banknotes.

2.2

The ECB understands that the draft executive order and the draft law have been influenced by a

recent report of Danmarks Nationalbank on the role of cash in a society with low usage of cash. In

this context, Danmarks Nationalbank notes that cash in recent decades has played a decreasing role

for Danish citizens and business

. The relative decline in cash usage for payments and savings is

seen by Danmarks Nationalbank as a natural development in the light of Danes’ willingness to

embrace new digital payment solutions combined with, at the same time, the digitisation of Danish

society. This is also the case for numerous public and private initiatives to accelerate digitalisation.

According to Danmarks Nationalbank, the decline in the use of cash has meant a general decline in

the demand for cash, and the development in cash usage for payments also suggests that more

people will live without cash in the future. This is seen by Danmarks Nationalbank to have

consequences for the role of cash in Danish society, and has already resulted in major changes to

the cash infrastructure and the need to continually adopt legislation on the use of cash for

payments

2.3

In terms of the decline in cash usage more specifically, the total value of cash payments in Denmark

has decreased from approximately 10 % of the total value of all payments in 2021 to less than 8 %

in 2023

. Moreover, in physical trade, the proportion of payments made with cash was 11 % of the

total amount of payments in 2023, which is understood to be equivalent to the level in 2021. However,

the ECB understands that this should be seen in the context of physical trade in Denmark, which

accounts for an increasingly small share of the total number of payments due to the shift towards

more online trade and ever more in-app payments on mobile phones. Moreover, it is noted that the

total value of DKK banknotes and coins in circulation has remained stable since 2017, and even

increased by around 10 % at the onset of the coronavirus (COVID-19) pandemic in 2020

. To the

ECB, this points to the relevance of physical central bank money, notably banknotes, during

situations of financial stress, but also for in-person payments at the point of sale.

See paragraph 2 of Protocol (No 16) of the TFEU on certain provisions relating to Denmark.

See paragraph 3.2 of Opinion CON/2019/5. All ECB opinions are published on EUR-Lex.

See Danmarks Nationalbank, ‘The role of cash in a society with low usage of cash’, November 2023, p. 4.

See Danmarks Nationalbank, ‘The role of cash in a society with low usage of cash’, November 2023, p. 6.

See Danmarks Nationalbank, ‘The role of cash in a society with low usage of cash’, p. 14, Chart 8.

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2.4

The statements on the role of cash in Danish society, as expressed in the explanatory notes, contrast

with the ECB’s views on the role of cash in society. The ECB considers that cash continues to play

an important role in society irrespective of the fact that electronic payment instruments are

increasingly used for retail payments in Member States, including Denmark

. Cash is generally

appreciated as a payment instrument because it is widely accepted, fast and facilitates control over

the payer’s spending. It is currently the only payment instrument that allows citizens to settle a

transaction in central bank money, which is also settled instantly

, while, importantly, ensuring

privacy. Moreover, it does not carry the legal possibility of imposing a fee for the use thereof. Cash

can play an important role in the event of contingencies, such as Hurricane Katrina in the U.S. in

2005, where alternative means of payment are temporarily not functioning

and it is robust against

cyber-crime

, since cash payments do not require a functional technical infrastructure or related

investment but are always available. Furthermore, cash payments are not subject to daily or weekly

payment limits set by entities providing underlying payment services

. In addition, cash payments

also facilitate the inclusion of the entire population in the economy by allowing citizens to settle a

wide range of payment transactions in this way, thus ensuring freedom of choice as to the method

of payment for all citizens

.The ability to pay in cash remains particularly important for all those

citizens who, for various legitimate reasons, prefer to use cash due to its unique features, rather than

other payment instruments. Also, cash remains important especially for those who do not have

access to the banking system and electronic means of payments. These groups include not only

elderly people, but also some disabled citizens, immigrants, socially vulnerable citizens, minors and

others with limited or no access to digital payment services

. The ECB surveys biennially the

payment habits in the euro area which revealed that around 60 % of the euro area citizens want to

have the freedom to also use cash at the point of sale. Finally, a critical mass of cash in circulation

is necessary to maintain the business case for third parties involved in the cash cycle. Thus, any

further cash payment limitation or suppression of a denomination could lead to a situation where the

unit costs of cash deter third parties from supplying cash any longer and, as a consequence,

endanger the contingency feature of cash, if the cash infrastructure and suppliers were to disappear

altogether or would be insufficient to cater for an unexpected surge in cash demand.

2.5

These characteristics of cash are also acknowledged by the European Commission in its Retail

Payments Strategy which, while promoting the emergence of digital payments to offer more options

See paragraph 2.4 of Opinion CON/2017/8 and paragraph 2.4 of Opinion CON/2020/33.

See paragraph 2.4 of Opinion CON/2017/8, paragraph 2.1 of Opinion CON/2019/41, paragraph 9.2.1 of Opinion

CON/2020/13, paragraph 2.3 of Opinion CON/2020/21, paragraph 7.2.1 of Opinion CON/2021/9, paragraph 2.1 of

CON/2021/18, paragraph 2.1 of Opinion CON/2023/7, paragraph 2.1 of Opinion CON/2023/13 and paragraph 2.1 of Opinion

CON/2023/39.

See paragraph 2.1 of Opinion CON/2019/41, paragraph 9.2.1 of Opinion CON/2020/13, paragraph 7.2.1 of Opinion

CON/2021/9, paragraph 2.3 of Opinion CON/2021/18 and paragraph 2.1 of Opinion CON/2023/39.

See paragraph 2.2 of Opinion CON/2021/32, paragraph 2.1.1 of Opinion CON/2023/33 and paragraph 2.1 of Opinion

CON/2023/39.

See paragraph 2.1 of Opinion CON/2023/39.

See paragraphs 2.4 and 3.1 of Opinion CON/2017/8, paragraph 2.7 of Opinion CON/2017/40, paragraph 2.6 of Opinion

CON/2019/4, paragraphs 2.1 to 2.3 of Opinion CON/2021/18, paragraph 7.2.1 of Opinion CON/2021/9, paragraph 2.3 of

Opinion CON/2021/38, paragraph 2.1 of Opinion CON/2023/13, paragraph 2.1 of Opinion CON/2023/13 and paragraph 2.1

of Opinion CON/2023/39.

See paragraph 1.5 of Opinion CON/2019/41 and paragraph 2.1 of Opinion CON/2023/39.

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to consumers, will continue to safeguard the legal tender of euro cash and the availability of central

bank money

2.6

Against this backdrop, the ECB closely monitors any national law developments that aim to limit cash

payment possibilities and thereby interfere with citizens’ right to pay in cash.

Specific observations

Phasing out of the 1 000 DDK banknote

3.1

The 1 000 DKK banknote, which is currently the highest denomination banknote in Denmark, has an

approximate value equivalent to 134 EUR

. From 1 June 2026, when the 1 000 DKK banknote has

been phased out and withdrawn and, therefore, no longer has legal tender status, the highest

denomination banknote in Denmark will be the 500 DKK banknote, which has an approximate value

equivalent to 67 EUR.

3.2

In the euro area, the first series of euro banknotes was originally issued in 2002, when the euro was

introduced. It comprises seven different denominations: €5, €10, €20, €50, €100, €200 and €500. In

May 2016, the ECB concluded a review of the denominational structure of the second series, also

known as the Europa series, of euro banknotes. The ECB has decided to permanently stop producing

the €500 banknote and to exclude it from the Europa series. In view of the important circulation of

this denomination and its store of value function, also at the international level, and to safeguard trust

in euro banknotes, the €500 banknote will remain legal tender and can therefore continue to be used

as a means of payment and store of value. The €500 banknote, like the other denominations of euro

banknotes, will always retain its value and can be exchanged at the Eurosystem NCBs for an

unlimited period of time. Credit institutions, bureaux de change and other professional cash handlers

may recirculate the €500 banknotes

3.3

In the euro area, the three higher denominations of banknotes remain available as a means of

payment. The ECB highlights the risk for the cash infrastructure and the smooth supply of cash

should Member States’ policies be tailored in such a way that they disincentivise or prohibit citizens

from using legal tender money for payments or as a store of value. Rather, the ECB considers that

policy measures should be designed to guarantee the freedom of choice on how to pay.

3.4

As noted above, Danmarks Nationalbank can continue to redeem 1 000 DKK banknotes for 12

months after they have been withdrawn, until and including 31 May 2026, and may subsequently still

redeem such banknotes ‘if circumstances justify it’. The ECB notes that a sufficiently long redemption

period of the 1 000 DKK and the old series DKK banknotes would serve to uphold trust in cash, and

refers to the Eurosystem policy of exchanging €500 banknotes for an unlimited period. In this context,

the ECB understands that Danmarks Nationalbank will assume ´justifiable circumstances´ and

redeem any DKK banknotes held legitimately by any persons in the Union and the European

Economic Area, who have come to possess such banknotes as a result of the free movement of

See COM (2020) 592 final.

The euro value in this opinion is based on the DKK/EUR exchange rate (7,45 DKK per EUR) on the date of receipt of the

consultation request by the ECB, 1 December 2023, as published by the ECB, available at:

www.ecb.europa.eu.

See paragraph 3.1 of Opinion CON/2019/5.

ECB-PUBLIC

capital under Article 63 TFEU, if the person holding such banknotes is for good reason unable to

present them for redemption before 31 May 2026, for instance due to greater obstacles by non-

residents compared to Danish residents.

Lowering of cash prohibition limit

3.5

3.6

The purpose of the draft law is to lower the existing threshold for certain cash payments to

professionals from a maximum equivalent of approximately 2684 EUR to 2013 EUR.

Under the Treaty, the European System of Central Banks (ESCB) has the basic task of promoting

the smooth operation of payment systems

, and the ECB has the exclusive right to authorise the

issue of euro banknotes within the Union

. The euro banknotes issued by the ECB and the NCBs

of the euro area are the only banknotes with legal tender status within the euro area

3.7

Were Denmark to initiate an abrogation of its exemption status in accordance with Protocol (No 16)

TFEU on certain provisions relating to Denmark, the draft law would represent a restriction of the

legal tender status of euro banknotes, which would be assessed against the relevant Union law, as

set out in paragraphs 3.8 to 3.13

3.8

The concept of ‘legal tender’ of a means of payment denominated in a currency unit has been

considered by the Court of Justice of the European Union. In particular, the Court has clarified that

the concept of ´legal tender´ signifies that this specific means of payment cannot generally be refused

in settlement of a debt, denominated in the same currency unit, at its full face value, with the effect

of discharging the debt. In clarifying the concept of ‘legal tender’ under Union law, the Court has

taken into consideration Commission Recommendation 2010/191

, which provides useful guidance

for the interpretation of the relevant provisions of Union law. Point 1 of Recommendation 2010/191

states that, where a payment obligation exists, the legal tender of euro banknotes and coins should

imply (a) mandatory acceptance of those banknotes and coins; (b) their acceptance at full face value;

and (c) their power to discharge from payment obligations. According to the Court, this shows that

the concept of ‘legal tender’ encompasses, inter alia, an obligation in principle to accept banknotes

and coins denominated in euro for payment purposes

3.9

The Court has clarified that the concept of ‘legal tender’ is a concept of Union law that must be given

an autonomous and uniform interpretation throughout the European Union

. Insofar as it allows the

Union legislature to lay down the measures necessary for the use of the euro as the single currency,

the Court clarified that Article 133 of the Treaty empowers the Union legislature alone to specify the

legal rules governing the status of legal tender accorded to banknotes and coins denominated in

euro, insofar as that is necessary for the use of the euro as the single currency. In this respect, the

ECB notes that, on 28 June 2023, the Commission published a proposal for a regulation on the legal

tender of euro banknotes and coins, which would establish rules on the legal tender of euro

Article 127(2) of the Treaty and Article 3.1 of the Statute of the ESCB and the ECB.

First sentence of Article 128(1) of the Treaty and first sentence of Article 16 of the Statute of the ESCB and the ECB.

Third sentence of Article 128(1) of the Treaty and thirds sentence of Article 16 of the statute of ESCB Statute and the ECB.

See paragraph 3.1 of Opinion CON/2023/39.

Commission Recommendation 2010/191 of 22 March 2010 on the scope and effects of legal tender of euro banknotes and

coins (OJ L 83, 30.3.2010, p. 70).

See judgment of 26 January 2021,

Hessischer Rundfunk,

joined cases C-422/19 and C-423/19, EU:C:2021:63, paragraphs

46 to 49.

See judgment of 26 January 2021,

Hessischer Rundfunk,

joined cases C-422/19 and C-423/19, EU:C:2021:63, paragraph

45.

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banknotes and coins in binding Union secondary law

. The explanatory memorandum of the

proposed regulation states that discussions within the Euro Tender Expert Group (ELTEG) confirmed

the existence of uncertainty and important differences regarding the practical application of the

concept of legal tender across the euro area

. These differences would justify establishing rules on

the legal tender of euro cash in a regulation adopted under Article 133 of the Treaty. The ECB has

welcomed the proposed regulation and strongly supported the establishment of rules on the legal

tender status of euro banknotes and coins in secondary Union law, as well as the measures laid

down in the proposed regulation regarding access to cash

3.10 The Union legislature’s exclusive competence precludes any competence on the part of the Member

States in this matter, unless they are acting on the basis that they have been empowered by the

Union to do so or for the implementation of Union acts

3.11 However, the Court further clarified that the status of legal tender calls for acceptance in principle of

banknotes and coins denominated in euro as a means of payment, not for absolute acceptance. The

Union´s exclusive competence in matters of monetary policy is without prejudice to the competence

of Member States whose currency is the euro to regulate the procedures for settling pecuniary

obligations, which do not affect the principle that, as a general rule, it must be possible to discharge

a payment obligation in cash. Thus, that exclusive competence does not prevent a Member State

from adopting measures falling within one of the Member State´s competences; for instance, a

Member State may, based on its competence to organise its public administration, oblige the public

administration to accept cash payments from citizens. Neither does it prevent a Member State, in the

exercise of its own powers, from introducing, on legitimate public interest grounds, a derogation from

that obligation for statutorily imposed payments, subject to compliance with certain conditions. In

particular, the obligation to accept euro banknotes and coins may, in principle, be restricted by the

Member States for reasons of public interest and subject to the principle of proportionality. This

means that any such restrictions must be proportionate to the public interest objective pursued. When

limiting the possibility, recognised by Union law, of generally discharging a payment obligation in

banknotes and coins denominated in euro, Member States must ensure that any measures comply

with the principle of proportionality, which requires in particular that they are appropriate for achieving

the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary

in order to achieve those objectives

3.12 The Court has established that restrictions of the legal tender status of euro banknotes in particular

require that the legislation (i) does not have the object or effect of establishing legal rules governing

the status of legal tender of euro banknotes; (ii) does not lead, in law or in fact, to abolition of those

banknotes, in particular by calling into question the possibility, as a general rule, of discharging a

payment obligation in cash; (iii) has been adopted for reasons of public interest; (iv) only entails a

Proposal of the European Commission of 28 June 2023 for a regulation of the European Parliament and of the Council on the

legal tender of euro banknotes and coins (COM(2023) 364 final).

See the explanatory memorandum of the proposed regulation on the legal tender of euro banknotes and coins section 3, page

4, and the Final report of the Euro Legal Tender Expert Group (ELTEG) of 6 July 2022.

See paragraphs 1.1 and 1.2 of Opinion CON/2023/31.

See judgment of 26 January 2021,

Hessischer Rundfunk,

joined cases C-422/19 and C-423/19, EU:C:2021:63, paragraphs

50 to 52.

See judgment of 26 January 2021,

Hessischer Rundfunk,

joined cases C-422/19 and C-423/19, EU:C:2021:63, paragraphs

55 to 56 and 67 to 70.

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limitation in on payments in cash that does not go beyond what is necessary in order to achieve the

public interest objective

3.13 Regarding the proportionality of a restriction of the legal tender status of euro banknotes, the Court

requires not only that the measure is appropriate for attaining the public interest objective pursued,

but also that it must not go beyond what is necessary in order to achieve that objective. The ECB

has opined on whether limitations may be considered appropriate

. In particular, the ECB has noted

that the broader and more general a limitation is, the stricter should be the interpretation of the

requirement for the limitation to be proportionate to the objective pursued

. When considering

whether a limitation is proportionate, the adverse impact of the limitation in question and whether

alternative measures could be adopted that would fulfil the relevant objective with less adverse

impact should always be considered

3.14 The draft law does not have the objective or the effect of amending the legal rules governing the

status of legal tender of euro banknotes or coins. The draft law does not lead, in law or in fact, to the

abolition of banknotes in Denmark, in particular by calling into question the possibility, as a general

rule, of discharging a payment obligation in cash

3.15 According to the explanatory notes

, the draft law is, as mentioned above, proposed to be adopted

for reasons of public interest. More specifically, all businesses receiving cash are seen, until the

phasing out of the 1 000 DKK banknote, to be extraordinarily exposed to an increased risk of being

misused for money laundering purposes, whilst the risk is thought to be particularly high for

professionals not subject to the procedures for fighting money laundering under the Law on money

laundering. Therefore, it is considered necessary to enhance the protection against money

laundering in retail and other trades where cash is accepted by lowering the threshold for certain

cash payments, as a consequence of the phasing out of the 1 000 DKK banknote.

3.16 The draft law´s objective of combating money laundering may, in general, constitute a ´public interest

reason´ justifying the dis-incentivisation of, and the resulting limitation on, the use of cash

payments

. It is, however, difficult for the ECB to assess whether the measure contained in the draft

law is appropriate for attaining the public interest objective pursued, and whether it goes beyond

what is necessary in order to achieve that objective, especially in view of the absence of a concrete

impact assessment of the expected effect of the draft law

3.17 The proposal for lowering the threshold for certain cash payments follows two previous reductions of

the same threshold in 2013 and 2020 respectively, on which the ECB was consulted and adopted

opinions

. In 2013, the cash prohibition limit was reduced from 100 000 DKK (approximately

See judgment of 26 January 2021,

Hessischer Rundfunk,

joined cases C-422/19 and C-423/19, EU:C:2021:63, paragraph

78.

See paragraph 4 of Opinion CON/2022/5.

See paragraph 2.7 of Opinion CON/2017/8, paragraph 2.11 of Opinion CON/2021/18 and paragraph 2.8 of Opinion

CON/2023/39.

See paragraph 2.7 of Opinion CON/2017/8 and paragraph 2.7 of Opinion CON/2019/39, and paragraph 2.8 of Opinion

CON/2023/39.

See paragraph 4.6 of Opinion CON/2022/5 and paragraph 3.2 of Opinion CON/2023/39.

See points 1 and 1.1.2 of the general comments to the draft law.

See, amongst others, paragraph 2.2 of Opinion CON/2014/37, paragraph 2.4 of Opinion CON/2017/18, paragraph 2.5 of

Opinion CON/2017/40, paragraph 2.3 of Opinion CON/2019/46, paragraph 4 of Opinion CON/2022/5, paragraph 2.10 of

Opinion CON/2022/43 and paragraph 3.6 of Opinion CON/2023/39.

See paragraph 3.7 of Opinion CON/2023/39.

See Opinion CON/2013/9 and Opinion CON/2020/33.

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equivalent to 13 422 EUR) to 50 000 DKK (approximately equivalent to 6 711 EUR). At the time, the

ECB noted

that any impact of the proposed provisions should be carefully weighed against the

public benefits expected to be derived from them. Also, in view of the fact that the measures affected

relatively low value payments, competent authorities should ensure that the effects of these

measures do not go beyond what is necessary for achieving the objective of combating money

laundering and financing of terrorism. In 2020, the explanatory notes of that draft law did not clarify

what the impact had been of the lowering of the threshold since its introduction and adoption in 2013.

Moreover, in 2020 the explanatory notes did not clarify why, seven years after the lowering of the

threshold for certain cash payments, the threshold needed to be further reduced to just around one

fifth of the pre-2013 threshold

. Likewise, the explanatory notes of the current draft law do not in any

manner address the effect of the two previous reductions of the threshold. Neither do they contain

any discussion as to possible alternatives to the proposed reduction. For instance, one possible

alternative could have been to restrict the reduction of the threshold to only apply to cash payments

made in 1 000 DKK banknotes instead of making it applicable to all cash payments irrespective of

the banknote denominations used. For these reasons, it is difficult for the ECB to assess whether

the objective of the current draft law will be effective.

3.18 The ECB also notes that the effect of the current inflation rates throughout Europe on the purchasing

power of money is something which should also be taken into account when assessing whether the

cash prohibition limit proposed in the draft law is proportionate to the public interest objective

pursued.

3.19 The ECB acknowledges that other lawful means for the settlement of monetary debts with similar

benefits to those of cash are generally available in Denmark above the proposed threshold equivalent

to approximately 2013 EUR. Moreover, as noted above, the proposal to further lower the threshold

for certain cash payments applies only to professionals who are not covered by the scope of

application of the Law on measures to prevent money laundering and financing of terrorism, when

receiving cash. Thus, the lowering of the threshold applies only to this specific group of business-to-

business and customer-to-business payments. In this respect, the ECB welcomes the fact that this

restriction is not intended to apply to payments between consumers, in the same way as is the case

for the existing restriction of 20 000 DKK. However, as noted above, no substantiation has been

provided in the explanatory notes on the effect of the previous 2013 and 2020 reductions of the cash

limitations.

. If such measures have not produced the desired effects, it is hard to understand why

lowering that threshold to 15 000 DKK would be considered more appropriate and more effective

Moreover, in respect of contingencies where alternative means of payment are temporarily not

functioning, flexibility should be ensured for the settlement of payment obligations in cash.

See paragraph 2.3 of Opinion CON/2013/9.

See paragraph 2.9 of Opinion CON/2020/33.

See also paragraph 3.5 of Opinion CON/2022/9, with a view to fighting fiscal fraud, the limitation of cash payments from 2 500

EUR to 1 000 EUR was considered to be disproportionate, where at least one of the parties to the transaction acts in a

professional or business capacity.

See paragraph 3.10 of Opinion CON/2023/39.

ECB-PUBLIC

3.20 Against this background, it is therefore questionable whether or not the draft law could be considered

proportionate to the objective pursued.

This opinion will be published on EUR-Lex.

Done at Frankfurt am Main, 12 January 2024.

The President of the ECB

Christine LAGARDE