EU clamps down on money laundering with strict cash payment cap

The European Parliament has adopted laws bolstering the EU's toolkit to fight money laundering and terrorist financing. This brings into effect a new rule limiting cash payments to a maximum of £8,500.

In January, the EU Council and the European Parliament reached a provisional agreement on tightening the regulations to prevent money laundering, the financing of terrorism, and the circumvention of sanctions. Integral to these tightened regulations is the restriction on cash payments, setting the ceiling at £8,500 across all member states. However, individual countries within the Community can impose lower limits.

The new regulations significantly empower financial analysis units, enhancing their authority to scrutinize, unearth, and halt suspicious transactions related to money laundering and the financing of terrorism.

Under the current rules, cash transactions exceeding £8,500 are subject to monitoring. Sellers engaging in such transactions must investigate the customer's source of funds and report the dealings to the General Inspectorate of Financial Information. A proposition by the Union aims to further tighten the screws by reducing this limit to £2,550, particularly targeting the trade of high-value items such as jewellery, luxury cars, private planes, and yachts.

Furthermore, the European Union is gearing up to implement specialized regulations targeting cryptocurrencies. Operators of exchanges and wallets must thoroughly verify their clients and the provided information for transactions starting from £850.

These new stipulations regarding cash payments are slated for implementation in 2027.