France has announced new economic controls restricting cash payments and withdrawals in an effort to fight “low-cost terrorism.” The announcement was made at a March 18 news conference by Finance Minister Michel Sapin.
The finance minister referred to the Paris attacks of two months ago that left 20 people dead as motive for the tightened restrictions of cash payment restrictions. The minister called the measure necessary in the “fight against the use of cash and anonymity in the French economy.”
Under the new restrictions, which come into effect in September, cash payments will be limited to 1,000 euros and bank deposits of more than 10,000 euros in a single month will need to be reported to the authorities. The previous limits were 3,000 and 15,000 euros.
The new restrictions will apply to differently to nonresidents. For nonresidents, including high-spending tourists, cash payments will be restricted to 10,000 euros, down from the previous limit of 15,000 euros.
Also, the amount of money an individual will be able to exchange into other currencies without having to show proof of identity will drop from 8,000 to 1,000 euros.
According to French officials, the Paris attacks did not cost much and were partly financed by cash, consumer loans, and trafficking counterfeit goods.
Despite the French finance minister’s comment that the changes are needed to fight violent extremist attacks, a similar proposal was made by French Prime Minister Jean-Marc Ayrault in February 2013. The stated reason at that time was not the “low-cost terrorism” cited now by the finance minister, but tax cheats who were apparently preventing the government from hitting its GDP growth target. Both the recent restrictions and the 2013 proposal contained identical amounts subject to limitation.
France is not alone in implementing this type of strict economic control. In Spain, cash payments are already restricted to 2,500 euros, and in Italy they are restricted to 1,000 euros.