French To Ease Tax Evasion Laws During Euro Introduction

by Ulrika Lomas, Tax-News.com, Brussels

10 July 2001

The French parliament looks set to relax the reporting requirements for banks during the introduction of the euro, it was revealed recently. The bill, which has already passed two readings and one in the Senate will raise the amount of money which can be deposited without the bank having to inform the authorities, and suspend the sanctions imposed on banks for failing to report such transactions.

If it is approved, as seems likely given the high degree of support from both houses, the bill will raise the ceiling on cash deposits from FFr50,000 to FFr60,000, and suspend the sanctions imposed on banks in the 1996 anti-money laundering law from December 1st 2001 until February 17 2002. However, this will only apply if the banks are confident that the money has been hoarded by individuals, and is not an attempt to launder criminal proceeds.

The proposed move comes as the result of pressure from the banking lobby on the government to treat the money hoarded at home by many French citizens as flexibly as possible, in order not to provoke a backlash of sentiment against the Euro. It is estimated that at the beginning of 2001, the amount hoarded by households was in the region of FFr130 billion, although some of this is thought to have already been spent in the run up to the european currency introduction, after which all francs will have to be exchanged for euros.

Although the bill will not get another reading in the Senate until October, so the provisions will not come into effect for quite some time, French banks have reportedly been telling customers that the law need not be broken if large deposits are broken into smaller amounts and staggered.

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