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Thursday, 20 December, 2001, 12:16 GMT
Eurozone faces 'black money' tracking trouble
Alpine ski resort
A ski resort could be an ideal location to offload cash
By BBC business reporter Mike Sergeant

With just days to go to the introduction of euro notes and coins - time is running out for anyone wanting to get rid of their stash of Deutsche Marks, Francs or Lire.

Cash hoarded away from the tax authorities, must now be spent or deposited in bank accounts.

Police are trying to stop "black money" leaking across borders to countries like Austria and Luxembourg, where laws protect bank customers' confidentiality.

On the Austrian border with Germany lies the high-alpine town of Jungholtz.

With the imminent arrival of new euro notes and coins it is one possible destination for anyone with "old money" they need to offload.

Secrecy ruling

A ski resort with as many banks as hotels, Jungholtz has long been a favoured holiday spot for Deutschmark millionaires.

Jungholtz is in Austria but only reachable by road from Germany. The Deutschmark is the currency here, but the banks operate under Austrian banking law, which guarantees clients much greater confidentiality.


There's no point in tracking these funds unless you're actually going to do anything about them - freeze the assets

Prof. Barry Rider, Institute of Advanced Legal Studies

Bank secrecy rules potentially make tracking black money in countries like Austria and Luxembourg more challenging than elsewhere in Europe.

Even if the cash can be traced - prosecuting tax cheats and money launderers isn't easy.

"There's no point in tracking these funds unless you're actually going to do anything about them - freeze the assets.

"And the record of the authorities frankly isn't good...if you look at the amount of money they've managed to extract from the criminal sector its minuscule," explained Prof. Barry Rider, Director at the Institute of Advanced Legal Studies.

No haven

Over the border in Southern Germany - the banking system offers no hiding place for tax evaders.

Piles of euros are in the vaults and ready to be distributed, but any deposit of more than a few thousand Deutschmarks will automatically be investigated.

"The banking system itself has to comply with the money laundering laws that we have in Germany, these laws are always observed by the banks here, it is not only because of the introduction of the euro," said Christian Wild, Bavarian Association of Credit Unions.

There certainly haven't been any suitcases of cash arriving at one branch in Bavaria, nor are any expected in the days ahead.

"I have to say that only small amounts of coins have so far been handed back, but no bigger sums, very few actual Deutsche Mark notes which would be recognisable by the authorities," says Alois Huschka, Manager at Raiffeisenbank Pfaffenhofen.

Black hole

So, where is the black money going in the scramble to switch 12 national currencies into euros?

The complete answer will almost certainly never be known.

With so many thousands of border crossings, banks and retailers to watch - financial experts say only a fraction of the illegal money will ever be discovered.


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17 Oct 01 | Business
20 Dec 01 | Business
29 Aug 01 | Business
04 Dec 01 | Business
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