French investigators suspect that the perpetrators of the November 2015 terrorist attacks in Paris used prepaid debit cards to cover their expenses. New measures will be proposed by the European Commission next month to make it harder to finance such operations, writes Prince Michael of Liechtenstein.
This “action plan” will outline a series of steps, including legislation, for consideration by the next European Union finance ministers’ meeting in February, according to the Commission’s Vice President Valdis Dombrovskis.
France is proposing to cap the sums that can be loaded onto prepaid cards, and to curb the conversion of virtual or crypto-currencies such as Bitcoin into legal tender. The French also claim that Bitcoin allows anonymous transactions that cannot be monitored, which happens not to be true.
Two aspects of this issue are striking.
Since the 9/11 attacks, Western governments have insisted that finances are the Achilles heel of international terrorism, which would wither once the money flow is cut off. The financial services industry has been doing its utmost to shut down these flows for 15 years – to little effect. Perhaps the lesson is that there is nothing significant to shut down. Terrorism is not particularly expensive. Attacking the money trail sounds good, but distracts us from the real threat.
Another, cynical aspect should not be ignored. Cash and crypto-currencies have become a thorn in the side of certain central banks and governments. Cash makes it more difficult for governments to control people’s behavior or for central banks to misappropriate savings by applying negative interest rates. The same applies to crypto-currencies, which compete with legal currencies and thus force monetary policies to become more efficient. In this sense, fighting terrorism could just be another pretext for protectionism.
I am reminded of a popular Twitter meme showing a herd of sheep staring out of a pen. Mummy sheep asks: “Kids, do you know why we are permanently surrounded by those barbed-wire fences?" Baby sheep compliantly answers: “I do, Mummy – it’s to keep the terrorists out, so we can all enjoy our freedom.”
European Parliament and individual freedom