£50 notes may fall victim to crackdown on crime

The Bank of England should scrap the £50 banknote to help rein in financial crime and terrorism, a report has said.

The overhaul should also stretch to 500 euro notes and 100 dollar bills because high-value notes are the payment method of choice for the criminal underworld, according to a study by the Harvard Kennedy School.

Any such move would be a big step forward in disrupting the "business models" of the "bad guys", the research said, because it would prevent criminals hiding behind the "lack of transaction record" that comes with trading in high-denomination notes.

The study estimates that global crime flows total two trillion US dollars per year, while corruption adds up to another one trillion US dollars.

Peter Sands - the former Standard Chartered chief executive who spearheaded the study - said eliminating high-value notes would "make life harder for those pursuing tax evasion, financial crime, terrorist finance and corruption."

He added: "Without being able to use high denomination notes, those engaged in illicit activities (...) would face higher costs and greater risk of detection."

The report states that tax evasion robs countries of between 6% and 70% of what their tax authorities should be collecting.

But despite heavy investment in systems and intelligence gathering to crackdown on the flow of illegal funds, only 1% of it is seized, the 'Making it Harder for the Bad Guys' report found.

However Mr Sands said that this move should not lead to the stopping of cash payments altogether.

He added: "Despite the rapid growth and development of electronic payment mechanisms, cash stills plays a vital role in the functioning of the economy.

"In every country cash is still the predominant method of making small payments, which represent the vast majority of all payments."

De La Rue sealed a 10-year deal with the Bank of England in October 2014 to print plastic banknotes.

The notes, which are coated with a thin film of polypropylene polymer and due to begin circulation this year, are harder to counterfeit and stay cleaner for longer.