People carrying large amounts of undeclared cash in Spain could soon be forced to prove the money comes from a legitimate source.
The Spanish government has included the measure in its draft law on the prevention of money laundering and terrorist financing.
The proposal represents a significant change in the treatment of undeclared movements of cash and other valuable assets.
Under the plan, when authorities seize undeclared money, the person carrying it will have to demonstrate its lawful origin.
It has prompted accusations that the government is effectively reversing the burden of proof.
Business groups and campaigners defending the use of cash have also raised concerns over what they say are implications for the presumption of innocence.
Crucially, however, the proposal remains an anteproyecto de ley (a preliminary draft law) and is therefore not yet in force.
When do you currently have to declare cash in Spain?
Spain already imposes strict reporting requirements on people physically moving large quantities of money.
A prior declaration is required when moving €100,000 or more within Spain, including when simply transporting the money from one location to another outside the holder’s home.
The threshold is considerably lower when crossing Spain’s borders.
Anyone taking €10,000 or more into or out of Spain must declare it.
These requirements concern the transportation of the money rather than ordinary purchases.
Spain separately limits cash payments when a business or professional is involved in a transaction.
In those circumstances, transactions worth €1,000 or more cannot generally be paid in cash.
The limit rises to €10,000 when the person making the payment is an individual who can demonstrate that they are not tax resident in Spain and is not acting as a business or professional.
What would change?
The most controversial provision concerns what happens when authorities intercept undeclared funds.
According to the draft legislation, ‘their lawful origin must be demonstrated’.
While failure to provide evidence demonstrating legality can already aggravate a sanction, under the proposed system, proving the lawful origin would become an obligation in itself when undeclared funds are intercepted.
That means someone stopped with a sufficiently large undeclared sum could potentially need documentation demonstrating where it came from rather than simply demanding that the authorities prove it was the proceeds of illegal activity.
The sanctions regime would also change, with failure to establish lawful origin becoming a serious infringement rather than an aggravating factor.
It’s not just banknotes
Another potentially significant element is the broad definition of what the government calls ‘means of payment’.
The rules would not apply exclusively to bundles of euro notes.
The draft encompasses Spanish and foreign banknotes and coins, as well as bearer instruments such as certain cheques and promissory notes.
It also covers non-personalised prepaid cards which store or provide access to money and are not connected to a bank account.
Perhaps more surprisingly, the definition extends to highly liquid commodities used as stores of value, potentially including assets such as gold jewellery and diamonds.
The declaration itself would also have to be accurate.
The obligation could be considered breached if the information submitted is incorrect or incomplete, meaning simply filing a declaration would not necessarily protect someone if the amount or other information provided did not correspond with what they were actually carrying.
Cash campaigners attack proposal
Denaria, an organisation campaigning to protect the use of cash in Spain, has fiercely criticised the plans.
It argues they unjustifiably associate legal tender with fraud and place the responsibility on ordinary citizens to demonstrate that their money is legitimate.
The organisation claims the government is effectively assuming that, beyond certain amounts, cash is being used for illicit purposes.
Denaria wants the relevant provision removed from the legislation, arguing that it should remain the responsibility of the authorities to demonstrate illegal use rather than the responsibility of citizens to establish their innocence.
The government, meanwhile, is pursuing the reforms as part of a much broader overhaul of Spain’s framework for combating money laundering and terrorist financing.
The legislation would also establish a new anti-money laundering authority known as ANIFI.
For residents and tourists, carrying €10,000 in cash around Spain is not automatically prohibited, nor would possessing a large amount of cash automatically make it illegal.
But taking €10,000 or more across Spain’s border, or moving €100,000 or more within the country, triggers declaration requirements.
And if the government’s proposed reforms ultimately become law, getting those requirements wrong would force the person carrying the money to prove where it came from.
