Through the ages, money has proved to be an indispensable part of everyday life, with individuals, institutions, enterprises, and governments considering it to be a symbol of national sovereignty. That’s why many governments across the world have developed stern laws that regulate the use and preservation of their national currencies, even prohibiting people from destroying money. But is it illegal to destroy money? Read on to find out.
Is It Illegal to Destroy Money?
Countries around the world have different laws stipulating how their national currencies should be handled and preserved. Many of these laws prohibit people from defacing money. Some even impose heavy penalties on people who destroy their national currencies.
For instance, in the United States, Section 333 of the 18 U.S. Code prohibits any acts of mutilation of the national currency. This code states that,
“Whoever mutilates, cuts, defaces, disfigures, or perforates, or unites, or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined under this title or imprisoned not more than six months, or both.”
This law was designed mainly to prevent forgers and frauds from changing money for evil purposes. Therefore, it makes it illegal for anyone to deface, cut, perforate, mutilate, or damage any bank bill, note, or draft issued by a national or federal institution. However, the catchphrase in this law is “with the intent to render the money unfit to be reused.”
Therefore, it’s not illegal for you to tear or write something on a banknote as long as your intention isn’t to make the note unusable in the future. The burden of proof of intent to deface the banknote lies with the state. If the state prosecuted everyone who defaced, cut, or burned a banknote, then the American jails would be full of magicians who do all manner of things to banknotes during their performances.
It’s also common to find banks and shops that don’t accept tagged bank notes. Many of these institutions reject tagged currencies as a precautionary measure against counterfeiters. However, the abovementioned statute makes it clear that tagging a banknote isn’t illegal if you are not doing it for nefarious purposes.
But you also need to understand that the decision by certain institutions and enterprises to reject tagged or defaced currencies may be informed by the institution’s internal policies.
Additionally, degrading the American currency in an act of defiance or protest may be considered the same as burning the American flag which is protected under the First Amendment of the U.S. Constitution. The act of burning the American flag is widely recognized as a form of “symbolic speech”, which consists of non-verbal and non-written forms of communication.
Therefore, burning banknotes in defiance may be considered symbolic speech, as long as you can prove that your intention wasn’t to prevent other people from reusing them. However, the American constitution doesn’t explicitly mention the act of burning bank notes or the American flag as part of the protected symbolic speech. So, you have to be careful when engaging in these acts of protest so that you don’t cross the legal line.
Apart from the U.S., many other countries have also developed laws prohibiting the defacement of their national currencies. In India, the Reserve Bank introduced the Clean Note Policy in 1988 to curtail the circulation of fake currency in the Asian nation. Since this policy came into effect, India has had a fairly healthy economy because people are always compelled to deposit their old notes and obtain new ones.
However, this policy has also led to a cash crunch in the market because there aren’t enough banknotes in circulation. This cash crisis has negatively affected many sectors of the country’s economy, including real estate, retail, tourism, and other industries that require enough liquid cash.
Some financial experts have also criticized this policy claiming that it has disenfranchised poor people in India who can’t access clean banknotes easily. But the Clean Note Policy has been effective in curtailing the circulation of fake currency in the Indian economy thus giving investors enough confidence to invest more money in their businesses.
This policy prohibits anyone or any premises where money is stored or sorted from soiling, defacing, disfiguring, or destroying bank notes. The country’s reserve bank offers banks guidelines on how to implement this policy. One of the requirements laid down by the reserve bank is for every bank to have a three-tier system to sort out bank notes.
This system categorizes bank notes into three clusters: soiled notes, dirty notes, and fit notes. Soiled notes are used to make paper pulp, while dirty notes are used to make second-rate paper items. Fit notes can be reissued to customers or used for making first-rate paper items. The Indian Clean Notes Policy has been amended severally to align it with the current financial situation in the country.
For instance, the Reserve Bank of India issued a new clean note policy in October, 2018 as part of its attempts to align it with digital payments. This policy is aimed at discouraging Indians from cash transactions. The reserve bank hopes to make India a cashless economy with few or no physical currencies in circulation.
In Europe, the law prohibits unauthorized destruction and mutilation of large quantities of euro banknotes or coins. However, the destruction of small amounts of banknotes or coins by individuals or organizations isn’t prohibited. This non-prohibition is informed by the belief that you have a right to do what you want with your money as long as your action doesn’t have a negative impact on a third party.
However, the law prohibits you from releasing the damaged or defaced banknotes back into circulation. Additionally, the law tolerates the mutilation and alteration of euro banknotes and coins for creative purposes. However, the mutilated and altered banknotes and coins should be kept away from circulation.
In Australia, the law prohibits anyone or any institution from defacing or destroying banknotes or coins without permission from authorities. The Australian Crimes (Currency) Act 1981 states that “a person shall not, without consent, in writing, of an authorized person, intentionally deface, disfigure, mutilate, or destroy any coin or paper money that is lawfully current in Australia.”
The penalty for this crime is imprisonment of two years or 50 penalty units, or both, for individuals, and 100 penalty units for corporates. This Act also prohibits people and organizations from selling defaced coins and banknotes. You shouldn’t even possess any defaced or mutilated banknotes or coins with the intention of selling them.
