EU banking union

Banker busted in ill-fated caper

Group took advantage of legal shift to profit from torn bank notes

Despite the best efforts of 1980s rockers Dire Straits, there remains no such thing as money for nothing, as at least one former Czech National Bank (ČNB) employee is learning the hard way.

A recent shift in bank policy sees the holders of damaged crown notes more easily able to use or replace the money, but the policy shift also opened the door for a short-lived scheme among bank workers attempting to profit from the changeover.

The ČNB says the new policy has been in effect since July but has only become widely publicized recently. It allows any damaged note containing more than 50 percent of the original to be exchanged at any commercial bank for a new note of the full value. In the past, holders would only receive a fraction of the value of the bank note corresponding with the percentage of the note they held, and banks would often limit how much damaged money could be exchanged, or even charge a fee.

In an attempt to make some quick cash from the policy shift, a now-former ČNB employee with foreknowledge of the change teamed up with other employees and outsiders in an ill-fated caper that saw her make off with some 110,000 Kč in all. The woman tore 440,000 Kč worth of bank notes before the law change, then exchanged the smaller parts of the torn notes for their percentage worth. After the law changed, members of the group then also returned the remaining portion of the bank notes for the original’s full face value, profiting about 125 percent on each bank note.

Police confirmed that the gang’s ringleader was charged with fraud Oct. 26. She faces up to one year in prison. Investigators say the rest of the culprits may have been little more than pawns used to exchange the bank notes, although additional details may still be forthcoming.

“In evaluating the safety and continuity of circulation, the ČNB began to suspect possible fraud, and so thoroughly documented and filed suspicions and filed a criminal complaint to the police against the group of people working inside and outside the ČNB,” said ČNB spokeswoman Petra Hájková.

The new law is meant to solidify policy regarding damaged bills to increase security in the monetary supply, Hájková said, and those commercial banks that refuse to exchange a damaged bank note free of charge can now get a 1 million Kč fine.

“The procedure for exchanging damaged bank notes used to be set in a Civil Code with a legal power that was often doubted,” Hájková said. “For this reason, a new legal change was embedded in the law on note and coin circulation that clearly sets the rights and obligations of individual participants in monetary circulation, which enabled an enhancement of the legal security for all the participants in monetary circulation.”

In another legal change, merchants and commercial banks must accept bank notes that are slightly damaged – with tears at the edges or that have gone through the washing machine, for example – as long as their authenticity can still be determined. For exceptionally damaged bank notes, holders must fill out an application for replacement.

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