SECOND COMMISSION REPORT based on Article 11 of the Council Framework Decision of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro {SEC(2003) 936}

1. INTRODUCTION

In order to guarantee tighter, harmonised protection for the euro throughout the European Union, the Council adopted Framework Decision 2000/383/JHA on 29 May 2000. [1] In the context of the introduction of the euro at the start of 2002, this Framework Decision was designed to complement the provisions of the International Convention of 20 April 1929 for the Suppression of Counterfeiting Currency and the application thereof. [2] The Member States were required to accede to the Convention, where necessary, and to transpose the provisions of the Framework Decision into national law by 29 May 2001 at the latest.

[1] Council Framework Decision of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro (OJ L 140, 14.6.2000, p. 1).

[2] No 2623, p. 372, 1931 Compendium of League of Nations Treaties.

Pursuant to Article 11 of the Framework Decision, on 13 December 2001 the Commission adopted a report on the implementation of the Framework Decision [3] based on information supplied to it by the Member States. The report, which sets out in detail the various obligations laid down in the Framework Decision and the way in which the Member States have complied with them, was then submitted to the Council. Although the Council acknowledged in its conclusions that the objective of the Framework Decision had largely been met, it called on the Commission to draw up a second report incorporating additional information from the Member States.

[3] COM(2001) 771 final.

On the basis of the information received subsequently, the Commission prepared a working document with country reports, an initial version of which was handed to the Council's working group on substantive criminal law in November 2002. A second version, accompanied by updated tables for individual countries, was handed to the Cocolaf's advisory committee on counterfeiting in April 2003 with a view to obtaining additional details from the Member States on their legislative amendments and the interpretation of certain provisions of national law.

The tables, which had already been included in a document annexed to the first report, [4] but did not form an integral part of it, are included in this report, [5] while the country reports are contained in a Commission staff working paper. [6] The present report begins with an article-by-article inventory of all the legislative amendments and clarifications made since the first report was adopted. It continues with a summary of the current state of implementation of each Article of the Framework Decision. [7] The report does not cover the new Article 9a of the Framework Decision on recognition of previous convictions as inserted by Council Framework Decision 2001/888/JHA of 6 December 2001. [8] The Member States have not yet provided any data on this subject.

[4] COMMISSION STAFF WORKING PAPER, 13 DECEMBER 2001 (SEC(2001) 1999).

[5] FOR THE TABLES AND COUNTRY REPORTS SEE ANNEX 1 AND ANNEX 2 TO THIS REPORT RESPECTIVELY.

[6] COMMISSION STAFF WORKING PAPER, SEC(2003)936, OF 3.09.2003.

[7] FOR MORE DETAILED INFORMATION, IN PARTICULAR ON THE NATIONAL PROVISIONS ALREADY REGARDED AS IN LINE WITH THE FRAMEWORK DECISION WHEN THE FIRST COMMISSION REPORT WAS ADOPTED, SEE THE TABLES AND COUNTRY REPORTS IN THE ANNEX AND THE FIRST REPORT.

[8] COUNCIL FRAMEWORK DECISION OF 6 DECEMBER 2001 AMENDING FRAMEWORK DECISION 2000/383/JHA ON INCREASING PROTECTION BY CRIMINAL PENALTIES AND OTHER SANCTIONS AGAINST COUNTERFEITING IN CONNECTION WITH THE INTRODUCTION OF THE EURO (OJ L 329, 14 DECEMBER 2001, P. 3).

2. PROGRESS IN IMPLEMENTING THE FRAMEWORK DECISION

As far as possible, the current inventory of amendments and clarifications which have been communicated to the Commission since its first report follows the structure and headings of the sub-chapters indicated in Chapter 2.2 of that report.

2.1. Progress in implementing the Framework Decision and ratifying the 1929 Convention

All the Member States have provided the Commission with information on their implementation of the Framework Decision. Most have also submitted their national implementing legislation.

When the Commission adopted its first report, some Member States (France, Germany, Ireland, and Luxembourg) had prepared new legislation which complemented or amended existing criminal law and which was specifically designed to implement the Framework Decision but had not entered into force at the time. It has since done so.

Since the first report was adopted, some Member States have also introduced new draft legislation in order to implement certain provisions of the Framework Decision. For instance, Spain has drafted amendments to its criminal code with a view to transposing Articles 3, 8 and 9 of the Framework Decision into national law. However, these amendments have not yet entered into force.

According to information provided by the French authorities, new legislation is currently being drafted in order to transpose Article 4 of the Framework Decision into national law. Portugal, Luxembourg and Austria have tabled bills for the transposal of Articles 8 and 9 of the Framework Decision, but these have not yet entered into force.

Now that Luxembourg has completed ratification of the 1929 Geneva Convention, all the Member States are parties to it.

2.2. General offences (Article 3): Table 1

The various elements of the general concept of counterfeiting defined in Article 3(1)(a) and (b) of the Framework Decision will have been transposed by all the Member States into their domestic criminal law as soon as the amendments to the Spanish criminal code have entered into force.

Given that counterfeiting currency is not yet a criminal offence in Spain, the draft amendment is designed to alter Article 386 of the criminal code to make specific provision for that act.

The Spanish draft amendment also provides for the express criminalisation of import, export and transport of counterfeit currency referred to in Article 3(1)(c). With regard to Danish criminal law, which classes the offences referred to in Article 3(1)(c) and (d) as 'attempts' and 'assistance' in respect of counterfeiting or issuing counterfeit currency, Denmark has made it clear that this does not affect the level of penalty available, in contrast to what was stated in the first report and to what might be the case in other Member States.

With regard to offences concerning items which, by their very nature, are for the purpose of counterfeiting currency and components which serve to protect against counterfeiting (Article 3(1)(d) of the Framework Decision), the amendments prepared by Germany, France and Luxembourg with a view to incorporating a specific offence into their respective sets of legislation have now entered into force.

2.3. Additional offences (Article 4) and currency not issued but designed for circulation (Article 5): Table 2

The supplementary information provided by Italy and Portugal made it clear that their definition of counterfeiting implicitly covers the illegal manufacture of currency using legal facilities or materials. This will also be the case for Spain once its draft amendments have entered into force, while France still plans to create specific provisions to punish the offences referred to in Article 4.

Italy has also helped to clarify the issue of whether its criminal code is in line with Article 5(b) by indicating that the offence of counterfeiting would cover all currency which is legal tender, irrespective of whether it has been issued. The entry into force of new legislation following the adoption of the first report means that Ireland and Luxembourg now also comply with this Article of the Framework Decision.

2.4. Penalties (Article 6): Table 3

Confirmation by Member States that their criminal law is to be brought into line with the articles of the Framework Decision which relate to substantive offences has enabled a number of doubts surrounding implementation of penalties, particularly in Spain and Italy, to be resolved.

The Irish and Luxembourg legislation transposing Article 6(2) of the Framework Decision into national law has entered into force since the adoption of the first report. Sweden, which provides for a maximum penalty of just eight years for "serious" offences, has noted that the scale of penalties applicable (minor, normal or severe) is assessed on a case-by-case basis and that the courts must exercise their judgment in the light of individual circumstances.

As regards the obligation on Member States to make penalties, including deprivation of liberty which may give rise to extradition, available for the offences contained in Article 3(1)(a), it should be noted that some of the Member States which had made reservations to the 1957 European Convention on Extradition have altered or clarified their position. [9] Once the provisions of Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and (the surrender procedures between Member States) have been implemented, [10] they will also apply to counterfeiting, including counterfeiting of the euro.

[9] Whereas Denmark has completely withdrawn its reservations, Sweden now authorises extradition to another Member State where a sentence of six months' or more imprisonment is involved. In France, when a "Schengen" state requests extradition, sentences of two years' imprisonment in France and of just one year's imprisonment in the country requesting extradition are required. Once a guilty verdict has been pronounced, a sentence of just two months' imprisonment is sufficient for extradition to be authorised.

[10] 2002/584/JHA: Council Framework Decision of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States (OJ L 190, 18 July 2002, p. 1.).

2.5. Jurisdiction (Article 7): Table 4

Now that the Irish, French and Luxembourg legislation designed to implement Article 7(2) of the Framework Decision has entered into force, all the Member States which have adopted the euro have transposed the obligation resulting from that Article into their national law.

2.6. Liability of legal persons and sanctions (Articles 8 and 9): Table 5

Since the entry into force of the new Irish legislation and an amendment to German law, ten Member States have aligned their law with Articles 8 and 9 of the Framework Decision.

Spain, Austria and Portugal have now introduced, or are in the process of drafting, legislation transposing Articles 8 and 9 of the Framework Decision. According to the information available to the Commission, Luxembourg is working on this legislation too and notes that for some years now the Attorney General has been empowered under company law to request the dissolution and liquidation of any company engaged in activities which contravene criminal law.

The United Kingdom is not planning to adopt specific legislation to incorporate the concept of liability of legal persons into national law, but has stated that it already complies with the obligations set out in Articles 8 and 9 of the Framework Decision. According to the UK authorities, the concept of negligence in civil law meets the requirements of Article 8(2). In accordance with this concept, the British courts would be able to grant damages to victims who can prove negligence on the part of a legal person. However, these issues may still need further clarification.

3. CONCLUSIONS

3.1. General points

With a greater or lesser degree of delay in relation to the deadline laid down in Article 11(2) of the Framework Decision, all the Member States have finally provided the Commission with information on the measures taken to implement the Framework Decision. Although in some cases this information is somewhat lacking in detail, it has enabled a more comprehensive assessment to be made than was possible when the first report was adopted.

From the Commission's perspective, the result is that, when all the amendments still in the process of being drafted or adopted (Austria, France, Luxembourg, Portugal, Spain) enter into force, the Framework Decision will have been transposed in full into national law by all the Member States, with the exception of at least one provision which does not seem to have been completely transposed by certain Member States. According to the information currently available to the Commission, this concerns Finland and Sweden as regards Article 6(2). There may also be further need of clarification on the full implementation of certains provisions, such as the liability of legal persons in the law of the United Kingdom.

It is therefore suggested that the Council invite those Member States which have yet to complete the transposition of certain provisions into national law or which may yet provide further explanations on aspects of national law which may not be fully in line with the Framework Decision to continue to inform the Council and Commission on those matters, to allow them to be taken into account in Council discussions after the Commission has presented this report.

3.2. Specific comments

Article 2

All the Member States have acceded to the 1929 Geneva Convention.

Article 3

When the amendments envisaged in Spain enter into force, all the Member States will have transposed the various components of the general notion of counterfeit currency as defined in Article 3(1)(a) and (b) of the Framework Decision into national law.

The import, export and transport of counterfeit currency as referred to in Article 3(1)(c) are specific offences in seven Member States (Austria, Finland, Greece, Luxembourg, Netherlands, Portugal and Spain, following the final adoption of amendments to the criminal code). The other Member States (Belgium, Denmark, France, Germany, Ireland, Italy, Sweden, United Kingdom) have transposed this Article into national law in more general terms.

Articles which, by their very nature, are for the purpose of counterfeiting currency and components which serve to protect against counterfeiting (Article 3(1)(d) of the Framework Decision) are covered by the national legislation of each Member State, either in the form of specific offences or broader concepts or notions.

All the Member States have introduced, in criminal law or common law, general provisions on participating in and instigating the aforementioned activities, or on attempts to commit those offences pursuant to Article 3(2) of the Framework Decision.

Article 4

When the legislative amendments envisaged by Spain and France enter into force, the illegal manufacture of currency using legal facilities or materials within the meaning of Article 4 of the Framework Decision will be an offence in all the Member States. In some Member States such activity is or will be a specific offence, but most Member States use a broad definition of counterfeiting which covers the illegal use of legal facilities or materials for the purpose of manufacturing currency.

Article 5

All the Member States now have legislation in line with Article 5(b) of the Framework Decision.

Article 6

Implementation of Article 6 (penalties) is still quite varied.

Although Article 6 evidently leaves considerable leeway to the Member States, it remains clear that Finland and Sweden still provide for maximum sentences of at least eight years for the manufacture and alteration of currency only in cases of "serious" offences. All the other Member States have managed to bring their legislation completely into line with Article 6(2) of the Framework Decision.

Article 7

All the Member States now have legislation compatible with Article 7(1) of the Framework Decision. All the Member States which have adopted the euro (and, in addition, Denmark and Sweden) have also transposed the obligation resulting from Article 7(2).

Articles 8 and 9

Once Austria, Luxembourg, Portugal and Spain have finished transposing the provisions of the Framework Decision concerning the liability of legal persons and the sanctions applicable to them, fourteen Member States should have legislation in line with Articles 8 and 9. In the case of the United Kingdom, which has not adopted specific legislation on liability of legal persons or the sanctions applicable to them, the scope of its domestic legislation may require further clarification with regard to the implementation of Articles 8(2) and 9(2) of the Framework Decision.

Article 10

According to information received from the United Kingdom, Article 10 is in the process of being implemented by legislation applying the provisions of the framework Decision to Gibraltar.

Annex to the second report

of the Commission based on Article 11 of the Council's framework Decision of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro [11]

[11] OJ L 140, 14.06.2000, p. 1

TABLES 1 - 5

Table 1 General offences (Article 3)

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Table 2 Additional Offences (Article 4) & Currency not issued but designed for circulation (Article 5

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Table 3 Penalties (Article 6)

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Table 4 Jurisdiction (Article 7)

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Table 5 Liability of legal persons (Article 8) & penalties for legal persons (Article 9)

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