Proposal for a European Parliament and Council Directive on cross-border transfers (94/C 360/11) (Text with EEA relevance) COM(94) 436 final - 94/0242(COD)

(Submitted by the Commission on 18 November 1994)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 100a thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the Economic and Social Committee,

Having regard to the opinion of the European Monetary Institute,

In accordance with the procedure laid down in Article 189b of the Treaty,

Whereas the volume of remote cross-border payments is growing steadily as the completion of the internal market and the progressive move towards full economic and monetary union lead to greater trade flows and movement of people throughout the Community; whereas cross-border credit transfers account for a substantial part of the volume and the value of remote cross-border payments;

Whereas it is of paramount importance for individuals and businesses to be able to make credit transfers rapidly, reliably, and cheaply from one part of the Community to another; whereas a market in which there is competition for cross-border credit transfers should lead to improved services and reduced prices;

Whereas this Directive intends to follow up the progress towards the liberalization of capital movements reached during stage 1 of economic and monetary union; whereas it takes account of the purpose of facilitating the use of the ecu set out in the Treaty; whereas it is conceived as a step towards the progressive implementation of economic and monetary union; whereas its provisions should apply to credit transfers in any currency, including the ecu;

Whereas this Directive is intended to implement one aspect of the programme of work drawn up by the Commission following its Green Paper 'Making payments in the internal market`;

Whereas the Commission has recommended to the Member States that the threshold below which cross-border payments should not have to be reported should be fixed at not less than ecu 10 000;

Whereas the Committee of Governors of the central banks of the Member States recommended that payment systems in all Member States should have a sound legal basis; whereas the Commission has set up a working group on the legal framework for cross-border payments, which consists of legal experts of governments and of the EMI; whereas this group has advised the Commission that the issues covered by this Directive may be dealt with separately from the systemic issues which remain under consideration; whereas it may be necessary to make a further proposal to cover these systemic issues, principally settlement finality;

Whereas the purpose of this Directive is to improve cross-border credit transfer services and thus assist the EMI in its task of promoting the efficiency of cross-border payments with a view to the preparation of the third stage of economic and monetary union;

Whereas, having regard to the third paragraph of Article 3b of the Treaty, this Directive lays down the minimum requirements needed to ensure an adequate level of customer information; whereas greater transparency is ultimately dependent on institutions' adherence to minimum performance requirements; whereas this Directive lays down the minimum performance requirements which institutions offering cross-border credit transfer services should adhere to; whereas this Directive fulfils the first, second, third, fourth and fifth principles set out in Commission recommendation 90/109/EEC (1); whereas it is without prejudice to Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering (2);

Whereas the nature of cross-border credit transfers, being a series of operations involving institutions in different Member States, is such that a coordinated approach at Community level is appropriate and necessary; whereas a self-regulatory approach has been attempted by the Commission by its recommendation 90/109/EEC; whereas this voluntary approach has not achieved the desired results; whereas a binding measure is therefore appropriate;

Whereas this Directive should apply to credit transfers for any amount; whereas institutions should be under an obligation to refund in the case of a non-completed transfer; whereas the obligation to refund imposes a contingent liability on institutions which might, if the possibility were not given to exclude high-value transfers, have a prudential effect on the solvency requirement; whereas the possibility of derogation (by Member States and, if so exercised, by institutions) from this obligation should be provided only in the case of high-value payments of more than ECU 10 000; whereas this threshold does not apply to any other Article of this Directive;

Whereas the European Parliament, in its resolution of 12 February 1993, called for a Council Directive to lay down rules in the area of transparency and performance of cross-border payments;

Whereas the Economic and Social Committee, in its opinion of 6 July 1994, stated a preference for a code of good conduct; whereas the Commission has previously pursued this approach; whereas the Economic and Social Committee advised that, if a directive were to be proposed, it should be limited to setting out a general framework; whereas this Directive follows this model, by allowing a large measure of freedom of contract,

HAVE ADOPTED THIS DIRECTIVE:

SECTION I Scope and definitions

Article 1

Scope

1. Member States shall apply the requirements of this Directive to credit institutions and to other institutions which supply credit transfer services to the public as part of their business.

2. This Directive shall apply to credit transfers in any currency, including the ecu, and for any amount save where the derogation in Article 7 (3) has been exercised.

Article 2

Definitions

For the purpose of this Directive:

(a) 'credit institution` shall mean an institution as defined in Article 1 of Council Directive 77/780/EEC (3); for the purposes of this Directive, branches of credit institutions in different Member States are deemed to be separate institutions;

(b) 'other institution` shall mean any legal person, other than a credit institution, that supplies to the public, by way of business, credit transfer services;

(c) 'institution` shall mean a credit institution or other institution;

(d) 'person` shall mean either a legal or a natural person, as the context may require;

(e) 'payment` shall mean the transfer by an originator of a monetary claim on a party acceptable to the beneficiary, including cases where the originator and the beneficiary are the same person;

(f) 'cross-border payment` shall mean a payment by an originator whose account, from which the payment is made, is held by an institution or its branch in one Member State, to be made available to a beneficiary at an institution or its branch in another Member State;

(g) 'originator` shall mean a person that authorizes the making of a credit transfer to a beneficiary;

(h) 'beneficiary` shall mean the final recipient of a credit transfer;

(i) 'customer` shall mean the originator or the beneficiary, as the context may require, and may be one and the same person;

(j) 'payment order` shall mean an instruction in any form, given direct to an institution, to place at the disposal of a beneficiary a fixed or determinable amount of money.

(k) 'credit transfer` shall mean a cross-border payment, consisting of a series of operations beginning with the originator's payment order. The term includes any payment order issued by the originator's institution or any intermediary institution intended to carry out the originator's payment order;

(l) 'force majeure` shall not include the insolvency of an intermediary institution but shall otherwise have the meaning ascribed to it in indent (ii) of the second subparagraph of Article 4 (6) of Council Directive 90/314/EEC (4);

(m) 'interest` shall mean the inter-bank offered rate, increased by two percentage points, in the relevant market for deposits in the currency of any given payment, calculated for the period of the delay;

(n) 'value date` shall mean the date on which the customer's account is debited (for originators) or credited (for beneficiaries) such date being that applied by the institution of the customer for the purpose of calculating interest (if any) on the account or assessing the availability of funds, where interest is not an appropriate criterion;

(o) 'acceptance` shall mean the acceptance by an institution of a payment order, upon fulfilment of the institution's conditions as to the availability of financial cover and the identification of the parties named in the payment order and any other pre-conditions agreed by the parties;

(p) 'completion` of a credit transfer shall mean acceptance by the beneficiary's institution;

(q) 'intermediary institution` shall mean an institution which is neither that of the originator nor that of the beneficiary;

(r) 'business day` in relation to any particular institution shall mean a day, or part of a day, on which that institution is open for the processing of credit transfers.

SECTION II Transparency of conditions for credit transfers

Article 3

Information prior to a credit transfer (made or received)

The institution shall supply its customers with clear written information about the services it provides to effect or receive credit transfers. This information shall include:

- an indication of the time needed for the funds to be credited to the account of the beneficiary's institution or to the beneficiary, as appropriate,

- the basis of the calculation of any commissions and charges payable by the customer to the institution,

- the value date, if any, applicable by the institution,

- a reference to the redress procedures available to the customer and the method of gaining access to them.

Article 4

Information subsequent to a credit transfer (made or received)

The institution shall supply its customers with clear written information subsequent to their making or receiving a credit transfer. This information shall at least include:

- a reference enabling its customer to identify the payment,

- the amount of any charges payable by its customer. Where the originator has authorized a deduction from the amount of a credit transfer, this fact and the original amount of the credit transfer should be stated by the beneficiary's bank to the beneficiary,

- the value date, if any, applied by the institution.

SECTION III Minimum obligations of institutions in respect of credit transfers

Article 5

Obligation to execute in good time

1. Each institution having accepted a payment order shall execute the related credit transfer within the time scale agreed with the customer (or institution) making the payment order. In the absence of a specific agreement as to the time scale, the institution shall act soon enough to enable its published clear time scale to be achieved. Where there is neither a specific agreement nor an applicable published time scale, the following obligations shall apply:

- the institution of the originator shall be responsible to the originator for ensuring that the credit transfer is completed no later than the end of the fifth business day following acceptance by it of the payment order from the originator, and

- the institution of the beneficiary shall be obliged to place the amount of the credit transfer at the disposal of the beneficiary, at the latest by the end of the business day following completion of the credit transfer.

2. The originator's institution shall compensate the originator by the payment of interest on the amount of the credit transfer where it is completed late, but shall not be liable for consequential losses under this Directive. No compensation shall be payable where the originator's bank can establish that the delay was attributable to the originator.

3. In addition to the obligation of execution in paragraph 1, the beneficiary's institution shall compensate the beneficiary by the payment of interest on the amount of the credit transfer where it is late in being placed at the beneficiary's disposal.

Article 6

Obligation to execute in accordance with the instructions contained in the payment order

1. The originator's institution, any intermediary institution and the beneficiary's institution, once they have accepted the payment order, shall each be obliged to execute the related credit transfer for the full amount thereof unless authorized to make a deduction therefrom. Without prejudice to the duty not to deduct, the beneficiary's institution may, where appropriate, levy an additional charge on the beneficiary relating to the administration of his account. However, any such additonal administrative charge shall not exceed the charge that would be made for a domestic credit transfer.

2. Where a breach of the duty to execute in accordance with the payment order as described in paragraph 1 has been caused by any institution other than the beneficiary's institution, and without prejudice to any other clain which might be made, the institution of the originator shall be liable to credit to the originator any sum wrongly deducted by any institution, at its own cost. Alternatively, if required to do so by the originator it shall transfer such amount to the credit of the beneficiary, free of all deductions, at its own cost. Any intermediary institution making a deduction in breach of the duty in paragraph 1 shall be liable to credit the sum so deducted to the institution of the originator. Alternatively, if required by the institution of the originator, it shall transfer such amount, free of all deductions, to the credit of the beneficiary, at its own cost.

3. Where a breach of the duty to execute in accordance with the payment order has been caused by the beneficiary's institution, and without prejudice to any other claim which may be made, the beneficiary's institution shall be liable to credit to the beneficiary, at its own cost, any sum wrongly deducted.

Article 7

Obligation of institutions to refund in case of non-completed credit transfers

1. If, after a payment order has been accepted by the originator's institution, the related credit transfer is not for any reason completed, and without prejudice to any other claim which may be made, the originator is entitled to have his account credited on demand with the full amount of the credit transfer plus interest and the amount of the charges for the non-completed credit transfer, such demand to be made not earlier than 20 business days after the date on which the credit transfer should have been completed. Each intermediary institution which has accepted the payment order likewise owes an obligation to refund at its own cost the amount of the credit transfer to the institution which instructed it.

2. If the non-completion of the credit transfer was caused by defective instructions given by the originator to his institution, the originator's institution and the other institutions involved shall use their best endeavours to make the refund referred to in paragraph 1.

3. Member States may allow institutions to derogate by contract from the obligation to refund, as described in paragraph 1, in the following cases:

- where the non-completion of the credit transfer is due to force majeure or

- for payments above ECU 10 000.

SECTION IV Final provisions

Article 8

Implementation

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive before 31 December 1996 at the latest. They shall forthwith inform the Commission thereof.

When Member States adopt these provisions, these shall contain a reference to this Directive or shall be accompanied by such reference at the time of their official publication. The procedure for such reference shall be adopted by Member States.

2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field governed by this Directive. In this Communication Member States shall provide a table of correspondence showing the national provisions which exist or are introduced in respect of each Article of this Directive.

Article 9

Report to the European Parliament and the Council

No later than 31 December 1999, the Commission shall present a report to the European Parliament and the Council on the application of this Directive, accompanied where appropriate by proposals for its revision.

Article 10

Entry into force

This Directive shall enter into force on the 20th day following its publication in the Official Journal of the European Communities.

Article 11

Adressees

This Directive is addressed to the Member States.

(1) OJ No L 67, 15. 3. 1990, p. 39.

(2) OJ No L 166, 28. 6. 1991, p. 77.

(3) OJ No L 322, 17. 12. 1977, p. 30.

(4) OJ No L 158, 23. 6. 1990, p. 59.