Proposal for a Regulation of the European Parliament and the Council on the prevention of money laundering by means of customs co-operation
Date: 2002-06-25
Institutions: European Commission
Subjects: approximation of laws, capital movement, capital transfer, customs cooperation, customs regulations, exchange of information, financial legislation, form, free movement of capital, money laundering, recycling of capital

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Official Journal of the European Communities

24.9.2002

Proposal for a regulation of the European Parliament and the Council on the prevention of money
laundering by means of customs cooperation

(2002/C 227 E/34)

COM(2002) 328 final — 2002/0132(COD)

(Submitted by the Commission on 2 July 2002)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF
THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 135 thereof,

Having regard to the proposal from the Commission,

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

Acting in accordance with the procedure referred to in Article
251 of the Treaty,

Whereas:

(1) Money laundering via cross-border cash movements
represents a threat to the security and financial interests
of the Member States and the Community. This threat can
be effectively combated by the customs administrations.
Customs officials are present at
the borders, where
controls are most effective. Indeed, some have built up
practical experience in the matter. They are, moreover,
able to control both cash and the valuables that are
substitutes for it.

(2) Furthermore, customs administrations are already familiar
the
with international cooperation, and in particular
exchange of information pursuant to Council Regulation
(EC) No 515/97 of 13 March 1997 on mutual assistance
between the administrative authorities of
the Member
States and cooperation between the latter and the
Commission to ensure the correct application of the law
on customs and agricultural matters (1), and to the
Convention drawn up on the basis of Article K.3 of the
Treaty on European Union, on mutual assistance and
cooperation between customs administrations (2).

(3) Account should also be taken of complementary activities
carried out in other international forums. In particular,
Recommendation No 22 of the OECD's Financial Action
Task Force calls on governments to take measures to
detect cash movements.

(4) Recourse to customs cooperation is necessary because the
machinery introduced by Council Directive 91/308/EEC

(1) OJ L 82, 22.3.1997, p. 1.
(2) OJ C 24, 23.1.1998, p. 2.

of 10 June 1991 on prevention of the use of the financial
system for the purpose of money laundering (3) covers
only money laundering operations conducted through
credit
and certain
professions.

institutions,

institutions

financial

(5) The consequence is that large sums of money of dubious
origin are entering and leaving the Community which
cannot be detected by this mechanism. Some Member
States have nevertheless
taken initiatives outside the
framework of the Community and introduced legislation
allowing their customs services to perform controls on
such sums. Other Member States, however, have no
such legislation. The probability of detecting money laun-
dering therefore depends on the Member State through
which cash is brought in or taken out. This diminishes the
protection afforded by the external
frontiers against
money laundering.

(6) The existing legislation should therefore be supplemented
by having recourse to customs cooperation arrangements
under Article 135 of the Treaty, which now gives formal
expression to customs cooperation. This should serve to
harmonise the control methods instituted by national law
and enable all the Community's customs administrations
to gather information on cash entering or leaving the
Community customs territory in sums equal
to those
covered by Directive 91/308/EEC. In these circumstances,
the most appropriate way to gather such information is
by imposing an obligatory declaration.
In case of
suspicion, the information is designed to be transmitted
to the
virtue of Directive
91/308/EEC, coordinate action against money laundering.

authorities which,

by

(7) Accordingly, cash movements should be subject to the
principle of obligatory declaration at
external
frontiers. This is the most expedient way to control acts
by which Community and national rules on laundering
might be circumvented. However, in order to focus the
authorities' action on significant instances of laundering,
only movements of EUR 15 000 or more should be
subject to an obligatory declaration.

the

(3) OJ L 166, 28.6.1991, p. 77; Directive as amended by Directive
2001/97/EC of the European Parliament and of the Council (OJ L
344, 28.12.2001, p. 76).

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(8) The form of the obligatory declaration should also be laid
down, otherwise it should be void. Imposing the use of a
standard pre-printed declaration form will enable customs
administrations to improve synergies and to exchange
the preventive
information more easily.
purpose and dissuasive character of the declaration,
it
may not be lodged after the external frontier has been
crossed. The moment at which this formality has to be
accomplished must
it
the obligation to
must be specifically laid down that
declare applies to the person carrying the cash, regardless
of whether that person is the owner.

therefore be determined. Lastly,

In view of

(9) It is desirable to establish the definitions needed for a
uniform interpretation of
this Regulation. The term
‘competent authorities’ must cover not only the customs
administrations, which bear primary responsibility for
these rules, but any non-customs services which, subject
to their remit and to each Member State's specific admin-
istrative arrangements, contribute to this Regulation's
in
implementation. This definition will
which departments other than customs, such as police
and border guards, are authorised to receive and check
such declarations. In addition, ‘cash’ should encompass the
whole range of fungible assets.

cover

cases

(13) The powers of the customs authorities should be supple-
mented by the Member States' obligation to lay down
penalties. However, penalties should only be imposed
for failure to make a declaration, not for money laun-
dering offences disclosed by the customs controls set
in this Regulation. Though genuinely dissuasive
out
penalties are called for,
fines should nevertheless be
restricted as to their amount. The absence of any limit
would enable Member States to impose fines so high as
unduly to compromise the principle of the free movement
of capital, or even to negate it altogether.

(14) Provision should be made,

cash
event of
in the
movements connected with terrorism,
for information
gathered to be transmitted, under certain conditions, to
non-member countries.

(15) This Regulation in no way affects the application of
general or specific Community rules on administrative
cooperation, especially in the matter of customs or in
the protection of the Community's financial interests, in
particular where those rules might improve or strengthen
the current machinery for administrative cooperation.

(4)

and

(6)(c)

(10) As far as geographical scope is concerned, in conformity
with the requirements of the Treaty, and in particular
Article
thereof, Directive
299(3),
91/308/EEC does not
to certain European
apply
countries and territories, including Monaco, the Channel
Islands and the Isle of Man. Attention should therefore be
paid to the risk of money laundering attaching to such
countries and territories, and special arrangements should
be made in their regard. The declaration should be given
on demand, on entering or leaving such countries and
territories, regardless of whether the movement is within
the Community or to a non-member country.

(11) In order to combine this Regulation with the national law
governing money laundering, provision should be made
for the automatic transmission of information gathered by
controls. Such information must be accessible to the
customs services of the Member State of residence and,
as the case may be, the Member State of origin or desti-
nation, and also to the money laundering authorities of
the Member States
the
information must also be transmitted to the Commission.
certain
Similarly,
provision
there
information to be
are
suspicions over
involving
sums lower than the threshold laid down.

should
transmitted whenever
repeated cash movements

concerned. Where

be made

relevant,

for

(12) Customs officials

should be vested with the powers

needed to exercise effective control.

(16) Since

of

the

the

objective

Regulation,

namely
strengthening customs cooperation in the fight against
money laundering, cannot be sufficiently achieved by
the Member States acting in isolation and can therefore,
by reason of the transnational scale of money laundering
in the internal market, be better achieved at Community
level, the Community may adopt measures, in accordance
with the principle of subsidiarity enshrined in Article 5 of
the Treaty. In accordance with the principle of propor-
tionality, as set out in that Article, this Regulation does
not go beyond what is necessary in order to achieve that
objective.

(17) This act respects the fundamental rights and observes the
in particular, by the Charter of

principles recognised,
Fundamental Rights of the European Union,

HAVE ADOPTED THIS REGULATION:

Article 1

Obligation to declare

1.
Any natural person entering or leaving the Community
customs territory and carrying a sum of EUR 15 000 or more
in cash shall be obliged to declare that sum in accordance with
this Regulation.

Any natural person entering or leaving those parts of
the
Community customs territory to which Directive 91/308/EEC
does not apply and carrying a sum of EUR 15 000 or more in
cash shall also be obliged to declare that sum in accordance
with this Regulation.

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The obligation to declare shall not have been fulfilled
2.
unless the person referred to in paragraph 1 has completed
the declaration form corresponding to the specimen in the
Annex and handed it in to the customs office of the Member
State through which he is entering or leaving the Community
customs territory or parts of the Community customs territory
to which Directive 91/308/EEC does not apply.

the obligation to declare is not
Moreover,
information given is incorrect or incomplete.

fulfilled if

the

Article 2

Definitions

For the purposes of this Regulation:

1.

‘Community customs territory’ shall mean the territory of
the Member States referred to in Article 3(1) of Council
the
Regulation
Community customs code.

2913/92 (1)

establishing

(EEC) No

2.

‘Competent authorities’ shall mean the customs authorities
of the Member States and the other authorities responsible
for applying this Regulation.

3.

‘Cash’ shall mean:

(a) currency (banknotes, coins);

(b) traveller's cheques or postal cheques;

Where the money laundering operations appear to involve the
illegal activity adversely
proceeds of
affecting the
the
the Community,
information shall also be transmitted to the Commission.

fraud or any other

interests of

financial

2. Where there is material or circumstantial evidence that a
natural person is repeatedly entering or leaving the Community
customs territory or parts of the Community customs territory
to which Directive 91/308/EEC does not apply with sums of
cash lower than the threshold fixed in Article 1, the name of
that person, his nationality and the registration number of the
means of transport used may also be transmitted, with the
material or circumstantial evidence, to the competent auth-
orities and, in the circumstances described in paragraph 1, to
the Commission.

3.
The provisions of Titles V and VI of Regulation (EC) No
515/97 shall apply mutatis mutandis to the transmission of
information gathered pursuant to this Regulation.

Article 4

Powers of the competent authorities

In order to check compliance with the obligation under Article
1 to declare, officials of the competent authorities shall be
empowered, even where there is no prior evidence that an
to control persons and their
offence is being committed,
baggage, to question persons about the provenance of cash
found in the course of such controls and to detain such cash
by administrative decision.

(c) any anonymous or bearer certificate of a financial or
monetary character which is convertible into cash, irres-
pective of
the issuer, and in particular negotiable
securities and other bonds.

Cash may be detained for up to three working days; that period
may, however, be extended in accordance with national law.
The period shall, in any event, be no longer than is necessary
for the investigation.

Article 3

Reporting

1. Where there is material or circumstantial evidence that
cash is being carried for the purposes of money laundering
operations,
information obtained through the declaration
provided for in Article 1 or subsequent controls shall auto-
matically be transmitted to the competent authorities of,
respectively,
the person
the Member State of residence of
referred to in Article 1(1) and the Member State through
which that person entered or left the Community customs
territory.

shall also be

It
transmitted to the national authorities
responsible under Article 6 of Directive 91/308/EEC for
combating money laundering in the country through which
the person concerned entered or left the Community customs
territory.

(1) OJ L 302, 19.10.1992, p. 2.

Article 5

Penalties

1. Without prejudice to the penalties applicable in the event
of money laundering, the Member States shall, in accordance
with their national legislation, make sure that proceedings are
initiated
or
inspections carried out under this Regulation establish that
the obligation to declare laid down in Article 1 has not been
fulfilled.

responsible where

controls

against

those

shall,

in accordance with the relevant
Those proceedings
provisions of national
law, be such as to produce effects
proportionate to the seriousness of the offence constituted by
the failure to make a declaration or the lodging of an inac-
curate or incomplete declaration, and thereby deter others from
committing offences of a similar nature.

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The level of fines resulting from the procedures referred
2.
to in paragraph 1 may not exceed a quarter of the sum carried.

3. Member States shall notify to the Commission, at the
latest by 31 December 2003, the applicable penalties in the
event of non-compliance with the obligation to declare.

2. Member States shall notify the Commission of exchanges
of information with non-member countries in the course of
mutual administrative assistance where particularly relevant to
the effectiveness of action against money laundering under this
Regulation and where such information falls within the scope
of this Regulation.

Article 6

Relations with non-member countries

Article 7

for

1. Where there is material or circumstantial evidence that
cash is being carried for the purposes of money laundering
operations by or
information
this Regulation may be divulged to a
obtained under
non-member country, with the consent of the competent auth-
orities having provided the
to
compliance with their internal provisions on the transfer of
personal data to non-member countries.

information and subject

terrorist groups,

the

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

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ANNEX